Government postpones negotiations on 5 electricity projects signed at Sharm El-Sheikh Economic Conference

$23bn worth of investments are suspended; competitive bids are the only solution

The government has decided to postpone negotiations on a number of memorandums of understanding (MoU) signed in March 2015 at the Sharm El-Sheikh Economic Conference.
Government sources said the state postponed negotiations on five projects for producing electricity from various sources. This move is due to all these capacities not being required at the moment; rather, the national grid must be expanded and strengthened so it can absorb the added capacity.
These projects include three MoUs with Saudi Arabian company Acwa power and Emirati company Masdar. The planned developments included implementation of a power plant with a combined-cycle system at a 2,200MW capacity in western Damietta with $2.5bn in investments, as well as solar plants in several locations with total capacities of 1,500 MW, and a 500 MW wind plant at an estimated cost of $2.4bn
The government postponed negotiations with Acwa Power for a 2,000 MW coal plant, which will be upgraded to 4,000MW, at a cost estimated at $7bn.
The list also included Tharwa Company's MoU to establish an $11bn coal-operated power plant.
According to sources, the Ministry of Electricity has initiated a plan worth EGP 33bn to strengthen and expand the national grid so it can contain the capacity over the next three years. This is a necessary endeavour because if the ministry adds more capacities and the grid is incapable of containing these additions, it would be considered wasted energy.
The main reason that negotiations were frozen is the impossibility of providing financial guarantees for all projects in the current period, the sources said. This is in addition to the decline in load growth rates. Production reserves reached about 3,000 MW per day.
If the negotiations on the MoUs are completed, they will be put up for bid for companies to choose the best technical and financial offers, the sources said.
The MoUs for Siemens have been activated and the contracts have been completed. The Germany company holds the inauguration of three plants to produce electricity through a combined-cycle system with a 14,400MW capacity that provides a third of the fuel used in Beni Suef, the New Administrative Capital, and Borollos. This involves a €6bn investment.
The memorandum of understanding that was signed with China's State Grid Corporation was also activated to establish 1,210-km long, 500KV power lines.
The Ministry of Electricity is still negotiating with a number of companies that have signed MoUs to establish coal-fired plants, including El Sewedy Electric, Marubeni, Shanghai Electric, and Orascom.