EuroAfrica cable closer as Egypt eyes electricity export

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A month after completing all licensing procedures in Cyprus for the EuroAsia Interconnector subsea electricity cable, licenses for the second ‘electricity highway’, the EuroAfrica Interconnector have been issued.

Daily Phileleftheros reported that the granting of the relevant license gives the green light for the HVDC converter station to be built, for which Siemens has been selected as the preferred constructor.

For the EuroAfrica Interconnector, the President of Egypt is being kept regularly informed.

Abdel Fattah al-Sisi was recently briefed by the CEO of the EuroAfrica Interconnector, Nasos Ktorides, as well as the head of the Strategic Council, former Foreign Minister Ioannis Kasoulides.

The EuroAfrica Interconnector links Egypt with Europe, through Cyprus, and creates an energy hub for Africa and the Arab world.

The Cyprus Planning and Housing Bureau has approved since November 2019 the planning permit for the HVDC converter station with a capacity of 2,000 MW, as well as the landing points of the subsea cable.

In June 2019, a 33-year land lease agreement was signed at the Ministry of Energy for the construction of the HVDC converter station in Cyprus, with the option to renew the lease for two more periods of 33 years each.

The necessary environmental, technical and other studies have already been completed and the relevant permits received from the Cyprus authorities.

The construction cost for the first phase of the Egypt-Cyprus interconnection with a Stage 1 transmission capacity of 1,000MW is estimated at €1bln.

The Cyprus-Greece (Crete) interconnection, as well as the Egypt-Cyprus electricity interconnector, will both be commissioned by December 2023.

Sovereign Fund invests in electricity

The announcement in Cyprus coincides with another positive development in Egypt, where the Ministry of Electricity and Renewable Energy partnered with the Ministry of Planning and Economic Development as well as The Sovereign Fund of Egypt (TSFE) to achieve maximum use of projects and assets run by the electricity ministry.

According to the Egyptian daily Al Ahram, the three government entities signed a cooperation protocol to pump investments to develop and operate the power projects through a sub-fund or joint-stock companies in collaboration with TSFE.

“The protocol encourages the private sector to invest and strengthen cooperation in electrical interconnection projects and the export of electricity to Europe,” said Minister of Electricity Mohamed Shaker, after signing the protocol agreement with Hala Al-Saeed minister of planning and chairman of the Egypt Sovereign Fund.

They will study the possibility of transferring some projects and assets to the “assets available for investment” portfolio of Egypt’s sovereign fund, by enabling sub-funds that are wholly owned by the fund or in which it contributes.

The aim is to maximise and develop the field of conventional and renewable energy, as well as electricity interconnector projects with neighbouring countries, such as the EuroAfrica Interconnector, and the sale and export of electricity to strengthening Egypt’s position as a regional energy hub.

Shaker said Egypt has taken steps to reform the legislative structure of the electricity sector and create a climate to encourage investment in electric power projects.

He added that the necessary legislative reforms were undertaken to encourage and attract the private sector to invest in electricity projects in Egypt, stressing that the Ministry of Electricity and Renewable Energy is working hard to create an attractive climate for global investment by liberalising the electricity market and enhancing competition, both in production and renewables, as well as distribution.

Hala Al-Saeed said the protocol is a new step in the tangible investment activity initiated by the fund, and it is consistent with the fund’s philosophy that depends on the state’s plan to achieve comprehensive and sustainable development, the vision of Egypt 2030.

The capital of the Egyptian sovereign fund is EGP 200 bln (€10.5 bln), while its issued capital is EGP 5 bln, of which 1bln shall be paid from the state treasury.

The remaining EGP 4 bln shall be injected within three years.

It is the first Egyptian fund aimed at managing state assets.

The fund is looking to acquire a stake in the three Siemens / Orascom Construction / Elsewedy power plants in Burullus, Beni Suef, and the Administrative Capital.

As many as six investors have expressed interest in the transaction, including investment funds and individuals.

The acquired stake will be transferred to the energy sub-fund, and then the rest of the equity in the plants shall be offered to investors under a 25-year power purchase agreement.

A committee has been formed between the Fund and the Egyptian Electricity Holding Company to choose a global financial adviser to the government in the deal, expecting the completion of the deal on the first power plant in less than a year.