Japanese, European Banks Extend US$501mn for Egypt Wind Project

An agreement for financing of US$501 million from a group of lenders has been reached with the developers of an Egyptian wind farm.

The financing was negotiated for a 500 megawatt facility on the banks of the Gulf of Suez by Red Sea Wind Energy, a joint venture between the Egyptian company Orascom Construction, France's Engie, and Japan's Toyota Tsusho and its subsidiary Eurus Energy.

According to the Japan Bank for International Cooperation (JBIC), it will contribute US$240 million to the facility. The European Bank for Reconstruction and Development (EBRD), SMBC, Norinchukin Bank, and Société Générale will each contribute the remaining funds.

Nippon Export and Investment Insurance (Nexi), Japan's official export credit insurer, is paying for the commercial banks' share of the loan.

For the anticipated 25-year life of the facility, Red Sea Wind Energy has agreed to sell electricity produced by the project to the Egyptian Electricity Transmission Company. The project will cost approximately US$600 million, and construction is expected to start this month. Commercial operations are expected to start in August 2025.

The second wind farm in Egypt to be recently co-financed by JBIC and insured by Nexi is situated close to the town of Ras Ghareb. In late November of last year, the two organisations joined the International Financial Corporation (IFC) and a number of other commercial lenders in lending Amunet Wind Power Company US$518 million for a second wind farm close to Ras Ghareb.

Toyota Tsusho states in a statement that "new power plants are being built and existing sites are being expanded to fulfil the strong demand for electricity." The need for electricity in Egypt is anticipated to increase continuously.

By the end of this decade, the Egyptian government wants to get 35% of its energy from renewable sources.

JBIC says the project is in line with the Japanese government's overseas project finance policy of "providing support for quality energy and electricity infrastructure that harnesses sophisticated technologies to reduce the burden on the environment in a way that is compatible with the energy policy of the host countries".

It is also the first project on which it has cooperated with the EBRD since the two institutions signed a memorandum of understanding in October last year.