Egypt is considering offers by US Blackstone’s Zarou Ltd and Malaysia’s Edra Power Holdings Sdn Bhd to take over three state-owned power plants, the country’s electricity minister, Mohamed Shaker, announced yesterday.
“We [Egyptian government] received an expression of interest from the two companies [Zarou and Edra] to take over and operate the power plants and we’re looking into it,” Shaker was quoted by Bloomberg as saying.
The facilities – co-built by Germany’s Siemens AG – were inaugurated in July at a total cost of $6.7 billion and a total production capacity of 14.4 gigawatts. They were the latest in a series of large-scale infrastructure projects under the incumbent President Abdel Fattah Al-Sisi’s administration and were financed by a consortium of lenders led by Germany’s KfW-IPEX Bank AG and Deutsche Bank AG, and the United Kingdom’s HSBC Holdings Plc.
“If the deal went ahead, a power-purchasing agreement would be signed with either Edra or Zarou,” Shaker pointed out, adding that the company would then “sell the electricity produced to the Egyptian government while working alongside Siemens.”
The deal would pave the way for the winning company to assume responsibility for any financial dues at a time when Egypt is seeking to ease its debt burden. It would also bring funds for the North African country, which has cut energy subsidies and devalued its currency to revive its economy.
The state-owned Egyptian Electricity Holding Company was said to have secured a loan to finance about 85 per cent of the power facilities’ cost, which was funded by the foreign consortium.
The minister stressed that the government has not made a final decision regarding foreign offers. “The negotiations are still in the early stages,” he said.
Zarou is a London-based energy development private equity company owned by the American Blackstone Group. It was founded in October to finance and operate energy-related projects the Middle East and North Africa (MENA) markets. Edra is a Kuala Lumpur-headquartered energy company which is a subsidiary of China General Nuclear Power Corporation. It already owns three gas-fired thermal power plants in Egypt.
Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolution and to ease a dollar shortage that has crippled import activity and hampered recovery.
In November 2016, Egypt won a $12 billion IMF loan for a three-year bailout programme that aimed at reviving the struggling economy, bringing down public debt and controlling inflation while seeking to protect the poor.
Since Al-Sisi took power, Egypt’s external and internal debts jumped 100 per cent in only four years, according to official data.