The Ministry of Finance approved the government’s guarantee of payment in case of dispute over the establishment of the Gulf of Suez wind farm with a capacity of 250 MW.
The plant was agreed to be constructed by the so-called Toyota alliance, consisting of Toyota, Orascom, and GD France.
Based on the ministry’s decision, the state will be responsible for providing official financial guarantees to pay the companies’ dues if the Ministry of Electricity failed to pay the price of produced energy. Such guarantees are always provided for projects agreed to be implemented by the private sector.
Sources at the Egyptian Electricity Transmission Company (EETC) said that the company has agreed to issue a financial guarantee for the Gulf of Suez wind farm. They added that the alliance was informed by the Ministry of Finance’s decision regarding the financial guarantee and holding arbitration in case of dispute. The sources revealed that the new farm’s contracts will be signed in January 2017.
Lamia Youssef, head of the feed-in-tariff division at EETC, said that the Ministry of Electricity had agreed with the alliance to buy the produced energy at 4.7 cents per kilowatt.
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 produced energy to the distribution companies.
The Ministry of Electricity had negotiated with GD France, Toyota, and Orascom after its negotiations with Lekela Power-Actis, which presented the lowest prices, were stalled, because the company did not complete the procedures and requirements announced by the ministry.
The ministry seeks to produce 20% of new and renewable energy of the total national electricity grid by 2020, as part of the ministry’s plan to diversify its sources of energy production and sustainable development in the sector.
The Ministry of Electricity announced that it would not contract directly with any company to build renewable power plants. Instead, it will propose competitive tenders and the company which offers the lowest prices will win the tender.