European Bank for Reconstruction and Development (EBRD), OPEC Fund for International Developmentthe (OPEC Fund), Africa Development Bank (AfDB), Green Climate Fund (GCF) and Arab Bank have signed a $114 million financing package with ACWA Power for the construction of the largest private solar plant in Egypt.
The development of the Kom Ombo solar plant will add 200 MW of energy capacity, increasing the share of renewable energy in Egypt’s energy mix and further promoting private-sector participation in the Egyptian power sector.
The package comprises loans of up to $36 million from EBRD, $18 million from the OPEC Fund, $17.8 million from AfDB, $23.8 million from GCF and $18 million from Arab Bank.
This is in addition to equity bridge loans of up to $14 million from EBRD and $33.5 million from Arab Petroleum Investments Corporation (APICORP).
The new Kom Ombo plant will be located less than 20 km from Africa’s biggest solar park, the 1.8 GW Benban complex. Once operational, the new utility-scale plant will serve 130,000 households.
ACWA Power, a Saudi Arabian developer, investor and operator of power generation and desalinated-water plants, submitted the lowest tariff in what was the first solar photovoltaic (PV) tender in Egypt.
The provision of solar energy through a public tendering process aims to achieve a competitive tariff and promote the growth of solar energy as an affordable alternative to conventional energy sources.
Private-sector participation in the Kom Ombo project is the result of successful policy dialogue with the Ministry of Electricity and Renewable Energy and the Egyptian Electricity Transmission Company (EETC), as well as a $3.6 million technical assistance programme, co-funded by the EBRD and the GCF, to support the EETC in administering competitive renewable energy tenders.
In addition, the project has also benefitted from broader energy-sector reforms supported by the AfDB in recent years to scale up the involvement of the private sector.
EBRD President, Odile Renaud Basso, said: “We are very happy to team up again with ACWA Power in Egypt, after our successful partnership in Benban, to promote renewable energy in Egypt. Increasing the production of clean energy is an important step to reducing carbon emissions and addressing climate change.
‘’This is in line with the EBRD’s strategy to become a majority green bank by 2025. This project also marks the EBRD’s first co-financing project with the AfDB and the OPEC Fund in Egypt and we look forward to future joint investment opportunities for our institutions across Africa.”
OPEC Fund Director-General, Abdulhamid Alkhalifa, said: “We are pleased to contribute to Egypt’s efforts and strategy to expand its generation capacity in the renewable energy space. We have been at the forefront of advocating for access to affordable clean energy for many years. Kom Ombo will be our third project with ACWA Power and it exemplifies great cooperation between government, development finance and private-sector actors.”
AfDB’s Vice President in charge of Power, Energy, Climate Change and Green Growth, Kevin Kariuki said: “The Kom Ombo solar project is a truly remarkable transaction. It not only clearly demonstrates the indisputable competitiveness of solar PV vis-à-vis conventional sources of generation, but it also directly contributes towards the realisation of Egypt’s ambitious renewable energy targets, in addition to being an excellent example of what stakeholders driven by a shared objective can achieve”.
President and Chief Executive Officer of ACWA Power, Paddy Padmanathan, said: “ACWA Power is privileged and proud to lead the realisation of the Kom Ombo PV project. The financing package signed today brings us closer to not only the people and the government of Egypt, but also to our finance partners, EBRD, AfDB, OPEC Fund, GCF and Arab Bank and APICORP, reflecting our shared objective of supporting the energy transition to address the threat of climate change.
‘’Kom Ombo PV is the fourth project in ACWA Power’s Egyptian portfolio and the conclusion of this financing demonstrates the confidence in the Egyptian government’s ambitious renewable energy plans, being implemented through private-sector participation.”
Executive Director of the Green Climate Fund, Yannick Glemarec, said: “The GCF is proud to support implementation of Egypt’s ambitious renewable energy financing framework. $154.7 million in GCF resources, including $23.8 million for the Kom Ombo plant, catalyses over $850 million in co-financing and unleashes the first wave of private renewable energy projects in Egypt.
‘’The GCF looks forward to continuing to support the government of Egypt in delivering on its ambitious climate targets through innovative partnerships with the private sector.”
CEO of Arab Bank, Nemeh Sabbagh, said: “We are proud to capitalize on our long experience in this sector and partner again with EBRD to provide debt financing and related banking services to another renewable energy project in Egypt for our client ACWA Power. Green financing is one of our strategic focus areas and Egypt is a core market for Arab Bank Group, where we have been operating since 1944”.
The Kom Ombo plant will contribute to the Egyptian government’s target to generate 42 per cent of the country’s electricity from renewable energy sources by 2035 while delivering one of the lowest generation tariffs on the continent.
However, AfDB Group is Africa’s premier development finance institution. It comprises three distinct entities: the AfDB, the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 41 African countries, with an external office in Japan, it contributes to the economic development and social progress of its 54 regional member states.
On its part, ACWA Power is a developer, investor and operator of power generation and desalinated water production plants. Registered and established in 2004 in Riyadh, Saudi Arabia, ACWA Power employs about 3,500 people and is currently present in 13 countries in the Middle East, Africa, Central Asia and south-east Asia.
ACWA Power’s portfolio includes 62 assets with an investment value of US$ 65 billion, producing 42 GW of power and 5.8 million m3/day of desalinated water, delivered on a bulk basis to address the needs of state utilities and industries on long-term, offtake contracts under utility services outsourcing and PPP models.
Its mission is to reliably deliver electricity and desalinated water at a low cost, thereby making an effective contribution to the sustainable, social and economic development of communities and countries. ACWA Power is committed to the values of safety, people and performance in operating its business in all regions.
EBRD is a multilateral bank that promotes the development of the private sector and entrepreneurial initiative in 38 economies on three continents. The Bank is owned by 69 countries, as well as the European Union and the European Investment Bank. EBRD investments are aimed at making its investee economies competitive, inclusive, well-governed, green, resilient and integrated.
Meanwhile, the OPEC Fund is the only globally mandated development institution that provides financing from member countries to non-member countries exclusively. The organisation works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world.
OPEC Fund was established by the member countries of OPEC in 1976 with a distinct purpose: to drive development, strengthen communities and empower people. Its work is people-centered, focusing on financing projects that meet essential needs, such as food, energy, infrastructure, employment (particularly relating to MSMEs), clean water and sanitation, healthcare and education.
To date, the OPEC Fund has committed more than $22 billion to development projects in over 125 countries with an estimated total project cost of $187 billion. Its vision is a world where sustainable development is a reality for all.