Siemens signs financial closure agreement for Egyptian power projects

Egyptian government has signed Sunday a financial closure agreement with German industrial giant Siemens, Orascom Construction, and El-Sewedy Electric to fund the construction of three electricity production undertakings in Egypt.

The signing ceremony was attended by Egyptian Prime Minister Sherif Ismail.

Upon the agreement, the banking consortium, which includes Deutsche Bank, HSBC Germany, and German Bank of Reconstruction (KFW), will secure €4.1 billion in finances, equivalent to 85 percent of the total cost of the three Egyptian projects, which amounts to €6 billion.

The three projects are set to be with total capacity of 14,400 megawatts.

The first project is Beni Suef proper, about 115km (71 milles) south of Cairo, to generate 4,800 megawatts. The second project is located in Burullus, near the town of Kafr el Sheikh, some 210km (130 miles) north of Cairo; the third planned plant is set to be in the Egyptian new administrative capital city.

Upon the signed contracts, the loans will be repaid over a period of 15 years with a three-year grace period, Amwal Al Ghad quoted Egyptian electricity minister Mohamed Shaker as saying Saturday.

Gaber Desouky – Chairman of the state-run Egyptian Electricity Holding Company (EEHC); and officials from the German banks have signed the contracts in the presence of representatives of Siemens Group, Orascom Construction, and El-Sewedy Electric.

The projects will be implemented by using the Energy Performance Contracting (EPC) system, the innovative financing technique that uses cost savings from reduced energy consumption to repay the cost of installing energy conservation measures.