Blackstone and Edra Power Holdings of Malaysia have submitted offers to Egypt to take over three state-owned power plants co-built by Siemens AG. The move is expected to cut Egypt’s debts while bringing in much-needed foreign investment. According to analysts, the deal reflects a positive economic strategy that “includes unorthodox ways to manage debt liabilities in a way that moves them to off-balance sheet, long-term obligations.”
The plants, with a total capacity of 14.4 gigawatts,were part of the latest in a series of large-scale infrastructure projects under President Abdel-Fattah El-Sisi.The cost of the plants was estimated to be around 6 billion euros ($6.7 billion). mainly financed by a consortium of lenders led by Deutsche Bank AG, HSBC Holdings Plc and KfW-IPEX Bank AG. Egypt has cut energy subsidies and devalued its currency to revive an economy that started stagnating after its 2011 uprising. This marks a turnaround from 2013 when severe power outages and fuel shortages drove the public anger against the administration of Islamist President Mohamed Mursi. The protests culminated in his ouster in a military-backed popular uprising. Though El-Sisi’s rule has launched mega-projects such as a new administrative capital, an extension to the Suez Canal and a record-breaking Nile bridge, it could not mop up major foreign investment beyond oil and gas. Edra, already owns three gas-fired thermal power plants in Egypt and is a subsidiary of China General Nuclear Power corp. If they come to an agreement with Egypt, a power-purchasing agreement would be signed with either Edra or Zarou. and the company can sell the electricity produced to the government in collaboration with Siemens, Egypt, which is operating the three combined-cycle plants under an eight-year contract.
