In 2015, the Ministry of Renewable Energy of the Arab Republic of Egypt (Egypt) launched its Integrated Sustainable Energy Strategy, which established a competitive energy auction process through 2035 for Build-own-operate (BOO) projects. This auction process, designed to procure investment in renewable energy capacity, is administered by the Egyptian Electricity Transmission Company (EETC), and includes five rounds of bidding to award twenty- year power purchase agreements (PPAs) for each BOO project. Each winning bidder is provided all neces- sary land access and use rights by the New and Renewable Energy Authority (NREA), a government agency, thereby enabling each project to fulfill its power production obligations under, and for the duration of, each PPA entered into with EETC.

In 2018, the Egyptian government announced aggressive renewable energy targets: by 2022, 20% of Egypt’s national power will be generated by renewable energy sources. By 2035, that figure doubles: according to the US International Trade Administration, 42% of Egypt’s national power will be generated by renewable sources (including 25% solar power, 14% wind power, and 3% hydro power).

While meeting these goals will largely depend on significant investment from the private sector, attaining these targets will result in significant environmental and human benefits. First, reliance on renewable energy sources can alleviate the burden on Egypt’s national budget by reducing the funds previously allocated towards meeting the country’s energy needs. Second, Egypt’s use of renewable energy sources can improve the sta- bility of its energy supply at a time of national economic growth and ultimately enable export of natural resources, such as gas. According to the International Renewable Energy Agency, this considerable shift towards renewable energy sources, particularly solar and wind power, could amount to an estimated energy cost reduction of as much as USD 7 per MWh.


Egypt continues to be a focal point for client activity. Clients require guidance on both transactions for existing assets and new development opportunities afforded by a changing political, economic and natural resource landscape, including through the establishment of the government’s renewable strategy and the major offshore gas production coming online in the coming years.

The Milbank team has expertise advised on numerous projects, financ- ings, acquisitions and restructurings across various sectors in Egypt, including the first BOO wind project in Egypt, the 262.5MW Ras Ghareb windfarm in the Red Sea Governorate. The Milbank team advised lenders to the project, JBIC, NEXI, SMBC and Société Générale.

Given the nascent nature of the renew- ables strategy and auction process at that time, a key part of our role was focused on a thorough review of the bankability of the PPA, adjusting pro- visions where necessary to establish a structure and risk allocation across the PPA and other project documents that would facilitate financing for a twenty- year PPA term. The Ras Ghareb project set the precedent for subsequent wind and solar IPP transactions in the Egyptian market, including West Bakr.


The Gulf of Suez enjoys an average wind speed of 10.5 m/sec, and it was in this region of Egypt, 30km north of Ras Ghareb, that the tender process was launched for the 252 MW West Bakr windfarm. The successful bidder for this second privately owned windfarm in Egypt was the sponsor, Lekela Power B.V. (Lekela), a 60%/40% joint venture between the leading emerging markets private equity investor Actis Energy Fund III and the pure play renew- able energy development company Mainstream Renewable Power. Lekela was established to focus on onshore wind power generation projects in Africa and now owns 1,300 MW of renewable power investments in South Africa, Senegal and Ghana.

Wind Turbine (taken from the bottom, looking up)

The PPA for the West Bakr project was signed in February 2019, and the project is expected to achieve operations in 2021. Siemens Gamesa Renewable Energy was appointed to install 96 turbines through a turnkey EPC contract and provide maintenance services over a 15-year period. Producing more than 1000 GWh of power annually (enough energy to power over 350,000 homes), the West Bakr project will increase Egypt’s wind capacity by 14%.

While the Ras Ghareb project was the first of its kind from a project docu- mentation, structuring and negotiation perspective, the financing structure on the West Bakr project is also innovative. The $300 million project financing marks the first occasion on which the development finance institutions EBRD, IFC and OPIC have been co-lenders to a project. IFC’s commitment was comprised of an A Loan of up to $26M and $58M from IFC’s innovative syndications program. OPIC’s funding was provided by way of an OPIC-guaranteed loan participation. Through this 2019 financing, EBRD continues its strong support of projects in Egypt, which in 2018 was the largest EBRD country of opera- tions by new commitment.

This multi-party financing structure resulted in the need to coordinate mutually acceptable financing and intercreditor arrangements amongst these lenders. Additionally, the
inclusion of EBRD and IFC in the financing enabled the project company to access competitive hedging coverage over the full tenor of the debt, whereas other Egyptian projects have faced constraints owing to the project company’s inability to access long term hedging products from the commercial bank market.

Not surprisingly in the context of a project financed by development finance institutions, and as is becoming increasingly common in the project financing market, a critical focal point of the diligence process was on the environmental and social aspects of the project. Given that the project is located in an important migratory bird flyway, the project company has committed to shut downs to address migratory bird patterns. The project is expected to avoid 550,000 tons of annual CO2 emissions, and additionally will significantly impact the local community through the creation of 550 jobs and the development of a Community Investment Plan.

The Milbank team provided guidance to Lekela and the three development finance institutions to facilitate the signing of the finance documents and the achievement of financial close under the PPA in July 2019.