The Egyptian investment climate has turned green, and by “going green” economists are not talking about irrigation. They are referring to Egypt’s booming renewable energy industry and the massive global attention that it has received from foreign investors during the recent period. The financial implications of the energy transition no longer need to be a concern for Egypt, since it has proven that green and renewable energies have become the ultimate magnet for foreign investments. Working alongside the appeal and potential that oil and gas investment opportunities offer, renewable energy and energy transition projects have the potential to bolster the investment climate in Egypt by giving investors a diverse array of investment options that promise to support all aspects of the industry.
To improve the investment climate, the Egyptian government has sought to implement several reforms to attract more foreign investors to the country’s energy sector among many others, the most important of which is golden licenses, which are expected to boost foreign direct investment (FDI). These reforms will not only support the country’s investment attraction ambitions, but promise to boost the country’s scarce foreign currency reserves. For this reason, the state implementing strategies to achieve its goal of increasing annual foreign currency revenues to $300 billion by 2030, being an ambitious goal given that it currently stands at $100 billion.
The art of the deal has been the key factor behind unleashing the world’s massive wealth into projects that promise to change the energy landscape in Egypt and support the national economy.
In the most recent period, Egypt has managed to open the door to up to $40 billion worth of investments through signing seven memoranda of understanding with various foreign partners. Many of these projects will take place with the Suez Canal Economic Zone, with an expected initial investment of $12 billion, soon to be followed by an additional $29 billion at a later stage.
Green energy investments have been particularly pivotal in supporting the ship bunkering industry, with the Egyptian state taking quick and decisive measures to build as well as expand projects to produce a rich variety of green fuels. This was evident with the framework agreement which was signed between the General Authority for the Suez Canal Economic Zone (SCZONE), the Sovereign Fund of Egypt, The New and Renewable Energy Authority (NREA), Egyptian Electricity Transmission Company (EETC), and C2X. This green fuel project will involve investments valued up to $3 billion for its first phase and it will be essential for the ship bunkering market in Egypt as well as supporting net-zero ambitions.
In addition, green methanol has also attracted a lot of interest from investors, especially with a massive $450 million deal that was forged in May 2023 between ANRPC & Scatec to collaborate with EBIOL for a new green methanol project. It is worth noting that all these efforts paid off when, in August 2023, Egypt received the first green fuel container ship in Africa and the Middle East. It’s a milestone for Egypt as it navigates the path towards being an energy-diverse, sustainable, and invest-friendly hub and competitive force within the regional market.
Most recently at the EGYPES 2024, the Egyptian petroleum sector was involved in several agreements that promise to change the landscape of renewable energy in Egypt, which include the MoU between Ganope and SLB to exploit geothermal energy, the various hydrogen and emission reduction agreements signed by GASCO and other foreign partners, Sidi Kerir Petrochemicals Company (Sidpec) signed a memorandum of understanding (MoU) with Hitachi Zosen Inova AG (HZI). All of these agreements, though important for promoting renewables in Egypt, have also had significant contributions to pumping in foreign investments needed to drive the national and fund a smooth transition.
Various initiatives by the oil and gas sector to support investments have also been part of the recent success that Egypt has witnessed, most notably Egypt Upstream Gateway (EUG), considered by many high-level officials to be a trendsetter that many other countries are seeking to follow.
It is important to note though renewable energy has been successful in supporting the country’s ambition as a hub for energy trading and investment, it is not sufficient as an investment attraction on its own. The future of renewables in Egypt as an investment option can only be successful if it is in synergy with investments that the oil and gas industry are able to attract as well. As Egypt’s government has without a doubt taken the strategic steps that it needs to fully realize the state’s vision of turning the country into an energy hub. It is nonetheless important to note that the key to all successful energy strategies is inclusivity. Egypt’s triumphant and rapid expansion into the green energies market is only part of a wider plan to ensure economic stability supporting a diverse energy mix.
