Egypt, EBRD sign development financing agreement, 3 MoUs in support of green transition, Egypt’s 2035 Startegy

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Thu, 22 Apr 2021 - 03:26 GMT

CAIRO - 22 April 2021: The Ministry of International Cooperation witnessed the signing of a development financing agreement and 3 memoranda of understanding (MoUs) between the European Bank for Reconstruction and Development (EBRD), the Government of Egypt, and the private sector, to promote the transformation towards a green economy, paving the way for sustainable cities. This is also in support of the private sector’s efforts to expand its contributions to solar energy. 
 
This comes in light of the President of EBRD’s visit to Cairo; her first visit to the region since her election in October 2020. 
 
3 Agreements Within the “Green Cities” 
 
The Minister of International Cooperation and Governor of Egypt at the European Bank for Reconstruction and Development (EBRD), Rania A. Al-Mashat witnessed the signing of a development agreement between the Ministry of Housing, Utilities & Urban Communities, the Ministry of Local Development, and the EBRD to include the 6th of October City as part of the EBRD’s “Green Cities” project.
 
This took place in the presence of  Sayed Ismail, the Deputy Minister of Housing, Utilities and Urban Development; Major General Mahmoud Sharawi, the Minister of Local Development; Odile Renaud-Basso, President of the EBRD; Major General Khaled Abdel Aal, Governor of Cairo; and Jackleen Aze, Deputy Governor of Alexandria.
 
The EBRD’s “Green Cities” sustainability programme aims to help cities curb environmental challenges, improve the quality of life, and combat the effects of climate change, through an action plan that will be implemented in cooperation with the bank. As a way to shift towards green cities, the EBRD will provide green financing for projects that shall be implemented across various sectors. The Green Cities project aims to incorporate 100 cities around the world by 2024.
 
Al-Mashat stated that Egypt is moving forward with a transformation towards a green economy in order to become a leading regional model; this is in response to the urgency surrounding the preservation of the environment and the achievement of a sustainable recovery. The Ministry of International Cooperation seeks to strengthen international partnerships with multilateral and bilateral development partners, with the aim to provide green financing that supports the state's sustainable development agenda. 
 
The Minister of International Cooperation also explained that Egypt is seeking to develop its infrastructure through a large number of projects in the fields of transportation, new and renewable energy, and smart cities, among many others; in order to reduce harmful gas emissions and pave the way for a sustainable future. 
 
The Ministry’s partnership with EBRD in the “Green Cities” programme will advance the country’s green economy framework and will accelerate the pace towards achieving the UN 2030 Sustainable Development Goals (SDGs).
 
Major General Mahmoud Sharawi, the Minister of Local Development affirmed that the cooperation between Egypt and EBRD encompases a sustainable- led development portfolio that the Government of Egypt values. Sharawi added that the EBRD is a major partner for the Ministry with regards to the Kitchener Drain project that is worth €79 million, and that is  being implemented across 3 governorates: Gharbia, Kafr El Sheikh, and Dakahlia.
 
Sharawi added that the “Green Cities” programme began through meetings in Stockholm in 2018, and during a visit to London to participate in the “Green Cities” Conference. At the time, Sharawi met with officials from EBRD and expressed Egypt’s aspirations in benefiting from the bank’s initiative to lay down action plans and strategic studies pushing towards green transition. 
 
The Minister elaborated that both Cairo and Alexandria have projects in transportation concerned with the renewal and development of the Second Metro Line in Cairo and in the development of Alexandria’s electric metro. He emphasized that cooperation between state ministries and the EBRD will help in achieving the national economic agenda. 
 
The President of the EBRD Odile Renaud-Basso said that the bank looks forward to working with Egypt in implementing the “Green Cities” programme to support the development of sustainable infrastructure that takes into account environmental standards, and sets the path to a better, and more resilient future. 
 
“The contributions made by our partners including the TaiwanBusiness – EBRD Technical Cooperation Fund, and the Government of Austria through the CREATE Fund managed by the EBRD, are essential in providing the necessary support to implement the Green Cities Action Plan in Egypt,” added Renaud-Basso. 
 
Sayed Ismail, the Deputy Minister of Housing, Utilities and Urban Development said that the “Green Cities” programme aims to advance the technical cooperation in the field of sustainability, assess environmental risks and overcome challenges through a comprehensive methodology that can achieve the desired results and identify environmental problems. 
 
He added that the “Green Cities” programme is integrated with other projects between the Ministry and the EBRD to enhance the country's strategy for the transition towards a green economy, and to launch “fourth-generation” cities in a way that promotes sustainable growth and creates job opportunities.
 
The EBRD’s “Green Cities” programme aims to provide the necessary financing to transform cities into green, sustainable cities through investments that amount to €2.5 billion. Considering that cities produce 75% of the greenhouse gas emissions, this reflects the importance of the program in combating climate change.
 
Through the support provided by the EBRD and international entities participating in the initiative, each city within the “Green Cities” Programme will develop a clear action plan defined in accordance with its priorities for facing the most pressing environmental challenges.
An Agreement with the EBRD to Launch the Largest Private Sector Solar Power Plant in Egypt
 
The Minister of International Cooperation, Rania A. Al-Mashat, witnessed the signing of a development agreement between  Odile Renaud-Basso, President of the EBRD, and Rajit Nanda, the Chief Investment Officer (CIO) at ACWA Power International, a leading private sector company in clean energy established in 2004.  The signing of the agreement was attended by Dr. Ahmed Mahina, First Undersecretary of State for Research, Planning and Follow-up Authorities at the Ministry of Electricity and Renewable Energy.
 
The agreement, worth $114 million, includes the EBRD, the OPEC Fund for International Development, the African Development Bank (AfDB), the Green Climate Fund (GCF) and Arab Bank. The signing aims to inaugurate the development of the largest solar energy plant for the private sector in Egypt. 
 
The development of the new Kom Ombo plant will add 200 MW of energy capacity, and is located 20 km away from the Benban solar power plant, Egypt’s flagship solar park. The new project  will increase Egypt’s renewable energy mix and promote private-public cooperation in heavy industries. 
 
The agreement comprises $36 million from the EBRD,  $18 million from the OPEC Fund, $17.8 million from the AfDB, $23.8 million from the GCF and $18 million from Arab Bank. This is in addition to equity bridge loans of up to $14 million from EBRD and $33.5 million from Arab Petroleum Investments Corporation (APICORP).
 
Al-Mashat explained that the Government of Egypt is adamant on including the private sector in the transition to a green economy as a way to recover and rebuild. The Ministry of International Cooperation is working to mobilize efforts through international partnerships to provide more green financing tools for the private sector to participate in development efforts. This would be a continuation to what the Benban Solar Park has begun: the public-private partnerships in heavy industries pushing towards sustainable development in order to achieve Egypt’s 2030 Vision.  
 
Al-Mashat added that the Ministry of International Cooperation is working to coordinate with relevant authorities and to consolidate international partnerships aimed at strengthening Egypt’s position as a leading regional model in the transition towards a green economy. The country's efforts in this context are in line with the EBRD’s 2021/2025 strategy; of which the first pillar focuses on supporting the transition to a green economy and promoting environmental sustainability.
 
“We are happy to team up again with ACWA Power in Egypt, after our successful partnership in Benban, to promote renewable energy in Egypt. Increasing the production of clean energy is an important step to reducing carbon emissions and addressing climate change. This is in line with the EBRD’s strategy to become a majority green bank by 2025. This project also marks the EBRD’s first co-financing project with the AfDB and the OPEC Fund in Egypt and we look forward to future joint investment opportunities for our institutions across Africa,” said President of EBRD Odile Renaud-Basso.
 
Ahmed Mahina, First Undersecretary of State for Research, Planning and Follow-up. Authorities at the Ministry of Electricity and Renewable Energy, expressed his gratitude at the signing of the agreement between ACWA Power, the EBRD, and other international partnerships. He explained that such projects advance Egypt’s regional position in promoting the transition towards a green economy and clean energy. He also added that the private sector plays a pivotal role in the development plans and in the state’s plans to increase the percentage of clean energy being used.
 
Paddy Padmanathan, President and Chief Executive Officer of ACWA Power, said that,  “ACWA Power is proud to lead the implementation of the Kom Ombo PV project. The financing package signed today brings us closer to not only the people and the Government of Egypt, but also to our finance partners, the EBRD, AfDB, the OPEC Fund, the GCF and Arab Bank. This reflects our shared objective of supporting the energy transition to address the threat of climate change. The Kom Ombo PV is the fourth project in ACWA Power’s Egyptian portfolio, and the conclusion of this financing demonstrates the confidence in the Egyptian government’s ambitious renewable energy plans, being implemented through private-sector participation.”
 
These agreements coincide with Earth Day, in which the world celebrates  protecting the environment and preserving the planet. The agreements also come in light of the Government of Egypt’s transition towards a green economy as part of a long-term goal to mitigate climate change and global warming. Happening at the level of many state sectors, the project entails the transition from carbon-based energy sources to green and clean energy, the enhancement of waste management, the push towards a circular economy, and the strengthening of partnerships that are aimed at green energy transformation alongside the support of the private sector. 
 
The Government of Egypt aims to promote green recovery by allocating 14% of its total public investments in projects that take into account environmental standards. To ensure sustainability, Egypt is working to gradually integrate environmental sustainability standards into the country’s planning system. The criteria will be applied to 30% of the projects in the fiscal year 2020/2021 with the aim of reaching 100% of the projects in 3 years. 
 
In order to increase support for financing environmentally friendly projects, Egypt sold $750 million in green bonds in what was the region’s first sovereign offering of climate-friendly securities in 2020. These bonds are directed to financing a group of environmentally friendly projects worth $1.9 billion. The bonds were offered at an interest rate of 5.25% and the issuance was almost 5 times oversubscribed, pointing to growing appetites for climate-friendly securities worldwide.
 
The ongoing cooperation portfolio between Egypt and the EBRD amounts to €4.4 billion, financing 106 projects; 58% of the ongoing projects are dedicated to the private sector and 42% goes to the public sector. The bank’s total investments since 2012 amounts to over €7.2 billion financing 127 projects.
 
Egypt ranked first as the EBRD’s largest country of operations in the Southern and Eastern Mediterranean (SEMED) region in 2020 as the bank invested over €1 billion to finance 21 projects, representing 47% of the total investments in the region in 2018 and 2019.

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