Cairo has to win back private sector confidence

19 September 2008
The problem for Cairo is that private developers remember the debacle in 2001 when they were last in Egypt.

Egypt’s new electricity law will be submitted to parliament for approval in its next session. In addition to laying the groundwork for the creation of a competitive power market, the legislation sets out the framework for private sector participation in the renewable energy sector.

The country’s New & Renewable Energy Authority is wasting no time waiting for the law to be passed. It is already planning to issue a tender for a 2,500MW wind farm to be built on a build-own-operate basis, the first project of its kind in Egypt.

Until now, the Egyptian Electricity Holding Company (EEHC) has relied on its own resources and on funds from institutions such as the World Bank for its expansion programme. As these grow scarce, Cairo will be keen for private finance to play a bigger role.

Cairo’s previous foray into private power development at the turn of the millennium was not particularly successful.

Today, the country is home to a total of three independent power projects, which were developed as build-own-operate-transfer schemes. At the time, EEHC entered into dollar-denominated long-term power-purchase agreements with the developers. But when a devaluation of the Egyptian pound in 2001 pushed the cost of the power purchased by the government higher, EEHC asked to pay its dues in local currency.

The experience, which put Cairo off private power for several years, is still fresh in developers’ memories.

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