Electricity Ministry spinning Enel’s exit by blaming it on fallout from Regeni. A diplomatic rift opened by the ongoing investigation into the murder in Cairo of Italian graduate student Giulio Regeni is behind Enel Green Power’s exit of Egypt, a source at the Electricity Ministry told Al Mal. Enel had taken steps to end its investments in Egypt after what was presumed to be a disagreement over domestic arbitration clauses. The company has the right to be compensated for the investments it has already injected. More Italian companies will follow suit, the source said, speculating that the exit was driven by orders from Italian authorities.

In any event, the ministry’s insistence on domestic arbitration is behind Électricité de France (EDF) considering pulling out of phase one of the feed-in-tariff (FiT) projects, company sources tell Al Borsa. EDF’s consideration comes after the European Bank for Reconstruction and Development pulled its funding of EDF’s solar power JV with El Sewedy Electric in Benban. While financing the project doesn’t seem feasible at this time, the company will await the second phase launch of FiT projects in October, with an eye towards investing in those once the picture is clarified, the source adds.

Furthermore, domestic arbitration appears to be holding up signing the final agreements for the 250 MW Gulf of Suez wind farm between the consortium including Engie (previously GDF Suez), Toyota, and Orascom and the ministry. The consortium is looking for foreign lenders and Japanese banks in particular, and will require resolution for the domestic arbitration issue, a source from the consortium tells Al Borsa. This appears to contradict DNE reports, which we noted back in May, that the final contracts had been signed.

Cairo Solar’s Hisham Tawfik is much less optimistic about the prospects of phase two of FiT. While domestic arbitration prompted 21 FiT investors to tell the ministry that their projects were at risk, the ministry’s haggling over the FiT helped push 33 potential investors from the project, Tawfik tells Al Shorouk. Without addressing the problems of the first phase projects, the second phase and the entire FiT system is doomed to fail, he added.