The developers of a wind farm in Egypt have secured a US$501mn export credit agency-backed financing deal from a consortium of lenders.
Red Sea Wind Energy – a joint venture of Japan’s Toyota Tsusho and its subsidiary Eurus Energy, France’s Engie and Egyptian firm Orascom Construction – has obtained the loan for a 500 megawatt facility on the banks of the Gulf of Suez.
The Japan Bank for International Co-operation (JBIC) says it is providing US$240mn toward the facility, with the remainder extended by the European Bank for Reconstruction and Development (EBRD), SMBC, Norinchukin Bank and Société Générale.
The commercial banks’ portion of the loan is being covered by Nippon Export and Investment Insurance (Nexi), Japan’s official export credit insurer.
Red Sea Wind Energy has committed to sell electricity generated by the project to the Egyptian Electricity Transmission Company for the plant’s expected lifespan of 25 years. Construction is set to begin this month with commercial operations slated to commence in August 2025, with a total project cost of around US$600mn.
The wind farm, located near the town of Ras Ghareb, is the second in Egypt to be co-financed by JBIC and insured by Nexi in recent months. The two institutions joined the International Finance Corporation (IFC) and a range of commercial lenders in late November last year on a US$518mn loan to Amunet Wind Power Company for another wind farm near Ras Ghareb.
“Electricity demand in Egypt is expected to grow steadily, and the construction of new power plants and expansion of existing sites are taking place to meet the strong demand for electricity,” Toyota Tsusho says in a statement.
Egypt’s government has a target of sourcing 35% of its energy from renewable sources by the end of this decade.
JBIC says the project is in line with the Japanese government’s overseas project finance policy of “providing support for quality energy and electricity infrastructure that harnesses sophisticated technologies to reduce the burden on the environment in a way that is compatible with the energy policy of the host countries”.
It is also the first project on which it has partnered with the EBRD since the two institutions signed a memorandum of understanding in October last year.