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Tuesday, 18 August 2020

Egypt earmarks EGP 1.2 bn in financing for the country’s natgas transition

Gov’t, CBE lay down framework for EGP 1.2 bn on-lending program for the country’s natgas transition: The Trade and Industry Ministry, the Central Bank of Egypt (CBE), and the MSME Development Agency are setting up a financing program through the country’s banks to extend EGP 1.2 bn in low-interest loans for car owners to convert their vehicles to run on dual-fuel engines, according to a cabinet statement. The government will make the funding available for on-lending through banks; loans to final borrowers will be for fixed terms, the statement says.

This is just phase one — and it will likely target vehicles used in public transport: Trade Minister Nevine Gameea previously estimated that the first phase of the engine conversion program — which would see 147k cabs and microbuses outfitted with dual-fuel engines over the course of three years — would cost EGP 1.2 bn. The first phase will be implemented in seven governorates with the infrastructure required to accommodate engines running on natural gas, and the remainder of the program will be expanded to the rest of the country.

Background: The Sisi administration earlier this year announced the multi-year plan to convert or replace 1.8 mn cars to run on both gasoline and natural gas for a total EGP 320 bn at the program’s completion. Once the initial three-year transition period has elapsed, 240k microbuses that run on diesel will be converted to dual engines that run on natural gas at a total cost of EGP 53 mn. The third stage will see 50k cabs more than 20 years old transitioned at an expected cost of EGP 10 bn. Vehicle owners with cars over 20 years old will be permitted to receive low-interest loans through the MSME Development Agency to purchase new dual-fuel vehicles, while those with younger vehicles will be able to access zero-interest finance to outfit them with new engines.

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