While new and renewable energy companies believe that the sector may currently be unattractive for investment, executive chairperson of the New and Renewable Energy Authority (NREA) Mohamed El-Sobki said the sector is indeed attractive for investment in Egypt.
El-Sobki denied that the price of the Egyptian pound exchange rate against the US dollar has affected the sector, as the government bears the difference in prices. The government announced that they will bear the currency conversion risks in order to ensure the stability of the profit margin for investors and keep it unaffected.
The government’s announcement put an emphasis on linking prices with the value of foreign currencies, but the payment will be in Egyptian pounds, said El-Sobki. The statement stated that the government pays the value using the official price of the US dollar at the time of energy import, with the exception of 15% of solar energy, 30% of wind energy, and the fees to be paid by the time of issuing the tariff.
In October 2014, the government issued a statement that indicated the prices of the energy that will be purchased from small- and medium-sized enterprises (SME).
El-Sobki said the investor’s desire for entering the renewable energy field was not affected by the changes to the exchange rate. However, he said that small investors may encounter difficulties if they decide to enter into the field at the current time.
The government will reconsider the prices to suit the currency change and suit taxes and the investment climate variation, said El-Sobki. He added that the issued statement stated that prices should be reconsidered periodically every two years, in order to ensure attractive prices for investors.
El-Sobki denied that there is a specific timing in place for announcing price changes and that the decision will be issued by the cabinet. He pointed out that the cabinet is currently working on a study of the variables to determine whether the prices will change or not, and that the cabinet is aware of the problems facing small investors and is seeking to resolve them.
In terms of the fund, El-Sobki said that financing is one of the problems that hinder those who want to create small- and medium-sized enterprises (SME) in the field of new and renewable energy, however, the Social Fund for Development is considering providing concessional funds for SMEs, which include many fields but most notably the new and renewable energy. The funds would be provided with an interest rate that does not exceed 5% and has a repayment option that will allow the small investors to enter that field.