Bloomberg: Egypt Weighing Offers to Sell Power Plants

Egypt is considering offers from a Blackstone Group unit and Edra Power Holdings Sdn Bhd of Malaysia to take over three power plants co-built by Siemens AG, Bloomberg reported.

In a phone interview, Egypt’s Electricity Minister  Mohamed Shaker said that both companies had previously expressed their interest in the state-owned facilities, which have a total capacity of 14.4 gigawatts.

According to Bloomberg, the move is expected to cut the North African nation’s debts while bringing in much-needed foreign investment. The plants cost 6 billion euros ($6.7 billion) to build and were mainly financed by a consortium of lenders led by Deutsche Bank AG, HSBC Holdings Plc and KfW-IPEX Bank AG. The government scured a loan to finance about 85% of the construction costs.

The plants were inaugurated in July among the series of large-scale infrastructure projects under President Abdel Fattah El Sisi.

Edra already owns three gas-fired thermal power plants in Egypt and is a subsidiary of China General Nuclear Power Corp.

Once approved, the foreign company will take over and operate the power plants. "If a deal is inked, a power-purchasing agreement would be signed with either Edra or Zarou and the company would sell the electricity produced to the government while working alongside Siemens," Shaker said.

On its part, Siemens Egypt, which is operating the three combined-cycle plants under an eight-year contract, said:  "the power purchase agreements between utilities and private power companies or investors are common worldwide". Its Chief Executive Officer Emad Ghaly explained that his firm is committed to operating and maintaining them until 2024.

Two of the plants are located in the new administrative capital near Cairo and the coastal city of Burullus --built by Siemens and Orascom Construction, while the third in Beni Suef on the Nile river was constructed by Siemens and Elsewedy Electric.