International banks agree to finance solar energy projects worth $3bn

Mohamed Farag
3 Min Read

Solar energy companies are looking forward to getting approvals of international banks to finance the second phase of feed-in tariff solar energy projects before 28 April, with investments of up to $3bn.

The approval of international banks came after visiting the site of solar energy projects in Benban, Aswan, and following up on the preparatory processes that have been conducted on site, as well as the establishment of substation transformers to transmit energy from power plants to the national grid.

The head of operations at Solar Shams, Faisal Eissa, said that his company is negotiating with the European Bank for Reconstruction and Development (EBRD) to obtain the initial approval for the financing of a solar power plant with a capacity of 50MW in the second phase of the feed-in tariff.

He explained that the model to be signed with the EBRD assures the Egyptian Electricity Transmission Company (EETC) about the seriousness of the company to implement the project, and does not form a commitment to the bank. Following the initial approvals, there will be another round of negotiations to obtain the funding.

Several banking institutions, including the EBRD, the International Finance Corporation (IFC), and the African Development Bank (ADB), expressed their willingness to finance solar energy projects with loans ranging between $400m and up to $800m.

The project manager of Desert Technology, Muhammad El-Dalie, said that the company’s subsidiary IRC is negotiating with the IFC to obtain preliminary approval to finance a 50MW power plant with investments of $100m.

He explained that IRC renewed the project documents and submitted them to banks, because the models that have been provided before were based on the terms and conditions of the first phase of the feed-in tariff.

The terms of the second phase of the feed-in tariff include securing 70% of required financing from foreign sources and 30% from local financiers.

The payment scheme also includes paying 30% of the tariff in dollars according to the pre-flotation exchange rate of EGP 8.88 to the dollar, while the other 70% is paid according to the exchange rate at the time of payment.

A source at EDF Energy said that the company is in negotiations with EBRD and the French Proparco to obtain a funding approval before 28 April.

He added that the company is seeking 70% of the project cost from the two banks, and 30% from local Egyptian banks.

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