Narrative
Full Description
Project narrative
On October 18, 2017, TK Company for Solar and Renewable Energy Systems JSC — a special purpose vehicle and joint venture of ACWA Power (18.05% equity stake), Al Tawakol Electrical Co. incorporated in Egypt (Al Tawakol), and Hassan Allam Holding incorporated in Egypt (Hassan Allam) — and the EBRD and the Industrial and Commercial Bank of China (ICBC) signed a $23.6 million syndicated loan agreement for the 20MW Benban 2 Solar Photovoltaic Power Plant Construction Project. Both the ICBC and ERBD contributed $11.8 million (EUR 10.9 million) as lead arrangers of the loan. The loan carries a maturity of 18 years. Its interest rate and grace period are unknown. However, is it known that the borrower purchased a credit insurance policy from the Multilateral Investment Guarantee Agency (MIGA) on December 15, 2017. The scope of the $29.34 million project included the design, development, construction, commissioning and operation of a 20MW solar photovoltaic power plant located in the Benban solar complex (محطة بنبان للطاقة الشمسية) in the Aswan Province of Egypt. The project was allocated to plot 42-4 (approximately 49 hectares (Ha) contiguous with 43-4, the ACWA Benban One for Energy site) in the Benban solar complex. The power plant has alternating current capacity of 20 MWAC and peak direct current capacity of 28 MWDCP, and it is linked to substation 4 (SS4) on the southeastern corner of the Benban complex via an underground 22 kilovolt (kV) transmission line following the internal routes right-of-way (RoW) installed by EETC. SS4 covers an area of 50 square kilometers. The power plant was developed under Egypt’s Feed-in Tariff (FiT) scheme. ACWA Power was granted a 25-year Power Purchase Agreement (PPA) and it will sell the power generated by the three solar plants to the state-owned Egyptian Electricity Transmission Company (EETC) (the off-taker). The Benban solar complex comprises a 37-square kilometer area allocated to Egypt's New and Renewable Energy Agency (NREA) located in the western desert, 15 km west of the River Nile and approximately 1 km west of Aswan – Luxor highway. The complex is approximately 650 kilometers (km) from Cairo. With the exception of the narrow and densely populated Nile Valley with its intensive agriculture, the area is all desert land, largely unused and unpopulated. The area is mainly flat, with sand and gravel dunes, and with no notable natural vegetation and no human activities. The nearest villages are Benban village, about 12 km east and Fares village about 25 km northeast of the Benban solar complex, with 26,200 and 11,000 inhabitants respectively. The nearest cities are Aswan, 40 km south and Luxor 140 km north. The Benban solar complex was sub-divided into 39 plots each allowing for a solar plant of up to 50 megawatts (MW) with a total capacity for the entire site of up to 1.8 Gigawatts (GW). As per Government of Egypt (GoE) requirements, each plot in the Benban solar complex is allocated to a separate project company, requiring separate permits to operate; although one company may have ownership stakes in more than one project. Power evacuation will be the responsibility of EETC. Power was to be evacuated from the new substations via an existing 220 kV high voltage line, 12 km east of the Benban solar complex. A consortium that consisted of Astroenergy and CGGC (China Gezhouba Group Corporation) International was the Engineering, Procurement, and Construction (EPC) contractor responsible for project implementation. First National Operation & Maintenance Co. Ltd (NOMAC) — a fully owned subsidiary of ACWA Power — was the Operations and Maintenance (O&M) contractor. The project was assigned to Category B under MIGA’s Policy on Environmental and Social Sustainability. The project was originally scheduled to commence in the first quarter of 2018 and reach completion (operations) by the fourth quarter of 2018. It ultimately reached its commercial operations date (COD) in the third quarter of 2019.
Staff comments
1. Some sources refer to the borrowing institution as TK for Solar and Renewable Energy Systems (TK). 2. This project is also known as the ACWA Power Feed-in-Tariff (FiT) Phase II Project and the Acwa Benban PV II – 20MW Project. 3. Allen & Overy was legal adviser to the lenders. 4. On December 15, 2017, Multilateral Investment Guarantee Agency (MIGA) signed a contract in which it agreed to issue guarantees of $15,771,171 to ICBC for its investment into TK Company for Solar and Renewable Energy Systems JSC. The guarantees are issued for up to 20 years against the risks of Transfer and Convertibility Restrictions, Breach of Contract, Expropriation and War and Civil Disturbance. 5. This project was one of the first fully non-recourse project financed transactions in Egypt since the late 1990s – and the only feed-in-tariff (FiT) project financing to attract a pure commercial bank. It was also the first non-recourse project-financed transaction in Egypt across sectors for any Chinese bank, and the first fully non-recourse deal in the power sector in the African continent for ICBC. It was awarded several international prizes, such as the “2017 Global Multilateral Deal” by PFI and the “Project Finance Deal of 2018” by Bond, Loan & Sukuk Middle East.