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Thursday, 13 January 2022

SFE eyes renewable energy sub-fund

Our friends at the Sovereign Fund of Egypt is working to launch a renewable energy sub-fund this year as part of its plan to support the green transition, Al Borsa reports, citing sources it says have knowledge of the fund’s plans. The Madbouly government is reportedly planning to transfer ownership of the assets of both the New and Renewable Energy Authority (NREA) and the Hydro Power Plant Executive Authority (HPPEA) over to this new sub-fund, which will manage investments in climate-friendly projects.

Where the plan stands: SFE officials are studying reports from the NREA and the HPPEA on their assets and ongoing projects, the newspaper says. We reached out to all the parties involved for comment, but they haven’t gotten back to us as of dispatch.

The HPPEA is already set to be scrapped: The body will be abolished and the country’s hydroelectric assets transferred to the NREA under a bill passed by the House last week. The legislation, first proposed by Cabinet two years ago, still needs to be ratified by President Abdel Fattah El-Sisi.

So what assets will the sub-fund hold? Anything and everything related to national projects in wind, solar, and hydro. Renewable energy production from the NREA projects increased over 22% y-o-y in FY2020-2021 to reach c. 4.5k megawatts / hour. Further rapid expansion is planned, as the government targets sourcing 42% of our electricity from renewable sources by 2030.

The SFE plans on scaling up climate-friendly investments this year. It is currently backing several high-profile infrastructural projects, including a USD 2.5 bn plan to develop 17 new desalination plants and Egypt’s first-ever green hydrogen facility. The fund is also considering its first green bond issuance, according to CEO Ayman Soliman, who in December said the SFE could sell the climate-linked securities in collaboration with unidentified “partners.”

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