Power sector energy efficiency project

repaying

Translated version of this PSD: Arabic The EBRD is considering the provision of a sovereign loan of up to USD 190 million to the Arab Republic of Egypt, to be on-lent to the state-owned Egyptian Electricity Holding Company (EEHC) and/or its subsidiary East Delta Electricity Production Company (EDEPC). The proceeds of the loan will be used to fund the conversion of two existing open cycle power plants to combined cycle gas turbines: (i) 500 MW Damietta West and (ii) 1,000 MW El Shabab. The project will add significant extra generating capacity to the Egyptian grid and improve the plants' efficiency from c.33% to c.51%. This will help alleviate the on-going energy crisis in Egypt, thus improving the socioeconomic environment for industry, commerce, small businesses and households. It will also result in significant carbon emission reductions. The Project’s transition impact stems from three factors: (i) demonstration of new replicable behaviour and activities from the promotion of high efficiency technology; (ii) setting standards for corporate governance and business conduct from alleviation of shortfalls in gas supply and generating capacity; and (iii) institutions, laws and policies that promote market functioning and efficiency from the Bank’s engagement in policy dialogue and the promotion of a reform agenda in the Egyptian power sector. 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 183 thousand people and serves more than 28 million customers. EDEPC is one of the six state-owned electricity generation companies in Egypt fully owned by EEHC, covering the east of the country. EDEPC owns and operates a generation capacity of 5.9 GW representing 21% of Egypt’s nominal installed capacity. Up to USD 190 million. USD 892 million. Category B. An Initial Environmental and Social Examination (IESE) has confirmed that environmental and social issues associated with the planned upgrade of the existing El Shabab and Damietta West power plants, from single cycle to combined cycle mode, can be readily assessed and mitigated as part of an Environmental and Social Due Diligence (ESDD). Both power plants have been recently commissioned and operate using state-of-the-art gas turbines. The plants are not located near residential areas and use closed loop cooling systems. EDEPC is currently installing low NOx technology to further reduce NOx emissions. The Project aims to increase the generation efficiency of the plants in line with international best practice; among others EU’s Best Available Techniques (BAT) for power generation. Initial estimates indicate that the Project will result in significant energy efficiency gains which will result in carbon emission reductions per kWh. The emission reductions and compliance with BAT will be assessed as part of the on-going ESDD. A site visit indicated that EEHC and EDEPC have the institutional capacity to implement the Bank’s Performance Requirements, with good housekeeping. Nevertheless, some institutional strengthening may be required. This will be further assessed as part of the ESDD. An Environmental and Social Action Plan (ESAP) will be developed and agreed with EEHC and EDEPC to ensure the Project is structured to comply with the Bank’s PRs. The PSD will be updated following the ESDD. None.