Damanhour CCGT

Location:

Egypt

Project number:

47336

Business sector:

Power and energy

Notice type:

Public

Environmental category:

A

Target board date:

11 Nov 2015

Status:

Cancelled

PSD disclosed:

08 Sep 2015

Translated version of this PSD: Arabic

Project Description

The EBRD is providing a sovereign loan of up to USD 200 million to the Arab Republic of Egypt, to be on-lent to the state-owned Egyptian Electricity Holding Company (EEHC) and its
subsidiary West Delta Electricity Production Company (WDEPC).

Project Objectives

The proceeds of the loan will be used to fund the construction of a new combined cycle gas turbine (CCGT) power plant with a total installed capacity of 1.8 GW near Damanhour city, Egypt.

Damanhour CCGT will have state-of-the-art technology and, when completed, will become the most energy and water efficient plant in the country's merit order after renewable facilities. Damanhour CCGT is expected to achieve up to 58% net electric efficiency.

Transition Impact

The expected transition impact of the project is twofold:

(i) providing the secure energy supply that is critical for the development of a flourishing and growing private sector, helping to avoid unpredictable blackouts and mitigate any shortfall in gas supply; and

(ii) institutions, laws and policies that promote market functioning and efficiency. Building on the Bank's existing engagement in
the sector the project will allow the Bank to continue to promote a transition agenda focused on increased commercialisation of the sector, higher energy efficiency and greater private participation.

The expected transition impact rating is ‘good’.

Client Information

EGYPT

EEHC is a state-owned holding company which owns and controls the country's electricity facilities
through 16 subsidiaries: the transmission system operator, nine distribution companies and six
generation companies. EEHC produces power from gas, steam, hydro and combined cycle power
plants, employs 184 thousand people and serves more than 29 million customers. WDEPC is one
of the six state-owned electricity generation companies in Egypt fully owned by EEHC, covering the
west of the country. WDEPC owns and operates generation capacity of 5.6 GW representing 17% of
Egypt's nominal installed capacity.

EBRD Finance Summary

USD 200,000,000.00

The project will be co-financed by loans from the European Investment Bank (USD 600 mln), the
Arab Fund for Economic & Social Development (USD 200 mln) and the African Development Bank
(USD 80 mln). The balance of the project cost (USD 240 mln) will be financed by EEHC's own
resources.

Total Project Cost

USD 1,320,000,000.00

Environmental and Social Summary

Category A. The addition of a 1.8 GWe Combined Cycle Gas Turbine (CCGT) power plant to
an existing power plant requires an Environmental and Social Impact Assessment (ESIA) of the
proposed investment in accordance with the Bank's Environmental and Social Policy (2014). The
ESIA was disclosed on the 13th of July 2015 to allow for 120 days disclosure period in line with the
Bank's Environmental and Social Policy.

The ESIA has been undertaken by an independent advisor on behalf of WDEPC, and includes the
new CCGT at Damanhour power plant in line with National and EU requirements.

The Bank's Environmental and Social Due Diligence (ESDD) was undertaken by an independent
consultant and ESD and included a review of current operations at the existing facility, as the
new CCGT plant will share some of the existing infrastructure of Damanhour power plant. ESDD
consisted of an environmental and social audit of the existing power plant and an ESIA of the 1.8
GWe CCGT plant and associated facilities. The existing plant is well kept, operates in compliance
with National environmental standards and has an effective environmental, health and safety
management system. The ESDD concluded that, although in principle the Company has the
institutional capacity to implement the Bank's Performance Requirements, additional capacity
building will be required to meet good international practices. The Company will need to implement
certifiable EHS management systems and additional staff training will be required. The Bank will
work with the Company on addressing this through the implementation of an Environmental and
Social Action Plan (ESAP) and technical assistance, which will allow for compliance with the Bank's
Performance Requirements.

The new CCGT will meet the Bank's Performance Requirements and EU environmental standards,
namely the EU Industrial Emissions (IE) Directive. As part of implementing the Project the Company
plans to decommission three 65 MWe/ea light fuel oil fired units which were commissioned
in 1968/69. They are the oldest and least efficient units of the Damanhour complex and their
decommissioning will lead to significantly reduced emissions (SO2; NOx; CO2). The remaining
units were commissioned between 1991 and 1995 and will continue to operate using a mixture of
gas and light fuel oil. These units are well managed, however, they would not fully comply with EU
environmental standards post 2016 in terms of NOx emissions and energy efficiency. The current
investment program will not allow further modernization of these units in the short to medium term.

The construction of the new plant will be associated with additional infrastructure, such as a new high
voltage transmission line (14.5km) and an additional 4 km gas supply pipeline. These are associated
facilities and have been assed as part of the ESDD. The ESDD has confirmed that the associated
infrastructure will be associated with limited environmental and social impacts and a framework
livelihood restoration plan is being prepared for the Project in line with the Bank's Performance
Requirement 5. These investments will not be associated with resettlement and the Company has
a good track record in terms of managing land acquisition. The transmission line and gas pipeline
will be subject to separate EIA process under National legislation and will also meet the policy
requirements of IFIs funding these projects.

A second 60 km grid connection is also being planned in the future to ensure a stable connection
of the new station to the national electricity grid once the new station is fully operational. This line
is not part of the Project or a directly associated line. This grid connection will also be subject to a
separate EIA process under National legislation and will also meet the policy requirements of IFIs
funding these projects.

The Bank will subsequently monitor the project.

There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

The Bank has engaged consultants within the "Sustainable Development of the Power Sector
Programme" funded by the SEMED Multi-Donor Account for the SEMED region to perform technical
due diligence for the Project and assess its exposure to climate change. In addition to confirming that
the Project is fully consistent with the EU BREFs for large combustion plants. The review identified
options to incorporate climate change resilience measures to help mitigate the impact of climate
change on production performance in the longer run.

Company Contact Information

Mohamed Abd El-Moneim El-Tablawy
Tablawy_station@yahoo.com
+20222616535
http://www.eehc.gov.eg
Egyptian Electricity Holding Company Ramsis Street Extension Abbasia, Cairo 11517 Egypt

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