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  • Sunday, 19 November 2023

The First Follow-up Report of the NWFE program: $3.2 billion in Total Financial Pledges from Development Partners to Implement the Components of the Energy pillar.

● Strengthening partnerships with the local and foreign private sector to launch renewable energy projects with a capacity of 10 GWs by 2028, thus advancing the implementation of NDCs.

● The project saves $1.2 billion annually on fuel imports for thermal power plants.

● Al-Mashat: Implementing partnerships for the 1st time with global climate action funds to support the energy pillars.

● Renaud-Basso: We have achieved tangible results in the energy pillar over the course of a year, making the NWFE program an example of a successful national platform.

● Berger: The NWFE program enhances complementarities between water and food projects and supports efforts to achieve sustainable development.

● Building on what has been achieved by completing the mobilization of innovative financing mechanisms and activating the grants platform to implement energy pillar projects

The first follow-up report of the NWFE program, launched by the Ministry of International Cooperation, on the occasion of the one-year anniversary of the launch of the NWFE program, the link between water, food and energy projects, revealed that the total financial pledges from multilateral and bilateral development partners to implement the components of the energy pillar amounted to about $3.2 billion over the course of a year of joint work.

The statement of the Ministry of International Cooperation revealed that throughout the year coordination was made with the relevant national authorities, especially the Ministry of Electricity and Renewable Energy, the main development partner, the European Bank for Reconstruction and Development (EBRD), and other partners from international institutions, the private sector, and international alliances, in order to put projects into practice with the aim of enhancing objectives of mitigating the repercussions of climate change. This was achieved by reducing harmful gas emissions, improving air quality and ensuring access to reliable and clean energy sources, while achieving national climate goals, in the implementation of the directives of the political leadership.

The Minister of International Cooperation, H.E. Dr. Rania A. Al-Mashat, said that cooperation efforts with development partners, especially within the framework of NWFE, are based on three basic principles; first, the Egyptian government’s commitment to moving forward with climate action efforts and transitioning to a green economy. Second, clarity; complete information is available about each project, its purpose, and the required feasibility studies. Third, credibility; the state works to achieve its goals and work, strengthen international partnerships, and take into account governance standards and their differences between each development partner. This contributed to reaching new financing mechanisms and sources for the first time and benefiting from them. An example of such is the High Impact Partnership on Climate Action (HIPCA), managed by the EBRD, and the Transformative Carbon Assets Facility (TCAF) managed by the WBG.

The president of EBRD, Odile Renaud-Basso, said, “When the Bank took the lead on the energy pillar of NWFE, we had a clear goal; to accelerate Egypt’s energy transition. A year later, we are proud to see the tangible results we have achieved for this program, explaining that the operational results achieved during that period make the energy hub within the NWFE program-an example of a successful national platform.”

Renaud-Basso explained, “This is due to the joint effort with development partners, and through cooperation with all partners, the Bank has mobilized $1.5 billion in the form of soft development financing, grants, and other forms of financing that enhance investment in the energy network in Egypt. These funds work to mobilize billions of private investments in the field of renewable energy. Indeed, projects with a capacity of 1.8 GWS have begun, which attracted about $1.9 billion in private investments. Egypt also signed the first debt swap for network-strengthening investments.

In the same context, the Head of the European Union Delegation to Egypt, Christian Berger, said that the EU supports the NWFE program- an essential element in Egypt’s strategy for climate change and a necessity for achieving sustainable development. He explained that the program helps Egypt develop aspects of integration and interconnectedness between water and agricultural projects-an essential element of Egypt's climate strategy and necessary to achieve sustainable development.

Berger added, “The EU welcomes Egypt’s efforts to institutionalize the NWFE program and enhance investments from the government and private sectors.”

The Ministry of International Cooperation’s statement added that since COP27 in Egypt’s Sharm El-Sheikh last November, the total pledges from multilateral and bilateral development partners and international institutions, in the form of concessional development financing, development grants, debt swaps, and private sector investments, amounted to about $3.2billion dollars, from development partners -the EBRD, the European Investment Bank (EIB), the Netherlands, the EU, Denmark, the United States of America, France, the United Kingdom, the HIPCA Fund, and the TCAF Fund, in addition to technical assistance for the rehabilitation and the preparation of feasibility studies as well as maximizing partnerships aimed at implementing projects.

The Ministry of International Cooperation stated that the political declaration issued in partnership between the Arab Republic of Egypt, the United States of America, and the Federal Republic of Germany was issued by updating the Nationally Determined Contributions (NDCs) and moving forward the date for increasing the percentage of renewable energy in the energy mix to 42% by 2030 instead of 2035. This contributed to the completion of the debt swap agreement for climate action with the German side, worth €54 million, to support investments in the electricity transmission network, linking two wind energy projects with a capacity of 500 megawatts; the wind farm in Neuss and the Amunet wind farm in the Red Sea to the national transmission network. Work is currently underway to sign the second tranche of the debt swap with Germany for the program worth €50 million.

The statement of the Ministry of International Cooperation also confirmed that the private sector is a major partner in implementing the NWFE program projects, especially in the energy pillar, in furtherance of the state’s vision and its efforts since 2014 to enhance the private sector’s participation in energy projects.

In this regard, contracts have been made for renewable energy projects at a capacity of 3.7 GWs between the Ministry of Electricity and Renewable Energy and private sector companies such as ACWA Power, Masdar, Al Nowais, Orascom, and others.

The energy pillar aims to shut down 12 thermal power plants with a capacity of 5 GWs, and stimulate investments worth $10 billion to launch renewable energy projects with a capacity of 10 GWs during the period from 2023 to 2028, in close partnership with the local and foreign private sector.

During COP27, the partnership agreement on the energy pillar was signed with the EBRD, the EIB, the French Development Agency (AFD), the African Development Bank (AfDB), the Asian Infrastructure Investment Bank (AIIB), the United Kingdom, Denmark, and the Netherlands.

The Ministry of International Cooperation explained, in its statement, that the energy pillar projects enhance the achievement of the goals of Egypt’s Climate Change Strategy to reach sustainable economic growth, implement NDCs, and reduce approximately 17 million tons of carbon dioxide emissions annually that is a result from the closure of stations that operate on thermal energy and replace it with renewable energy plants; saving $1.2 billion annually that was to be spent on providing the fuel necessary to operate these plants.

The Ministry of International Cooperation stated that a number of development grants were agreed upon from development partners, including HIPCA and TCAF, provided through the World Bank. Notably, the  the first time that both have been used for the benefit of Egypt through the NWFE program, along with Germany, the Netherlands, the United Kingdom, and the EU, to direct it to a number of components and projects, including supporting the decommissioning of old thermal plants and strengthening the network.

It is worth noting that during the first year of launching the NWFE program, cooperation efforts with development partners resulted in the availability of financing for private sector investments in many renewable energy projects; wind and solar, in addition to providing and using soft financing, grants, technical support and debt swaps for several projects identified within the energy pillar.

During the coming period, the Ministry is set to build on what has been achieved and benefit from innovative financing mechanisms, by completing debt swaps, activating the grants platform, and enhancing private sector participation to complete the project worth $10 billion to ensure the implementation of the activities and components of the energy pillar within the targeted time frame.