AfDB and Egypt Sign US$ 450 million Thermal Power Project Agreement

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AfDB and Egypt Sign US$ 450 million Power Project Agreement

Tunis, 15 March 2009 - The African Development Bank (AfDB) Group affirmed its support to a major power project in Egypt on Sunday, 15 March 2009 in Cairo, with the signing of a US$ 450 million loan agreement for the construction of a 1300 MW (2x650 MW) steam turbine power plant near Ain Sokhna seaport on the Gulf of Suez.

The loan agreement was signed by Egypt’s International Cooperation Minister, Fayza Aboulnaga, and the Bank Group’s Regional Director in charge of Egypt, Libya and Tunisia, Jacob Kolster. The ceremony was attended by Prime Minister Ahmed Nazif, the Bank Group’s Vice President for Operations, Zeinab El-Bakri, AfDB Vice President, and Resident Representative of the Egypt Field Office, Sushil Khushiram.

The loan is a long-term foreign currency financing that represents 22 percent of the total cost of the project. The rest of the project’s cost will be covered by the Egyptian Electricity Holding Company (EHHC), the World Bank, the Arab Fund for Social and Economic Development and the Kuwait Fund for Arab Economic Development.

The project involves the construction of a greenfield supercritical steam turbine power plant, located adjacent to the sea port and industrial area of Ain Sokhna on the Gulf of Suez, 112 km east of Cairo, in order to enhance Egypt's socio-economic development by providing energy to increase the power generation capacity in the country, and partially meet the electricity demand on the Unified Power System (UPS).

This is in line with the government's 6th Five-Year Development Plan (2007-2012) in which the expansion of electricity infrastructure is among the top priorities. The power demand in Egypt is growing at a very fast rate (6.38% per year) and in order to meet this demand, the EEHC is determined to implement power generation projects in a timely manner over the next five years. The power generated will be used for industrial and commercial activities country-wide, thus contributing to job creation, increase in productivity and in electricity connection rates as well as in the improvement of the quality of life of the Egyptian people.

 Highlighting the importance of the project, Mr. Kolster, indicated that “The Bank will continue to provide support for the expansion of power sector in Egypt.” He added that "the Bank considers Egypt to be a pioneering country in the field of energy development. Since 1974, the Bank has financed seven power plants, one transmission project and two rural electrification project in the country."

Mr. Kolster is leading a high-level Bank delegation that is engaged in a close dialogue with the Egyptian authorities since the beginning of March to assess the alignment of its operations with the country’s needs, and to enhance the development impact of its investments, especially in the context of the global financial crisis.

To assist its member countries in confronting the global credit crisis, the Bank is currently providing a new package of instruments and facilities. These include an Emergency Liquidity Facility Fund and a Trade Finance Initiative.

“By enhancing its interventions in Egypt, the Bank will contribute to mitigate the unfolding impact of the global economic and financial crisis and sustain the availability of funding for priority projects and programs,” VP Zeinab el Bakri stated, underlining the Bank’s commitment at this crucial juncture.

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