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Arbitration, Finance Ministry guarantee hinder wind plant establishment with Toyota’s alliance - Daily News Egypt

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Arbitration, Finance Ministry guarantee hinder wind plant establishment with Toyota’s alliance

The concern about ‘arbitration inside Egypt’ is moving from tariff projects to competitive tenders

An alliance of Toyota, Orascom, and GD France demanded to solve the predicament concerning the establishment of the Gulf of Suez wind plant. The trouble revolves around an article in the agreement between the companies and the Ministry of Finance, which stipulates the Ministry of Finance’s guarantee to pay in case of dispute, and holding arbitration in Egypt.

The plant is expected to run at a capacity of 250MW. A senior official in the alliance revealed to Daily News Egypt that the buying price of the kilowatt produced from the plant was agreed upon with the alliance. Additionally, all technical and legal issues were agreed upon, except for the previously mentioned article.

The concern about holding arbitration inside Egypt moved from the feed-in-tariff projects to the competitive tenders, especially given that the Ministry of Electricity is sticking to international arbitration inside Egypt. However, the financing institutions are categorically rejecting to finance any project because of that article.

Experts in the energy field believe that the position of the Ministry of Electricity on the arbitration, the lack of foreign exchange, and the delay in signing the agreement may make foreign companies withdraw from investing in the energy projects because of the high risks.

The official added that the consortium of GD France, Toyota, and Orascom will provide the required funding from international institutions and Japanese banks. The Ministry of Electricity will buy energy produced from the station for 25 years at a price that was agreed upon in accordance with the offer made in the tender. Furthermore, the ministry will sell the energy produced to the distribution companies.

He further explained that the ministry had agreed with the alliance to buy the produced energy at 4.7 cents per kilowatt. The ministry set this amount as the maximum price for negotiations in any other tender.

The Ministry of Electricity and Renewable Energy had begun negotiations with the alliance after faltering the final agreement with Lekela Power-Actis. Lekela Power-Actis had offered the electricity at the lowest price, but did not complete the procedures and requirements announced by the ministry.

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