Electricity Grid Reinforcement Project

Location:

Egypt

Project number:

51538

Business sector:

Energy

Notice type:

Public

Environmental category:

B

Approval date:

13 Nov 2019

Status:

Passed Final Review, Pending Board Approval

PSD disclosed:

01 May 2018

Translated version of this PSD: Arabic

Project Description

The provision of a sovereign loan of up to EUR 185 million to the Arab Republic of Egypt, to be onlent to the state-owned Egyptian Electricity Transmission Company (EETC). The proceeds of the loan will be used to finance the construction and upgrade of nine high voltage substations in Minya, South Sinai, Sharqia, Port Said, and Asyut Governorates in Egypt.

Project Objectives

The proceeds of the loan will be used to finance part of EETC's grid investment plan to help optimise power flows, reduce transmission losses, and connect new renewable energy plants and state-of-theart generation units. The Project consists of the following substations: (1) Abu Rdees 220 kV substation in South Sinai governorate. (2) Al Tor 220 kV substation in South Sinai governorate, (3) Belbeis 66 kV substation in Sharqia governorate, (4) Bernisht 220 kV substation in Giza governorate, (5) Dashlout 220 kV substation located in Asyut governorate, (6) Malawy West 500 kV substation located in Minya governorate, (7) Nile West 500 kV substation located in Minya governorate, (8) San El Hagar 66 kV substation located in Sharqia governorate, and (9) South Port Said 220 kV substation located in Port Said governorate.

Transition Impact

Green; The project will assist the transition to a low-carbon economy in the county and support climate mitigation as it will result in reduction of transmission losses, thereby resulting in the reduction of CO2 emissions by 77,000 tonnes per annum.

Competitive: The Bank is engaged in a policy dialogue with the electricity regulator and EETC in structuring the electricity market opening in Egypt in line with the provisions of the Electricity Law 87/2015. This will define the key parameters for successful private sector participation in the electricity market (IPPs) and support the authorities with establishing the key methodologies and drafting of key regulations and contracts that will govern private sector participation in the electricity merchant projects. The electricity merchant market in Egypt is almost non-existent and the current regulations are not suitable for the private sector participation in such segment. There will also be an implementation support to EgyptERA and EETC in the first few private-to-private merchant generation projects that will be developed in the first phase of the electricity market opening. This is a top priority to the MoERE as it demonstrates the country's commitment to the electricity market reform as per the Electricity Law.

Client Information

EGYPT SOVEREIGN

EETC is the transmission system operator and the sole buyer of all electricity generated in Egypt. It is 100% owned subsidiary of the Egyptian Electricity Holding Company (EEHC), the state-owned utility 100% owned by the Ministry of Electricity and Renewable Energy (MoERE). In accordance with the 2015 Electricity Law, EETC is now in the process of being unbundled into separate ownership.

EBRD Finance Summary

EUR 185,000,000.00
Up to EUR 185,000,000

Total Project Cost

EUR 204,000,000.00

Up to EUR 204,000,000 financed by the EBRD loan and an Investment Grant from an International Donor

Environmental and Social Summary

Categorised B (ESP2014). The construction and operation of the nine substations are expected to result in mainly environmental benefits related to the reduction in transmission losses, ensuring a more stable electricity supply and ability to connect the expected addition sources of renewable generation capacity in Egypt. The Environmental and Social (E&S) risks associated with the Project are expected to be site specific and readily identifiable, and mitigatable through the implementation of a targeted action plan. A Non-Technical Summary and Stakeholder Engagement Plan have been prepared and will be disclosed in both English and Arabic on EBRD's website once agreed with EETC. The Project is consistent with the GET approach, with a GET share of 70%.

Environmental and Social Due Diligence (ESDD) has been undertaken by an independent consultant and included meetings with EETC and visits to the Bernesht, Belbes, San el Hagar and South Port Said planned greenfield substations. It is understood that all land to be acquired for the project is not in use and already owned by the Government, and the ESDD has not identified any material issues at this stage. Nevertheless, if any expropriation or resettlement is needed as a result of the Project or its associated facilities, a Land Acquisition and Compensation Plan and Livelihood Restoration Plan will be developed in line with PR5 requirements. ESDD findings identified that the associated transmission lines are all medium voltage or less than 15km in length, except for the Nile West substation where a 30 km 500 kV line will be built. None of the overhead transmission lines are located in sensitive areas, or result in any physical displacement. The ESAP includes provisions for an appropriate assessment to be undertaken of the associated lines and an EU-compliant ESIA will be developed for the Nile West line. The EBRD will review these documents and provide technical assistance as required.

The Corporate EHSS audit has shown that EETC does not have a formal Environmental and Social Management System, or an E&S Policy at the corporate level and is not yet committed to certification or alignment with international standards. The present E&S resources and organisational capacity need to be strengthened, and technical assistance will be necessary for capacity building and to support EETC with the implementation of the mitigation measures identified.

An Environmental and Social Action Plan (ESAP) has been developed for the Project and is currently being discussed with the Client. The ESAP focuses on the development and implementation of a full Environmental and Social Management System and an Occupational Health and Safety Management System at a corporate level and at each substation location in line with international standards. Other elements include obtaining all relevant permits, including the local Environmental Impact Assessment studies; and implementing the Stakeholder Engagement Plan. ESD will monitor closely the implementation of the Project. The PIU consultancy support that the Bank is providing as part of the Project will include an ESAP implementation support to EETC.

Technical Cooperation

Technical Cooperation funding to assess the technical viability of the Project was provided by Germany (EUR 71,000) under the Sustainable Development of the Power Sector Framework and Shareholders Special Fund SSF (EUR 95,000) under the Green Economy Transition Project. Environmental & Social due diligence was supported by the SEMED Multi-Donar Account (EUR 50,000).

Project Implementation Unit (PIU) will allow EETC to engage a consultant to assist the Project PIU in the implementation during construction of EUR 1 million financed by Donor Funds.

Company Contact Information

Dr Amr El Baradie
amrbaradie@gmail.com
+20222611739
+20222616509

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