A group of developers, including Norway’s Scatec Solar, are renegotiating the terms of their power purchase agreements (PPA) with the Egyptian government in an effort to keep them on the existing timetable, as many developers withdrew from Egypt’s solar program due to a disagreement with the Egyptian Ministry of Electricity and Renewable Energy on the arbitration clause under the Feed-in-Tariff framework, PV-Tech reported.
Scatec Solar, which is the lead developer on one 50MW project and the finance partner for five others, is hopeful that an agreement can be found.
SVP of business Development at Scatec Solar said, “a compromise would need to be found taking into account the interests of Egyptian Electricity Holding Company (EEHC), the developers and the lenders. We assume this would entail an adjustment of the main commercial terms of the PPA, including the tariff, for an acceptable offshore dispute resolution and, potentially, added security related to the conversion of currency.”
The main objection is the use of local arbitration, which investors want to see moved overseas. This particular issue has led development banks to hold their investments, including the European Bank for Reconstruction which had set aside $500m for Egypt’s 2GW solar project, according to Arab Finance.