Up to 35 solar energy firms are considering withdrawing from the first phase of Egypt’s Feed-in Tariff (FiT) program due to delays, currency risks, and government’s insistence on domestic arbitration, as developers announced after meeting with the Minister of Electricity and Renewable Energy, Mohamed Shaker, Al Borsa reported. Developers who pre-qualified for solar and wind projects under attractive FiT schemes said they are wrangling with the government over contract terms, while in turn their efforts to secure financing became more complicated.
Furthermore, companies are struggling to meet the ministry’s new mandate for funding structures of 85% from foreign banks and 15% from local institutes. As a source from a consortium of foreign investors said Egypt’s insistence on domestic arbitration in any dispute had prompted a multilateral lender that was financing 50% of the required funds needed to complete FiT projects to withdraw.
As a result, Italy’s Enel Green Power (EGP), which pre-qualified in 2015 for one solar and two wind projects, stated that “continuous uncertainty from the local authority in managing the process as well as delays in assigning contracts, have lead EGP to freeze its business development operations in the country,” according to Reuters.
Similarly, Cairo Solar Power Solution Firm said that the company is to withdraw its investments from feed-in tariffs projects, reported Amwal Al Ghad. And Scetec Solar, another renewable energy company is quoted in Al Borsa News as announcing its plan to withdraw as well as due to the bureaucracy and the lack of transparency at the Ministry of Electricity.
The companies are now expected to meet with their board members in order to reach a final decision regarding their involvement in FiT.