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Monday, 15 August 2016

Four frameworks under consideration for FiT phase two

FiT phase two: Producers could get international arbitration if state gets lower tariffs. We have long maintained that the state’s insistence on domestic arbitration in the first phase of the feed-in tariff program for renewable energy was a stratagem hatched after the state felt it had agreed too high a price for energy produced in phase one. That view got a bit stronger yesterday as Al Borsa reported that one scenario the Electricity Ministry is considering would see international arbitration allowed in phase two if the tariff were lowered to USD 0.09 per kWh (from USD 0.14) and total capacity under the program were capped at 1 GW. Other phase two options: USD 0.11 per kWh and domestic arbitration, while also retaining the requirement that 85% of funding for projects be sourced from foreign institutions. Yet another option would be to leave the program sized at 1GW, but a lower price per kWh and additional, unspecified benefits to companies. Al Borsa’s source, a senior government official, said the proposals will go to cabinet for consideration in the coming two weeks.

Engie backs out of FiT: Meanwhile, Engie (which the domestic press still insists on calling GDF Suez) is reportedly pulling out of the FiT program altogether, said a company source. The source blamed the government’s insistence on international arbitration, saying it was the reason the International Finance Corporation and the European Bank for Reconstruction and Development pulled funding for its 50 MW solar plant in Benban. The company will continue to seek working in Egypt’s renewable sector but outside the FiT framework, the source added. The company plans to invest USD 7 bn in renewable energy projects in Egypt and the GCC over the next two years, said a senior executive at Engie.

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