The government is reportedly considering cancelling USD 23 bn worth of MoUs to build coal-fired power plants near the El Hamrawein Port on the Red Sea coast, sources told Al Mal. The Electricity Ministry is reportedly looking instead to put the projects out to tender through a competitive bidding process as it aims to lower costs. International investors have already been contacted and sources tell Al Mal that four offers have so far been received. The sources said talks, which are being led by “higher authorities,” are ongoing now with companies including Shanghai Electric, General Electric, Mitsubishi, and Hitachi. The projects are to be developed over three stages, each adding 2,000 MW in capacity through BOOT and EPC-plus-finance mechanisms. Al Mal says the original MoUs were signed with Dongfang Electric Corporation, Shanghai Electric, Orascom Construction and IPIC.

What’s happening here? Some of El Hamrawein’s projects were already contracted and had secured funding. Dongfang says on its website it was contracted to complete the “ultra-supercritical thermal power project (phase I) 3×660MW” on 21 January and had already secured a “capital raising and loaning framework agreement” with the Industrial and Commercial Bank of China. Orascom Construction had announced in March that its consortium with Abu Dhabi-based International Petroleum Investment Company (IPIC) signed a development agreement as an addition to an MoU for a 3,000 MW coal-fired power plant. The project carried an expected investment cost of USD 3 bn, funded through a mixture of debt and sponsor equity, OC said. The future of both projects is now unclear.

Is this a pattern? If Al Mal’s report is proven true, this will be the second time in under two months that the government has moved to unilaterally revise terms on an already-signed agreement for a major infrastructure project. Sadly, we rank 131 out of 189 countries on the Ease of Doing Business index for a reason.