8 Renewable Energy Development in Egypt and Transitioning …
279
8.5 Challenges Hindering Renewable
Energy Projects in Egypt
There are many drivers that positively affect the development of renewable energy in Egypt and thus changing the current energy mix. Nevertheless, despite the Egyptian authorities’ great hopes for the fledgling
renewable energy projects in the country, there are various challenges
encountered as discussed below:
8.5.1 Creditworthiness of EETC
As per the Egyptian law, EETC is in charge of supplying the final
non-qualified consumers with their power needs by concluding PPAs
to off-take the electricity produced/generated by licensed producers
of electricity. Moreover, EETC plays a crucial role in carrying out
electricity interconnection and electricity exchange projects with other
neighbouring countries.
One of the main issues to be considered by financial institutions/lenders and licensed private investors (Electricity licensed
Producers) who sell electricity to EETC, is the analysis of the creditworthiness of the EETC in the PPAs.
To ensure the best financing conditions of minimizing financial risks
and reducing financial cost, it is fundamental that EETC has a good
credit quality (credit rating). Since EETC is a stand-alone, Egyptian Joint
Stock Company independent from the Egyptian Ministry of Petroleum
and other Electricity Companies in Egypt, this implies that EETC’s
credit rating might not be positive. In this case, it is necessary to provide
the proper guarantees, being possibly issued by state institutions, assuring
the risk mitigation in case of an unexpected change in EETC’s solvency.
25
Additionally, to further strengthen the creditability of EETC, there is
a need to revisit law no. 14 of 2013 to include EETC among the list
of entities (EEHC and its affiliated companies) that are covered by the
25 In support of this opinion see: Donia El-Mazghouny—Getting the Deal Through, Renewable
Energy, Egypt, 2019, P. 29.
279
8.5 Challenges Hindering Renewable
Energy Projects in Egypt
There are many drivers that positively affect the development of renewable energy in Egypt and thus changing the current energy mix. Nevertheless, despite the Egyptian authorities’ great hopes for the fledgling
renewable energy projects in the country, there are various challenges
encountered as discussed below:
8.5.1 Creditworthiness of EETC
As per the Egyptian law, EETC is in charge of supplying the final
non-qualified consumers with their power needs by concluding PPAs
to off-take the electricity produced/generated by licensed producers
of electricity. Moreover, EETC plays a crucial role in carrying out
electricity interconnection and electricity exchange projects with other
neighbouring countries.
One of the main issues to be considered by financial institutions/lenders and licensed private investors (Electricity licensed
Producers) who sell electricity to EETC, is the analysis of the creditworthiness of the EETC in the PPAs.
To ensure the best financing conditions of minimizing financial risks
and reducing financial cost, it is fundamental that EETC has a good
credit quality (credit rating). Since EETC is a stand-alone, Egyptian Joint
Stock Company independent from the Egyptian Ministry of Petroleum
and other Electricity Companies in Egypt, this implies that EETC’s
credit rating might not be positive. In this case, it is necessary to provide
the proper guarantees, being possibly issued by state institutions, assuring
the risk mitigation in case of an unexpected change in EETC’s solvency.
25
Additionally, to further strengthen the creditability of EETC, there is
a need to revisit law no. 14 of 2013 to include EETC among the list
of entities (EEHC and its affiliated companies) that are covered by the
25 In support of this opinion see: Donia El-Mazghouny—Getting the Deal Through, Renewable
Energy, Egypt, 2019, P. 29.