As the potential economic fallout of the novel coronavirus (Covid-19) pandemic began to become clear, Egypt’s President Abdel Fattah Al-Sisi announced a comprehensive EGP 100bn ($6.4bn) package of measures, which included a EGP 22bn ($1.4bn) stimulus to financially support the Egyptian Exchange, as well as a reduction by half of taxes on the dividends of listed companies.
The government has committed to support exporters by allocating EGP 1bn ($63.5m) for export subsidies during March and April, and will furthermore postpone tax payments for three months on facilities and properties occupied by tourism companies. It also announced that the gas price for the industrial sector would be reduced from $5.50 to $4.50 per 1m BTU.
As part of the same package of measures, the price of electricity would be reduced for heavy industry consumption, from EGP 1.10 ($0.07) to EGP 0.10 ($0.006) per KWh. For other industries, the price is to be kept stable for 3-5 years.
Against the current backdrop of challenging economic circumstances, it was announced that the World Bank’s Multilateral Investment Guarantee Agency (MIGA) would provide funding for six new solar power plants at Benban Solar Park in the Aswan governorate, Upper Egypt.
A total investment of $52.35m will be directed in the form of guarantees to Norwegian-headquartered photovoltaic firm Scatec Solar, and will be used for the operation and maintenance of the six new plants.
The amount is guaranteed against the risk of currency inconvertibility and transfer restriction for up to 15 years. It is part of Egypt’s solar feed-in-tariff programme, which provides long-term contracts to private energy companies with a view to generating investment in renewable sources.
“In the face of uncertainty arising from the Covid-19 pandemic, MIGA remains committed to helping drive foreign direct investment (FDI) by supporting investors who are helping Egypt achieve its long-term goals of diversifying its energy mix,” Hiroshi Matano, executive vice-president of MIGA, said in a statement.
While the pandemic has caused a number of delays for the renewable segment, notably the postponement of the construction of four solar plants by domestic firm Inter Solar Egypt, the future thus bodes well for the expansion of the industry.
“In the current uncertain economic environment, solar energy has become popular, as it can be produced up to 80% more cheaply than other sources,” Yaseen Abdel-Ghaffar, founder and managing director of SolarizEgypt, said. “Although it was initially difficult to secure FDI for projects, banks are becoming increasingly receptive to renewables, and a growth in financing is expected after regular economic conditions are re-established.”