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Investments in FiT projects amount to $350m - Daily News Egypt

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Investments in FiT projects amount to $350m

Company aims to produce 130 MW from FiT 

Infinity Solar, a subsidiary of Mansour Group, owned by businessman Mohamed Mansour, has completed establishment of the first solar power plant in Benban, Aswan as part of the Feed-in Tariff (FiT) program, which was launched by the government in 2014. The company links its projects to the national electricity grid and sells production to the Egyptian Electricity Transmission Company (EETC) at 14.3 cents per kW.

Daily News Egypt met with the board of directors of the company to discuss solar energy projects being implemented in Egypt and explore their views of the FiT projects, along with their future plans in renewable energy sector.

IB Vogt contributed 48% in the company’s power plant in the first phase of the FiT project (Photo By Ahmed Hendawy)

How did the company implement the first solar plant?

The company’s financial division manager Mohamed Shehata said that the company completed the implementation of a solar power plant with capacity of 50 MW in Benban, Aswan, but 62 MW solar cells have been installed, due to the presence of cracks in the ground. The station was implemented in cooperation with the German company IB Vogt, which contributed 48% of the project.

Infinity arranged 85% of the funding through PLb bank in Germany and agreed with the Arab African International Bank to finance the local part of the project.

Investment manager at the company Taymor Aboul Kheir said that the return on investments of the solar power plant in the first phase of the FiT projects amounts to 12-14%.

According to the terms and conditions of the first phase of the FiT, EETC will buy electricity produced from solar plants at 14.3 cents per kW for 25 years.

What challenges did the company face during implementation?

HR and administrative director at Infinity for Solar Systems Hesham El Gamal said that the company has been working on a very fast pace over the past few months on two shifts. The company has used generators to power the site in the dark and overcome the challenging hot weather in Benban.

He added that the company will start the experimental operation during the current week and will link the production capacity of the station to the national electricity network within two weeks, in coordination with the EETC and XDEgymac to transfer the power from the project through the transformers substations.

What are the projects that you intend to implement in the second phase of the FiT?

Taymor Aboul Kheir said that the company has projects with a capacity of 130 MW and has completed financial closure in the time set by the Ministry of Electricity.

He added that the company has a project in the first phase working with El Mansour & El Maghraby alliance on a project of 30 MW, which was then postponed to the second phase since the company was unable to access the funding for the project based on the conditions set by the Ministry of Electricity, which includes local arbitration in Egypt in case of conflict, which was refused by the companies.

He explained that the European Bank for Reconstruction and Development (EBRD) told them that the capacity of the project is low and should be increased to finance the project in the second phase of the FiT. Infinity has acquired TAQA Solar project of 50 MW and funding from EBRD then cover some 80 MW.

He noted that Infinity Solar acquired 42% stake in the 50 MW Phoenix Power Company project, which is funded by the International Finance Corporation (IFC).

Mohamed Shehata, financial division manager (Photo by Ahmed Hendawy)

What is the strategy of the company in the coming period?

Taymor Aboul Kheir said that the company aims to expand in solar energy projects in the coming period, where it is awaiting the approval of the financial model of the projects in the second phase to begin constructions – which is similar to the strategy adopted in the first phase. The implementation period should not take longer than six months.

He stressed that Infinity invests in long-term plan, where it intends to participate in all projects put forward by the government during the coming period. The company is always looking for opportunities in the renewable energy sector to pump more investments. The company’s investments amount to $350m.

It has also submitted bids for tenders in Africa to launch solar power stations, and is considering participating in projects in Arab countries, and aims to compete in the tender for the construction of wind power plant in Greece.

What is the legal position to acquire companies?

General Counsel Hani Zahran said that the company aimed to benefit from the regulations and laws according to their desire to contribute to the projects, which include a minimum of 25% share of the alliance leader.

He said that shares owned by people in El Mansour & El Maghraby project have been restructured, based on the requirements of foreign banks financing the project. Shares owned by the personalities of the aggregate entity have been transferred to an entity in the Netherlands. This entity owns a controlling share and retains about 25% of El Mansour & El Maghraby share.

As for TAQA Solar; the alliance leader was changed as per law. The change requires submitting the paperwork again to obtain the approval. This includes the financial solvency to implement the projects. The main leader was swapped by Infinity. This was approved by the concerned bodies.


How did the decision to float the pound impact the projects?

All Infinity officials agreed that the decision taken by the state to float the pound is the best, encouraging foreign companies to invest in Egypt and eliminating the constant concerns and questions about how to find the dollar and how to repatriate instalments and profits to financiers.

Taymor Aboul Kheir said that the German bank funding the company in the first phase of the FiT told them that it is necessary to provide a dollar reserve to guarantee the payment of loan instalments. The liberalization of the exchange rate contributed to encouraging investment and attracting new capital.

The company’s financial division manager Mohamed Shehata said that the impact of the decision to float the pound on solar projects is not very large and limited, despite the increase in the budget allocated to projects. The company has calculated the cost of its equipment in dollars and financing in foreign currency, except for the local part used to pay the customs and companies engaged in civil works.

How will the employment of solar energy projects be determined?

HR and administrative director at Infinity for Solar Systems Hesham El Gamal said that funding bodies required hiring a company to manage project services in Benban, Aswan, including establishing walls, employment, and recruitment.

He explained that the Benban project services management task was granted to Hassan Allam, which will establish a training centre in cooperation with residents of Benban. They met with Aswan Governor and agreed to form a committee to oversee the projects and employ a number of Aswan villages’ residents in the FiT projects that will create some 15,000 jobs.

Company officials said that the wind farm projects in the second phase of the FiT need reconsideration to match the success of the solar plants, where Infinity, like all companies, is suffering from time constraints and low purchase price.


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