Saudi Electricity Company has signed a US$566.4mn export credit agency (ECA)-backed facility agreement with Standard Chartered Bank and Sumitomo Mitsui Banking Corporation to support a Saudi Arabia-Egypt electricity interconnection project.
The 14-year financing is guaranteed by the Swedish Export Credit Agency (EKN) and funded by the Swedish Export Credit Corporation (SEK). The landmark facility is structured on the concept of commodity murabaha – a cost-plus-profit arrangement which complies with Islamic finance standards.
Coming after the two countries signed US$1.8bn worth of contracts in Cairo last year to build transmission plants and connect power grids, the electricity interconnection project is the first large-scale, high-voltage direct current interconnection between the Middle East and North Africa. Once completed, the project will allow Saudi Arabia and Egypt to exchange up to 3,000 MW of power.
“This facility supports the growth of electricity connectivity in the Arabian Gulf and North Africa, which will allow for grid resilience and future decarbonisation efforts,” says Faruq Muhammad, global head of structured export finance at Standard Chartered.
The connection is expected to be in place by 2026 and will support the flow of electricity in multiple directions, between Badr in Egypt to El-Madinah El-Munawara via Tabuk in Saudi Arabia.