Madbouly witnesses signing of $680m financial close agreement for 500MW Gulf of Suez wind farm

Daily News Egypt
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Prime Minister Mostafa Madbouly witnessed this morning the signing ceremony of the financial closure agreement for the project to establish a new wind farm – located near Ras Ghareb in the Gulf of Suez region – with a capacity of 500 megawatts, and investments of $680m, between the “Red Sea Wind Energy alliance” and a group of banks and international financial institutions.

The signing ceremony was attended by Mohamed Shaker, Minister of Electricity and Renewable Energy; Rania Al-Mashat, Minister of International Cooperation; and Oka Hiroshi, Ambassador of Japan to Egypt.

The agreement was signed by representatives of the Red Sea Wind Energy company, namely Khaled El-Degwi, Chairperson of the company; Yuji Hashimoto, Chief Financial Officer of the company; and Hans Bruns, Executive Director of the company. From the financing side, Kenichiro Kitamura, Regional Director of the Japan Bank for International Cooperation (JBIC), and Heike Harmagart, Representative, European Bank for Reconstruction and Development (EBRD), signed the agreement.

On the sidelines of the signing of the agreement signing ceremony, the Minister of Electricity and Renewable Energy said that this project is one of the largest wind energy projects in Egypt and Africa.

Shaker explained that the role of the Red Sea Wind Energy Company is to operate and maintain the wind farm under a 25-year power purchase agreement (PPA), which it signed with the Egyptian Electricity Transmission Company.

He added: “The station is scheduled to be connected to the national grid in two phases, with full commercial operation planned during the third quarter of 2025.”

Shaker pointed out that the Ministry of Electricity and Renewable Energy has taken many measures and launched a number of mechanisms to encourage and stimulate investment in the field of electricity generation from renewable energy through the private sector to maximize the use of renewable energy sources and the exploitation of those natural resources.

He added: “As a result of these measures, the private sector has gained great confidence in the electricity and renewable energy sector. As a large number of investors from the foreign and local private sectors applied; to establish new projects, among these investments is the wind farm project in Ras Ghareb in the Gulf of Suez – the subject of today’s agreement – with a capacity of 500 megawatts.”

Shaker said that renewable energy projects enhance Egypt’s chances of exporting electricity to Europe, Asia and Africa through expanding electrical interconnection projects with neighbouring countries.

Rania Al-Mashat, Minister of International Cooperation, said that the project is the first for the private sector to be funded within the national platform of the “NWFE” programme.

She added that encouraging private sector investments through international cooperation aims to accelerate the pace of progress towards the transition to a green economy, noting that the ministry is working to achieve this through the axis of linkage between water, food and energy projects, and cooperation with all development partners, including the European Bank to restore Reconstruction and Development is the main partner in the energy axis of the NWFE platform.

She added: “We are working to stimulate green solutions for the transition towards renewable energy through innovative financing tools, and the implementation of the wind power plant project in the Gulf of Suez comes through cooperation between the European Bank for Reconstruction, the “Green Climate Fund” and many private sector companies, to confirm the state’s commitment to moving towards Clean energy and reduce harmful emissions.”

Khaled El-Degwi, Chairperson of Red Sea Wind Energy, said that the company will build, own and operate the wind farm.

He explained that the company’s ownership structure is divided into a consortium that includes: ENGIE by 35%, Orascom Construction by 25%, Toyota Tsusho Corporation by 20%, and Eurus Energy Holdings by 20%.

He added that “Orascom Construction” is carrying out the civil and electrical works for the wind farm.

He noted: “The financing of the project is being managed by the Japan Bank for International Cooperation (JBIC) in coordination with Sumitomo Mitsui Banking Corporation, Norinchukin Bank, and Societe Generale SA under the coverage of Nippon Export and Investment Insurance (NEXI) and the European Bank for Reconstruction and Development (EBRD).”

He pointed out that the consortium relies in its development of this project on the previous success it achieved in developing the first independent power producer (IPP) project in Egypt of its type and size, which was completed in October 2019 ahead of schedule.

He added: “This will be the third private wind farm in Egypt, and it is expected to be the largest in Africa, and this farm will help reduce carbon dioxide emissions by about one million tons annually.”

Heikki Harmgart, EBRD Representative, said: “We are very proud to support the important wind farm in the Gulf of Suez, a first for us as a major development partner for the energy hub of the country’s flagship nwfe programme.”

She added: “The European Bank for Reconstruction and Development continues to support the green transition process in Egypt, as it announced today the issuance of development financing amounting to $100m for the Red Sea Wind Energy Company to finance the development, construction and operation of a 500 megawatt wind farm in the Gulf of Suez region.”

The financing consists of up to $50m from the European Bank for Reconstruction and Development and up to $50m from the Green Climate Fund.

She added that this important project would lead to a fundamental transformation in Egypt that reduces its dependence on fossil fuels, supports the creation of green businesses, provides new job opportunities, and reduces pollution and carbon dioxide emissions.

She added: “The European Bank for Reconstruction and Development will proudly remain one of Egypt’s main partners in its green transition journey.”

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