Developers in the dark over reported 25% hike in Benban investment costs

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Developers working on the huge Benban solar park have told pv magazine they have heard nothing about a mooted 25% rise in investment costs being levied on investors because of the rising price of building materials.

A story published by the Daily News Egypt newspaper on Saturday – and carried by Thomson Reuters’ Zawya Middle East news website – quoted a source at the Egyptian Electricity Transmission Company (EETC) who said investors had already been notified of the rise and would receive written confirmation in due course.

However, the Benban Solar Energy Developer Association (BSDA) said its members first learned of the reported rise in costs by reading about it in the media.

Ghada Darwish, media and communications spokesperson for the BSDA, said the group “was informed of this news in the form of the press release seen by everybody in different newspapers and business news websites. However, no developer has been officially informed by the EETC [or] Ministry of Electricity of any increase of CSAs [cost sharing agreements] or any extra payments due in June 2019.”

Cost-sharing agreements

According to the weekend report, the Egyptian Electricity Holding Company and investors will share the burden of the increased cost of developing the 32-project, 1,465 MW site under the terms of one of five cost-sharing deals signed by investors in order to be eligible for FIT payments. Other arrangements relate to grid connection costs, transformer substations and road construction, according to the Daily News.

The newspaper reported the pending rise is the second price hike for investors after the Central Bank of Egypt floated the exchange rate for the Egyptian pound in 2016.

The report in question stated investors will have to find the higher fee by June, which is when the last of the projects on the sprawling 6 km² site are due to go online.

The confusion came after Spanish developer Acciona yesterday announced it had completed three projects with a total generation capacity of 150 MW at Benban. Acciona – which jointly owns the projects with the Enara Bahrain Spv WII unit of Saudi company Swicorp – said the $180 million worth of projects would be operational within weeks and would sell power to the EETC under a 25-year deal for $0.084/kWh.

Other developers involved in the Benban project include Dubai’s Alcazar Energy, Saudi’s ACWA Power and FAS Energy, domestic concern Infinity Solar, Italian business Enerray, Norway’s Scatec and Germany’s ib vogt. The investors potentially affected by any rise in costs include international development lenders such as the World Bank, European Bank for Reconstruction and Development, the Netherlands’ FMO, the International Finance Corporation, the Multilateral Investment Guarantee Agency, the Arab African International Bank, Germany’s Bayerische Landesbank and the UN’s Green Climate Fund. Private investment fund MMID and private equity vehicle BPE Partners have also reportedly invested in the Aswan solar park.

Emiliano Bellini contributed to this report.