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Private investment to lead energy infrastructure development in Egypt

Egypt's energy market becoming more opened to private investors. An important read before the upcoming Egypt Energy Investment Summit in February 2016
EnergyNet Ltd. | 20.12.2015
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by: Talita Covre

Improvements in Egypt’s legislation and regulation through the National Energy Strategy 2035 which is to be announced early next year will turn the country’s plan to add 30GW to the energy mix into a reality. The new strategy foresees a much larger presence of privately owned generation, and the creation of new market sectors to accommodate the increased private engagement.

Considered the historical state ownership of power projects in Egypt, the development of a more liberalised energy market opens unprecedented opportunities for private investors. Mr Atter Hanoura, Head of PPP at Egypt’s Ministry of Finance says that “the New Energy Strategy provides the legal framework to engage private investors. In addition, Egypt’s good reputation is also helping to bring in more investors. We are now trying to promote the private sector’s participation in infrastructure for big projects.”

When we asked about what were the government’s plans to continue stimulating private sector investment, Mr Hanoura briefed that “projects are well studied before they are sent to the market. We hire international experts and urge for a thorough study to assess the feasibility of each project.” 80% of these advisors are financial donors who often finance these activities. Main partners are the IFC, EBRD, AfDB, Islamic Development Bank, World Band and the GIZ.

In addition, Hanoura reminds that through the development of private projects, “all the related approvals and licensing remain registered as a reference. It is an obligation of the government to obtain and maintain the efficiency of these approvals and licenses throughout the project. And if any of these documents expire, they will be renewed until completion of the project”. This mechanism is mainly dedicated as a covering guarantee against risk of cash fluidity, which assures that commitments will be paid on time and according to budget.

As Egypt’s power capacity increases, opportunities for infrastructure development expand into specific needs of each sector. The government is already talking about the need for private investors to develop transmission and grid infrastructure network, which will help to accommodate the large intermittent energy coming from renewable sources. New gas discoveries such as the Zohr Field open further new opportunities for field development, distribution of gas for domestic and industrial supply as well as pipeline infrastructure. The developing coal industry, which is planned to produce 15GW in the next 4 to 5 years, will also need great infrastructure and technical investment. The fact that Egypt is entirely reliant on imports for its coal supplies adds the opportunity to improve port infrastructure where imports are received.

The need of investment in power infrastructure is primary to Egypt as the country invests in increasing and diversifying its energy mix. By opening up its power sector, Egypt has started to engage some of the world’s most technologically advanced businesses which are playing a leading role in helping the country to achieve its power ambitions.

Speaking at the Egypt Energy Investment Summit in Cairo in February 2016, Mr Atter Hanoura, will address the audience to the needs and opportunities for infrastructure development in Egypt. Taking place right at the time when the National Energy Strategy 2035 will be finalised and bringing the leading authorities involved in the strategy’s design, the meeting will put participants ahead of the major developments in Egypt’s power sector and open opportunities for private investors to take part in the country’s privatisation initiatives.