Orascom will finance a 3,000 megawatts coal-fired power plant in Egypt mainly through debt, the company said yesterday.
The Egyptian construction company will partner with Abu Dhabi-owned International Petroleum Investment Company (Ipic) on the US$3 billion project to raise $1.95bn in new debt.
This will take the form of a project finance loan issued to investors in Egypt, the Gulf and international markets. Orascom will also apply for loans from export credit agencies.
About $1.05bn in sponsor equity will come directly from Orascom and Ipic, Orascom said.
The plant will be built near El Hamrawein Port, on the coast of the Red Sea.
A mix of Egyptian and Gulf banks, including National Bank of Abu Dhabi and QNB Alahli, will underwrite Orascom’s debt issuance.
Egypt is in dire need of foreign investment as the government of Abdel Fattah El Sisi aims to get the Egyptian economy back on track.
A decade of fiscal deficits has limited the power of the state to improve living standards for the country’s 90 million citizens.
Last week’s investment conference at Sharm El Sheikh aimed to drum up foreign support for Mr El Sisi’s economic reform agenda.
Energy investments worth more than $30bn were announced at the conference, giving fresh hope to a sector that has struggled after the Egyptian government had difficulty meeting payments on its energy bills. Germany’s Siemens agreed €10 billion (Dh38.76bn) in deals and memorandums of understanding with Egypt to help expand its electricity network, including building a 4.4- gigawatt combined cycle power plant.
At the conference, Gulf states pledged a further $12bn as part of the region’s bid to strengthen the Egyptian economy under Mr El Sisi.
“This landmark project is one of many examples of future development initiatives between the UAE and Egypt,” said Sheikh Mansour bin Zayed, Ipic’s chairman.
Follow The National’s Business section on Twitter