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Wednesday, 7 September 2016

Electricity Ministry approves international arbitration for FiT Phase II, sets FiT rates for wind and solar, reduces foreign component

The terms for the second phase of the FiT projects are out: The Electricity Ministry has approved international arbitration in contracts for the second phase of the feed-in tariff (FiT) projects, Al Mal reported. The caveat is that international arbitration will be invoked only if one party should wish to appeal the results of arbitration at the Cairo Regional Center for International Commercial Arbitration, which must first attempt to settle any disputes. The announcement was made at a press conference yesterday; you can watch the full press conference here (in Arabic; runtime: 23:13)

The Ministry has also increased the percentage of domestic content that must be used in any FiT project to 40% for wind farms and to 30% for solar power projects. Energy purchase agreements for wind farms will run for 20 years, while agreements for solar projects will be on 25-years terms, Al Mal reported.

…The cabinet-approved rates for solar power projects under FiT: USD 0.084 per kWh for 20-50 MW projects and USD 0.078 per kWh for 0.5-20 MW projects. Rooftop-installed solar arrays will have a rate of EGP 1.02 per kWh for over 500 kW generated, and EGP 1.085 for under 500 kWh generated, Al Mal reported. The ministry will pay 30% of the 25-year contract in USD at the exchange rate set on the day of signing the agreement, while 70% will paid at the rate set on payment day, according to Al Borsa.

The ministry also approved the purchase terms for wind projects, and Ahram Gate has the full list of rates for wind farms under the second phase of FiT projects.

Back to phase one projects: Electricity Minister Mohamed Shaker said investors have until 26 October to request they be allowed to quit phase one, Shaker told Al Mal. The investors will be able to recuperate their entire capital, including EGP 220k in fees to the NREA and the Egyptian Electricity Transmission Company. Any party that qualified for phase one of the FiT has spent c. EGP 350 mn to date, he noted. Testing Shaker’s pledge will be Cairo Solar, which Al Mal says is withdrawing: Chairman Hisham Tawfik is “fed up” and is asking the ministry approved international arbitration for the second phase projects but not the first. He also says the projects’ returns are not worth the risk.

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