The Industrial and Commercial Bank of China (ICBC) has signed a financing agreement for the planned $6.4bn Harawein coal-fired power plant in Egypt.

MEED recently reported that Chinese contractor Shanghai Electric had received approval from the Egyptian government for plans to build the 4.6GW Harawein coal project, for which the contracts will be signed when China’s President Xi Jinping visits Cairo on 21 and 22 January.

The financing agreement covers important facets of financing arrangements for the deal, including interest rate and tenor details. According to sources close to the deal, the rate is better than interest rate usually provided by Chinese banks for African markets, which is generally around Libor +310.

A memorandum of understanding (MoU) for the scheme was signed at the Egypt Economic Development Conference (EEDC) in Sharm el-Sheikh in March 2015.

Cairo has set a target of implementing 12.5GW of coal-fired power generation by 2022 as part of energy diversification efforts, and MoUs for 19GW of coal-fired facilities were signed at the EEDC.

The signing of the MoUs followed the issuance of an environmental specification for the construction and operation of coal-fired plants in early 2015. Egypt’s cabinet first approved the use of coal for power generation in April 2014.