AfDB Sanctions $27 Mn Loan to Setup 200 MW Solar Power Plant in Egypt

The African Development Bank’s (AfDB’s) board of directors has approved USD 27.2 million in loan financing for the design, construction and operation of a 200 MW photovoltaic (PV) solar power plant at Kom Ombo, in Upper Egypt on the river Nile.

However, the total cost of the project, located 800 km south of Cairo, is estimated at USD 156.4 million.

The Saudi Arabian developer ACWA Power-owned project is expected to lower electricity costs for businesses and residences, as well as reducing greenhouse gas emissions and creating construction and other jobs.

Besides AfDB’s financing, structured as a senior loan, the European Bank for Reconstruction and Development (EBRD), the Green Climate Fund (GCF), Arab Bank and the OPEC Fund for International Development will contribute funding.

Commenting on the development, Kevin Kariuki, the Bank’s Vice President for, Power, Energy, Climate and Green Growth, said “we are delighted to support this project that will deliver one of the lowest generation tariffs on the continent.”

He added that “the project supports Egypt’s energy transition and contributes towards the country’s achievement of its targeted 20 per cent share of renewables by 2022.”

Egypt’s economy has continued to grow during the COVID-19 pandemic, and its electricity demands are increasing at an average annual rate of 7 per cent. By increasing Egypt’s installed power generation capacity from renewable sources, the plant is forecast to reduce greenhouse gas emissions more than 7 million tCO2e equivalent over a 25-year period. During the construction phase, 800 jobs likely to be created.

Egypt’s electricity grid is linked to those of neighbors Libya and Sudan, and the plant has the potential to greatly contribute to energy trading and electricity access in the region.

The Bank’s Deputy Director General for North Africa, Malinne Blomberg said that “the newly approved transaction is a continuation of the Bank’s long-standing partnership with the Government of Egypt and its strong support for the country’s reform agenda.” In addition to advancing the country’s green development, “the Kom Ombo project is also contributing to the sustainability of a sector that is essential for Egypt’s competitiveness and industrial development. More immediately, the recovery from COVID-19 will benefit from an efficient and sustainable energy sector,” she added.