Egypt to present $6 billion investment opportunity

Abu Dhabi: Egypt’s renewable energy sector presents strong investment opportunity of at least $6 billion (Dh22.04 billion) to 2018, according to investment bank EFG Hermes.

Facing growing energy demands and pressure on fuel supplies for conventional energy generation, Egypt is focusing on renewable energy as a viable and effective source to add to the gas-dominated energy mix.

Egypt’s New and Renewable Energy Authority aims to generate 20 per cent of its power from renewables by 2020, the bank said.

“We are bullish in the short- to medium-term on Egypt’s renewable energy projects. But it’s a matter of properly executing the first feed-in-tariff wave. The Government’s implementation of the regulatory framework is one of the biggest challenges. Once the right implementation plan is in place, then it will be easy for international lenders to be fully comfortable with Egypt’s renewables sector,” said Bakr Abdel Wahab, Managing Director of Infrastructure Private Equity at EFG Hermes.

“There is a lot of focus on investors and developers, but we have to remember that 60 to 75 per cent of the funding will be via debt from international and multilateral institutions. All the necessary structural changes need to be in place to assist aggressive debt financing,” he said.

Abdel Wahab will address financing renewables at both the Egypt Energy Forum and the World Future Energy Summit 2016, hosted by Masdar and part of Abu Dhabi Sustainability Week starting on January 18.

Currently, Egypt is deploying several different development models for renewable energy projects. These include bilateral agreements between the government and private developers, feed-in-tariff where the government pays set tariffs for renewable energy, and Build-Own-Operate and Build-Operate-Transfer tenders for more competitive bidding by developers.

EFG Hermes is presently considering establishing a $200 million renewable energy fund to spur wind and solar projects in Egypt and the wider region. The firm led the acquisition of a 49 per cent stake last year in a 330 megawatt portfolio of wind assets owned by EDPR in France.

Masdar’s CEO Dr Ahmad Belhoul told Gulf News last week they are planning to invest in the renewable sector in Egypt apart from Morocco and Jordan as part of their expansion plans.