AIIB provides debt financing for solar project in Egypt

The Asian Infrastructure Investment Bank (AIIB) has signed up to participate in a US$210 million debt financing for a solar project in Egypt.

A syndicate of lenders including the AIIB will provide long-term debt financing on a limited recourse project finance basis. World Bank Group unit International Financial Corporation (IFC) is supporting the solar project via an equity investment.

The project will consist of 11 greenfield solar power plants with an aggregate capacity of 490 MW, all located in Benban Solar Park, in southern Egypt. The power generated will be sold under feed in tariffs to the Egyptian Electricity Transmission Company (EETC) under a 25-year power purchase agreement.

This solar power project will increase Egypt’s power generation capacity, reduce the country’s dependence on gas and fuel for electricity generation, and will help the country meet its commitments under the Paris Climate Agreement as it moves towards an environmentally sustainable energy mix.

"Investing in clean, renewable energy is a big part of our strategy to promote a sustainable and low-carbon future for Asia," says DJ Pandian, vice president and chief investment officer at the AIIB. "We are supporting this project because it contributes to Egypt’s renewable energy capacity, and it will help position the country as a regional energy hub, which will have economic benefits for the entire region."

The AIIB is a multilateral development bank which operates with a high degree of independence from the Chinese government, but Egypt is also currently strengthening its ties with China within the Belt Road initiative.

In August, China Railway Group and AVIC International signed a US$1.24 billion contract to build a light rail transit system in Cairo. Construction will start before year end.

Egypt was one of five emerging markets which had representatives attending the BRICS Summit in Xiamen on September 4. The other four were Guinea, Mexico, Tajikistan and Thailand. China has been attempting to build up a so-called BRICS Plus, with a wider circle of developing countries.

Egypt was also the Guest of Honour Country at the 2017 China Arab States Expo which was held from September 6 to 9 in Ningxia, China. In previous years, the United Arab Emirates, Kuwait and Jordan have joined the Expo as the Guest of Honour.

Date

13 Sep 2017

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