The US-based Overseas Private Investment Corporation (Opic) will be the largest lender for Egypt’s Dairut independent power project (IPP), the World Future Energy Summit’s Egypt Energy Forum in Abu Dhabi was told.

“We have allocated $1bn to the sectors the Egyptian government considers a priority,” said Nancy Rivera, managing director of structured finance at Opic. “Obviously that is power as there can be no economic growth without electricity.”

The UK-headquartered European Bank for Reconstruction & Development will also lend on the scheme.

US firm GE will take an equity stake.

Saudi Arabia’s Acwa Power, with the local Hassan Alam Construction, was the sole bidder for the 2,250MW project. It is in negotiations with the Egyptian authorities to develop the scheme.

MEED reported in November that Acwa was seeking more than $1bn of project finance to carry out the project.

This is the first conventional IPP in Egypt since 2000.

Commercial international banks are reluctant to extend long-tenor debt in Egypt under the current circumstances. However, with the tariff for Dairut IPP paid in dollars, Acwa and its financers will avoid convertability issues.

There is a hard currency shortage, meaning companies have to wait one to two months to convert Egyptian pounds to dollars.

Development banks called for international arbitration on Egyptian projects, to bring commercial banks back to the market. They have reached the full extent of their capacity to lend in Egypt.

“International arbitration is critical,” said Rivera. “Commercial banks can’t get political risk coverage without it. It is important for the next level to access the deeper pockets of commercial banks. DFIs [development financial institutions] are very small compared with them.”

MEED has also reported that China’s state-owned investment fund Silk Road Fund has signed a memorandum of understanding to finance the project.