Tuesday, January 18

Parched Egypt seeks partners for $ 2.5 billion desalination plan


Egypt is seeking partners to invest in a $ 2.5 billion initiative to build more than a dozen desalination plants with renewable energy by 2025, as the country tries to address looming water shortages.

Officials plan 17 new plants that will run on solar power and other green sources, each built, owned and operated by Egypt’s sovereign wealth fund in partnership with a group of local and foreign investors, according to the fund’s chief executive, Ayman Soliman.

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The most populous nation in the Arab world relies on the Nile River for nearly all of its fresh water and faces a huge supply shortfall that officials fear will worsen with a gigantic hydroelectric dam that Ethiopia is filling up on the main tributary.

“Egypt wants to build a sustainable technological base to control its destiny when it comes to water safety,” Soliman said in an interview. The wealth fund aims to take a minority stake in all the plants along with the winning bidders, he said.

Population growth and climate change have also made Egypt vulnerable to water scarcity. The world needs to spend $ 6.7 trillion on water infrastructure by 2030, according to the United Nations, which says that around 1.2 billion people already live in areas of physical scarcity.

Egypt, which needs about 114 billion cubic meters of water each year to serve its more than 100 million people, receives only half that amount from natural sources, according to the Irrigation Ministry. Address the deficit through steps that include recycling agricultural and groundwater wastewater and importing additional food rather than irrigating more crops.

The 17 plants, which are set to produce a combined 2.8 million cubic meters of desalinated water per day, are part of a larger plan to add 6.4 million cubic meters of daily capacity by 2050, Soliman said. .

The housing, planning, finance and electricity ministries are all involved, and the government will be the buyer of the desalinated water at “competitive rates.”

Egypt operated 76 desalination plants capable of producing almost 832,000 cubic meters a day in May, according to state news website Ahram Online.

Egypt’s first sovereign wealth fund, which was established in 2018, is modeled after initiatives in Malaysia and India. The fund aims to partner with the private sector and generate additional wealth from underutilized state assets that it plans to manage.

Investor outreach

Several investors have expressed interest, Soliman said, without identifying them. The European Bank for Reconstruction and Development and the International Finance Corporation will provide technical support and advise on the tender. That is scheduled to begin in the first quarter of 2022 with a tender to produce around 1 million cubic meters, he said.

The project will benefit from Egypt’s competitive advantage in cheap renewable energy production and will also allow access to green financing, potentially reducing costs, according to the CEO.

About 8.6% of Egypt’s electricity comes from renewable energy, with the goal of increasing that to 20% by 2022 and more than doubling by 2035. Benban, a $ 4 billion solar park near the southern city Aswan, is one of the largest in the world. while the country also operates wind farms along the Red Sea.

Egypt’s cabinet said last month that officials held talks with Norway’s Scatec ASA about possible collaboration on projects using renewable energy for desalination.

“We are going to manage different types of partnerships to cater to a very aggressive schedule,” Soliman said, citing “great appetite.”

© 2021 Bloomberg


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