The Ministry of Electricity negotiates with the Japan International Cooperation Agency (JICA) to obtain a $200m fund for enhancing energy efficiency of some industrial projects in Egypt, particularly in the textile sector, said Mohamed Omran, first under-secretary for research planning, authorities, companies, following-up, and international cooperation in the Ministry of Electricity and Renewable Energy.
“The Japanese side initially agreed for our proposal and we will send them the official request for the new funding shortly,” Omran told Daily News Egypt on the sidelines of a seminar organised by JICA on Tuesday, entitled “Promoting energy efficiency and conservation in Egypt. Lessons learnt from experience in Bangladesh”.
Several financial institutions, including the African Development Bank and the German state-owned development bank KFW, showed their initial interest in collaborating with the ministry and JICA for the new proposal, Omran mentioned.
“If the financial institutions approved the new funding too, we will expand it to a wide scale of industries for also promoting energy efficiency,” he added.
Omran noted that the ministry will collaborate with the Central Bank of Egypt to re-lend the funding for companies through the banks operating in Egypt, noting that the participating companies will rehabilitate their production lines using machinery with energy efficiency features.
The interest rate of JICA’s proposed loan would be very low, estimated at 0.1-0.3%, hence there will be very competitive conditions for the Egyptian companies to obtain the funding, Omran stated.
A delegation from Japan visited Egypt last year for discussing the proposed funding. A study is being implemented now by JICA and likely to be finalised in 2019. We will get the funding through Egypt’s Ministry of Investment and International Cooperation as usual,” Omran elaborated.
JICA has been a good supportive of Egypt’s energy sector for several years.
“JICA supports our plans financially and technically. Our cooperation witnessed flourishing outputs. We have a successful capacity building programme, and we look forward to continuing this effective cooperation,” Omran stressed.
Omran pointed out that the Ministry of Electricity has adopted several steps to promote energy efficiency in Egypt, including raising awareness campaigns about the importance of the issue, energy subsidy reforms, and upgrading streets lighting system to reduce energy losses, noting that promoting renewable energy projects was a priority for the ministry besides encouraging energy efficiency investments.
“It was an excellent opportunity to exchange views with JICA and Bangladesh about energy efficiency being an important issue for us,” he concluded.
The Chief Representative of JICA Egypt office, Yoshifum Omura, said that energy represents the largest share of JICA’s portfolio in Egypt with over $2bn in 17 projects.
He clarified that they support projects that aim at increasing energy production and promoting energy efficiency, adding, “We have supported capacity development of the electricity sector through training programme, and extended our assistance to policy support in the electricity sector reform for enhancing competitiveness.”
Before 2000, JICA focused mainly on increasing electricity supply to cope with increasing market demand, Omura explained.
“Energy efficiency on the demand side is the area we would like to support for promoting energy security in Egypt,” he mentioned, adding that energy efficiency is important for Egypt due to the energy subsidy reforms which is being implemented by the government now.
Energy efficiency needs to be comprehensively addressed with the necessary legal and institutional framework, human resources capacity, and financial instruments and incentives, Omura elaborated.
“Last year, we had a series of knowledge exchange programmes with the Egyptian side. In 2019, we are planning to start our technical cooperation programme. In parallel, we will consider on the needs for financial assistance as well,” he mentioned.