EGYPT – The European Bank for Reconstruction and Development (EBRD) is investing US$100 million in a certified green bond issuance of US$334.5 million, backed by Scatec’s six solar power plants in Egypt.
The Bank is also providing a US$30 million Credit Enhancement Facility (CEF) for participating institutional investors.
Certified under the Climate Bonds Standard, this bond is the first private green project bond issuance in Egypt and the southern and eastern Mediterranean region.
The issuance will have a catalytic effect on renewable energy investors seeking access to capital markets in a volatile post-pandemic macroeconomic environment, allowing them to source funding from the growing pool of international institutional investors.
The issuance is co-financed by the EBRD, the US International Development Finance Corporation (DFC), FMO Entrepreneurial Development Bank, the German Development Finance Institution (DEG), and private institutional investors.
The Credit Enhancement Facility (CEF), alongside the Multilateral Investment Guarantee Agency (MIGA) Political Risk Insurance cover, is an innovative instrument, which will draw a new class of international institutional investors into Egypt’s renewable energy sector, thus paving the way for greener bond issuances in the future.
In addition, the EBRD will support the regional economic development of the Aswan governorate in the country.
The Bank will work on increasing access to skills and economic opportunities for people in the less developed rural areas near Benban Solar Park, by introducing a certified training program for agribusiness entrepreneurs, with a specific focus on youth and women.
“We are delighted to continue our support of Egypt’s renewable energy sector and to mobilize new private and institutional capital through this highly innovative and timely instrument,” said Nandita Parshad, EBRD Managing Director, Sustainable Infrastructure Group.
The project come at a time when the North African country is intensifying its effort to shift to the use of green energy sources.
Egypt intends to increase the supply of electricity generated from renewable sources to 20% by 2022 and 42% by 2035, with wind providing 14 percent, hydropower 2 percent, photovoltaic (PV) 22 percent, and concentrating solar power (CSP) 3 percent by 2035.
The country is a founding member of the EBRD and has so far realized investments by the bank amounting to US$8.89 billion in 144 projects throughout the country.