March 6, 2017

FiT Program in Benban – Amendment of the Cost Sharing Agreement

The Feed-in-Tariff Unit at the Egyptian Electricity Transmission Company (EETC) announced today to the developers in Round 1 and Round 2 of the FiT Program the estimated increase in the cost of the interconnection works at Benban site. This increase retunes to the free floatation of the EGP which had its implication on the cost of the equipment and interconnection work.

Interconnection works comprise of the energy interconnection infrastructure required to accommodate the capacity from renewable energy generated by all the facilities in Benban. It includes 4 substations, underground cables from the relevant substation to each of the land parcels serviced by the relevant substation and local monitoring center.

According to the Cost Sharing Agreement (CSA) which was signed by each developer and both NREA and EETC, the cost of the interconnection works is determined for each developer by multiplying the MW capacity of developer’s facility by the rate of EGP 583,000 (which was equivalent to USD 66,000 calculated at a rate of EGP 8.8 per USD).

The new rate that is announced by EETC today is increased to 955,000 (equivalent to 53,000 calculated at the current rate of EGP 18 per USD), which represents a 64% increase above the agreed cost (approximately 40% on top of the 25% contingency cap under the CSA). Consequently, the share of a 50MW solar project in the interconnection work is increased to is increased to EGP 47,750,000 instead of EGP 29,150,000 under the old rate.

Amended interconnection works installments and payment schedule will be circulated by EETC soon. Developers are required to sign the amendment to the CSA reflecting the new rates once circulated.

In the meantime, developers of Round 1 and Round 2 had a meeting today to discuss the expected shared services needed for the collective management of Benban site (FM shared services) and the proposed common CSR study. It was previously suggested that FM shared services will be included under the CSA. Developers will form a board from among themselves to facilitate communication with the authorities, evaluate tenders and CSA study and supervise contract management. Elections for the members of the board is agreed to be held this week through electronic voting. Riad & Riad attended the meeting representing FAS Energy, one of the few developers who succeeded to sign the project agreements for Round 1 for a 50 MW PV project in Benban.

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