3 electricity projects subject to minister’s decision on ‘arbitration’

Mohamed Farag
3 Min Read
Fuel supply to these plants will remain suspended until the end of Ramadan, to be able to provide power stations with the required amounts of gas, in order to prevent power outages. (AFP Photo)

Electricity projects carried out by the private sector are pending decisions by the economic ministerial group about the item of arbitration in case of conflict and the language of the contracts, in order to finalise procedures with the Ministry of Electricity.

Negotiations for three projects costing $7bn were finalised, according to a source in the Ministry of Electricity. The completed projects are: Dairut’s 2,250 MW capacity combined-cycle power plant to be carried out by ACWA Power, Al-Nowais’s 2,640 MW capacity coal power plant in the Oyoun Mousa area, and Gulf of Suez’s 250 MW capacity wind plant to be carried out by the Toyota alliance.

The Ministry of Electricity is seeking to finalise the contracts for the three projects, especially as negotiations have been going on for more than two years in order to reach the best agreement that satisfies all parties.

All the technical, financial, and legal aspects of establishing the Suez Gulf’s wind plant at a cost of $300m have been agreed upon with the alliance of Toyota, Orascom, and GD France. However, the arbitration issue led the signing to be delayed, the source said.

Head of the private sector projects department at the Egyptian Electricity Holding Company (EEHC) Fouad Mansour said that negotiations with ACWA Power to establish the Dairut power plant are complete, except for the agreement on arbitration. The contracts were sent to the Ministry of Finance pending the necessary decision.

There are also ongoing discussions with the Ministry of Petroleum to consider the latter’s comments on securing fuel needed for the plant. The final agreement includes three contracts for the plant: produced energy purchase, securing fuel, and the financial guarantee agreement.

The Dairut power plant is estimated to cost $2.2bn. It will be established on 70 feddans and consist of three units, each generating 750 MW through combined-cycle technology.

Mansour said that the ministry is just steps away from concluding an agreement with Emirati firm Al-Nowais Investment to establish a coal-fuelled power plant in Oyoun Mousa. Negotiations are pending the cabinet’s decision on arbitration to finalise the deal.

The Ministry of Electricity signed a memorandum of understanding with Al-Nowais at the end of September 2014 to establish a coal-power station to produce 2,640 MW in Oyoun Mousa.

A conditioned contract has been signed between both parties, including the Egyptian side’s acceptance of the energy-purchase tariff. The station, according to Al-Nowais’ offer, will operate through the build, operate, own (BOO) system.

The first phase will include two generating units producing 660 MW, each within 40 months of signing the contract.

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