AfDB approves the revision of the financing plan of Suez power project to assure timely, smooth completion
The Board of Directors of the African Development Bank (AfDB) has recently agreed to revise the financing plan for the ongoing Suez Thermal Power Plant Project. The move will allow the Government of Egypt to leverage Bank financing to cover part of the local costs of constructing a 650 MW steam cycle power plant at a site located in the vicinity of Suez city, approximately 150 kilometres east of Cairo.
In December 2010, the AfDB extended a loan of US $550 million to the Government of Egypt for on-lending to the Egyptian Electricity Holding Company (EEHC)/East Delta Electricity Production Company (EDEPC) to finance the Suez project. The AfDB loan was originally intended to cover part of the foreign currency cost of the project. The recent restructuring of the project’s financing plan will allow the equivalent of US $73.5 million of the Bank’s loan to be used for covering part of the project’s local costs as well.
Alex Rugamba, Director of the AfDB’s Energy, Environment and Climate Change Department, explained, “We recognize that, in addition to the Suez project, EDEPC is also implementing three other power generation projects as part of the utility’s generation expansion plan. The financial obligations that EDEPC has to meet to finance all of these activities are challenging. Lifting some of that burden will improve the flow of resources to the projects, including the Suez Thermal Power Project. The result will be projects that progress more smoothly, finish on time and meet their intended objectives.”
The specific objective of the Suez Thermal Power Plant Project is to support socio-economic development in Egypt by making available a reliable and affordable power supply for all economic sectors and social services throughout the country. The project entails civil works; goods (supply and installation of equipment); environmental monitoring; project management; and wrap-up insurance. The project is co-financed by the Bank, the Islamic Development Bank and EDEPC. This revision of the project’s financing plan would increase the Bank’s contribution to 69% of total project cost, whereas Government’s (EDEPC) contribution would be 28%.
The Suez Thermal Power Plant Project is part of EEHC’s power generation expansion plan for 2012–2017, which aims at increasing the country’s thermal generation capacity by 13,200 MW. Project implementation is progressing well, with overall implementation at approximately 40%.