Shares in Orascom Construction rose around three percent on their NASDAQ Dubai market debut on Monday and the company said it was in talks to finance the first phase of a $5 billion coal-fired power plant in Egypt.
Orascom shares climbed 2.9 percent to close at $14.69. The company, majority owned by Egypt’s billionaire Sawiris family, will join Cairo’s bourse on Tuesday or Wednesday, having de-merged from Amsterdam-listed parent firm OCI.
Last November, Orascom Construction had announced a joint venture with Abu Dhabi’s state-owned International Petroleum Investment Co (IPIC) to build the power plant with a total capacity of 3,000-4,000 megawatts on Egypt’s Red Sea coast.
Egypt is facing major energy shortages and has been in talks with several big investors about building coal burning plants to bolster its generation capacity.
The project is split into two phases. The first phase will provide 1,800-2,000 megawatts and will cost about $3 billion, while the total budget is $5 billion, Orascom Construction chief executive Osama Bishai told reporters in Dubai.
The firm is negotiating with banks to arrange the debt part of the first phase.
“We are targeting to achieve financial close if not the end of this year, the first quarter of next year,” Bishai said.
“These transactions take at least 12-15 months. With this type of transaction you’re looking at somewhere like 80 (percent) debt and 20 (percent) equity.”
The project is provisionally a 50-50 partnership with IPIC.
“We’re talking to other strategic and technical investors that may come or may not,” Bishai said. “Once we conclude that, the final structure will be announced.”
He said the first phase would likely take 30-38 months to build, although construction could start prior to financing being finalised, while the second phase could start before the first was completed if the government approved it.
As part of its market debut, Orascom has issued 12.98 million new shares in Egypt, representing 11 percent of its share capital, in an offer that was 5.1 times subscribed.
“Dubai provides our institutional and UK and U.S. shareholders a base that is dollar denominated,” Bishai said.
Orascom’s customer order backlog was $5.6 billion as of Sept. 30, of which about 43 percent was from the United States, with the reminder mostly split between Egypt and Saudi Arabia.
The company has since accumulated nearly $1 billion of additional orders, Bishai said.