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Egypt, Saudi Arabia to finalise electricity interconnection project procedures in March - Daily News Egypt

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Egypt, Saudi Arabia to finalise electricity interconnection project procedures in March

Cost up to $2.5bn after changing routes for Neom, Riyadh will bear the additional costs: source

Egypt and Saudi Arabia agreed to complete the procedures to implement the electricity interconnection project between the two countries by March 2019 to exchange 3,000 MW.

High-level government sources told Daily News Egypt that all procedures for the project involving Egypt, including transformer substations and interconnection lines, have been completed. Financing is available through Arab funds and banks. The first tranche of the loan will be disbursed by the Saudi side after awarding the tenders, which have been delayed due to changing the routes of the lines in Saudi territories for the implementation of the Neom project.

The total cost of the project was $1.6bn, but after adjusting the routes and the increase in equipment prices, the cost increased to $2.5bn.

The sources said that the additional costs in terms of lines, cables, and transformer substations in Saudi territories will be borne by the Saudi side. The same applies to Egypt, both in terms of signed contracts or current negotiations. Egypt will receive funding from the Kuwait Fund for Arab Economic Development; the Arab Fund for Economic and Social Development; the Islamic Development Bank, and the self-resources of the Egyptian Electricity Transmission Company (EETC).

The sources said that the drilling and preparations works have variable costs according to the differing locations. The Saudi change in routes will lead to amending the tenders for establishing the substations and lines, to which three international companies have applied.

The previous tender included technical specifications and lines differing from the current ones, which required modification or cancellation of the tender and presenting other lines to the qualified companies to include the new specification and offer new prices.

The project connects the two energy networks in Egypt and Saudi Arabia to a 500kV transformer from the Badr transformer station in Egypt to a transfer station east of Medina, passing through the Tabuk station in Saudi Arabia with a length of 1,300 km, including 820 km in Saudi Arabia and 480 km in Egyptian lands.

Egypt started negotiations with Saudi Arabia in 2010 to establish an energy exchange project between the two countries. However, due to political events, the project was postponed more than once. Negotiations resumed once again with the support of the political leadership of the two countries.

Saudi Arabia announced in October last year the plan to establish the Neom project, which stretches between the three countries: Saudi Arabia, Egypt and Jordan, with an investment of about $500bn. The project is located on the north west of the kingdom covering 26,500 sqkm. The project will focus on nine investment sectors and the first phase will end in 2025.

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