Financing deals worth $1.1 billion have been arranged for Egypt’s largest solar and wind power projects involving International Financial Corporation (IFC), commercial banks and export credit agencies, it was announced on Wednesday.

The financing package (including debt and equity) was raised by IFC alongside UAE, Japanese, Dutch, and private sector commercial bank partners, IFC said in a press statement.

The statement said the financing package will support UAE-based AMEA Power to build, own, and operate the solar and wind plants, delivering more than 1 gigawatt of renewable energy at the lowest price in Africa.

In November 2022, Zawya Projects had first reported that the solar and wind power projects are expected to achieve financial close by early December, quoting AMEA Chairman Hussein Jasim Al Nowais.

IFC said construction of both projects is scheduled to begin in December 2022, with the solar plant expected to be complete in 18 months and the wind farm in 30 months.

IFC said that it is lending up to $145 million for both projects. As the hedging organisation for both projects, IFC is also removing most of the risk of rising interest rates by swapping the variable interest rate for a fixed rate for the term of loans for the combined packages, it said.

Amunet Wind IPP

Amunet Wind Power Company, owned 60 percent by AMEA Power and 40 percent by Japan’s Sumitomo Corporation will develop the 505-megawatt (MW) Amunet Wind Independent Power Project (IPP), located in Ras Ghareb in the Gulf of Suez on the Red Sea coast.

Project site for Amunet Wind IPP
Project site for Amunet Wind IPP
Project site for Amunet Wind IPP

IFC said that as lead arranger, it mobilised over $500 million for Amunet Wind project from the Japanese Bank for International Cooperation (JBIC) and from three commercial banks—Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, and Standard Chartered Bank—under insurance cover from Nippon Export Investment Insurance and a working capital facility from the Commercial International Bank of Egypt.

Power from the wind farm is priced at 3 US cents/kilowatt hour and will be sold to the state-owned Egyptian Electricity Transmission Company (EETC) under a 25-year power purchase agreement.

While the press statement didn’t disclose the loan amount, Zawya Projects had also reported in November that IFC is looking at providing $83 million to part-fund the wind farm.

IFC’s disclosure statement had estimated the total project cost at $709 million.

Abydos Solar PV IPP

Abydos Solar Power Company S.A.E, an Egypt-incorporated special purpose vehicle owned by AMEA Power will develop the 560 MW Abydos Solar PV IPP, situated near Kom Ombo in Egypt's Aswan governorate.

IFC mobilised up to $160 million in long-term loans from the Japan International Cooperation Agency (JICA) and the Dutch Entrepreneurial Development Bank (FMO) to support the solar project.

While the press statement didn’t disclose IFC’s loan amount, the disclosure statement said IFC will provide up to $100 million from its own account for the solar project, noting that total project cost has been at $330 million.

Power from the solar park and the wind farm will be priced at 2 US cents/kilowatt hour and sold to EETC under a 25-year PPA.

Abydos and Amunet support Egypt's National Climate Change Strategy 2050, which calls for renewables to provide 42 percent of total power generation by 2035. Currently, thermal power accounts for 90 percent of Egypt's power supply, and hydropower and renewable energy sources each account for only 5 percent, leaving the country dependent on fossil fuels, according to JICA.

(Writing by P Deol; Editing by Anoop Menon)