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Monday, 8 August 2016

Electricity minister’s comments on domestic arbitration “incense” investors

FiT investors say they were not aware domestic arbitration was a hallmark of the FiT program: Investors in the Feed-in-Tariff program are reportedly “incensed” over comments by Electricity Minister Mohamed Shaker claiming that investors were aware that domestic arbitration clauses would be a feature of power purchase agreements [PPAs], as they had already signed off on such clauses when signing cost sharing agreements [CSAs], Daily News Egypt reported on Sunday. “A number of investors responded,” DNE’s Mohamed Farag writes, “saying that they had accepted local arbitration in the CSA as it is a 12-month agreement and includes the infrastructure cost at a maximum of EGP 30 mn. On the other hand, the PPA is a 25-year contract, and each project included would cost more than USD 100 mn.” Cairo Solar’s CEO Hisham Tawfik adds: “It [domestic arbitration] was not a point of contention, as it included contracting and infrastructure work.” However, due to the long-term nature of the power purchase agreements, such arbitration mechanisms would not be suitable. “Governments will change and new leaders will come. The rights of investors and financing banks must be considered and guaranteed.”

Tawfik confirmed that Shaker has set Thursday 11 August (that’s this Thursday) as the date of a much anticipated meeting between the FiT investors and the minister to discuss “the ministry’s vision” for the phase one and two of FiT projects. As we noted last month, the minister is unlikely to budge from his stance on domestic arbitration.

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