MOIC, German KfW Development Bank Sign Soft Development Financing Agreement Worth €53 Million

The Ministry of International Cooperation and the German KfW Development Bank signed soft development financing agreements and grants worth €76 million, to implement a number of projects in the electricity sector, and to promote the green transformation and transition to renewable energy, within the framework of joint bilateral cooperation between the Arab Republic of Egypt and the Federal Republic of Germany.

The first agreement, worth €53 million, is soft development financing and a grant for the smart grid development project for the Ministry of Electricity and Renewable Energy. The project aims to add 450 megawatts to the capacity of the “Abis transformer station”, reduce loads in the new city of Abu Qir, and to support the stability of the network after the exit of low-power stations. This includes efficiency of service and improving the access of renewable energy produced in the Red Sea region to the northern coastal region.

The Minister said that this agreement comes within the framework of implementing the joint political declaration issued in November 2022, with the Federal Republic of Germany and the United States of America to support the energy pillar within the NWFE program. This is a continuation of the efforts to mobilize facilitated development financing mechanisms for the NWFE Country Platform to advance the green and renewable energy transition in Egypt. This is in order to support accelerating the pace of the transition to renewable energy to reach 42% of the total energy generated by 2030, instead of 2035.

In line with the political declaration, the German government pledged to provide financing worth €258 million in the form of concessional financing, debt swaps, and grants to support the energy pillar within the NWFE program. Following the government’s approval of updating the Nationally Determined Contributions (NDCs) and moving forward the date for increasing the percentage of renewable energy to 42% by 2030 instead of 2035, it was decided in June, a debt swap tranche worth €54 million was signed for the electricity transmission project, with the aim of supporting increased use of renewable energy sources, reducing greenhouse gas emissions, and increasing the transition towards green. The agreement signed today is the second within the tranche agreed upon with the German side.

Moreover, a soft development financing agreement worth €23 million was signed to implement two projects. The first is the Energy Efficiency Project “2” worth €8 million euros for the Ministry of Electricity and Renewable Energy, which aims to facilitate investment in energy efficiency projects, including small-scale photovoltaic energy. This is in addition to funding worth €15 million for the rehabilitation project of hydroelectric stations “2”, with the aim of developing the lighting system equipment, voltage regulators and speed regulators at the High Dam power station, speed regulators at the Aswan station and the control system.

It is worth noting that Egyptian-German relations have witnessed significant development over the past years at all levels. The development cooperation portfolio with Germany records about €1.6 billion in the form of development financing, grants and technical support, from which many sectors have benefited, including energy efficiency, renewable energy, and sanitation, irrigation, water, solid waste management, migration, labor market, private sector innovation, technical education, vocational training, urban development, administrative reform, women, youth and social development. In addition, the implementation of the debt swap program with Germany began in 2011 at a value of €240 million, and so far the first phase has been implemented at a value of €70 million, the second phase is being implemented at a value of €90 million, and the third phase is being implemented at a value of €80 million.

The debt swap program with Germany is managed through a governance structure to ensure optimal implementation of the agreements and achieve maximum benefit through which the Ministry of International Cooperation coordinates with the German side regarding projects, with the German KfW Development Bank and the beneficiary national entities, and finalizing the technical details and the financing agreement.

The Ministry of International Cooperation launched the 2023 Annual Report under the title “International Partnerships to Achieve Sustainable Development: Platforms for Policy and Partnerships,” which includes the results of international partnerships with multilateral and bilateral development partners, and concessional development financing, from 2020 to 2023.