Changes made to arbitration but not currency clauses
Around 20 developers are preparing to sign power purchase agreements (PPAs) for solar photovoltaic (PV) 20MW to 50MW feed-in tariff projects in March.
The developers allocated one of 41 plots at Benban in Southern Egypt are studying final PPAs.
Another 10 solar PV projects are at an earlier stage but could still go ahead as investors and international developers buy in.
State Council approval for the PPAs is still needed, so they may still be subject to change. Other project documents are yet to be released.
The lenders on the project, mainly development banks, are now the most important factor. If they are comfortable with this version, the projects will move ahead fast to meet the October deadline for financial close.
No convertability guarantees will be offered. Egypt is currently experiencing a foreign currency shortage, and developers and lenders are worried about their ability to expatriate profits. The arbitration framework, which was a stumbling block, has improved slightly.
We can now go back to our lenders and they can increase their resources and look at this seriously, says a solar developer. Some lenders want a little more comfort, so they may push for more on arbitration.
Financiers and developers were reluctant to carry out the project with only local arbitration, but the issue is not completely resolved.
There is now a mechanism to have arbitration outside Egypt but under Egyptian arbitration rules, says Clint Steyn, a partner at Houstons Bracewell & Giuliani. But the decision has to be enforced in Egypt.
Draft costsharing agreements for 20MW to 50MW wind projects are being assessed by developers, and will have to go through a similar revisions process.
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