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German ECA steps in as three Egypt solar projects close

The transactions conclude the first round of Egypt’s feed-in tariff programme, which has been marred by large-scale withdrawals amid an international arbitration dispute.

Three solar parks accredited under Egypt’s first feed-in tariff programme have reached financial close following a lengthy process which saw some of the market’s biggest players cancel their projects.

Egyptian firm Infinity Solar teamed up with German companies ib vogt and Solizer to seal a $126 million financing package for their 64.1MW plant. Some 85 percent of the funds were provided by Bayerische Landesbank, with the remainder coming from the Arab African International Bank. It included both US dollar and Egyptian pound-denominated facilities. The dollar-denominated tranche was covered by Germany's export credit agency Euler Hermes.

A 50MW project developed by Saudi Arabian developer FAS Energy and a site owned by Elf Energy have also reached financial close, according to local law firm Riad & Riad.

The financings draw to a close Egypt’s first attempt at procuring solar projects via its feed-in tariff programme, a process that started back in 2014. Development finance institutions such as the International Finance Corporation, European Bank for Reconstruction and Development and Proparco all pledged large loans to projects awarded by the programme. However, the DFIs insisted on arbitration for the projects taking place in Geneva while the Egyptian government maintained this would take place in Cairo. As a result, financing was withdrawn and developers such as Neoen, Fotowatio and Enel cancelled their awarded projects.

Riad & Riad said the three financial closures are the only successes despite 40 developers participating in the programme. It added that for the programme’s second round arbitration will take place in Paris, after Cairo was eventually chosen for the first.

Projects for Round 2 must also be fully financed through banks or other financial institutions, with at least 70 percent to come from foreign banks. Developers participating in the next phase must show proof of financing before the end of next month.