A consortium of Orascom Construction and Abu Dhabi-based International Petroleum Investment Company (IPIC) has been awarded a contract to build a coal-fired power plant in Egypt.

A development agreement was signed by the duo as an addition to the existing memorandum of understanding (MoU) previously inked with the Egyptian government in November 2014, said a statement from Orascom.

The deal marks a significant step in the development of the 3,000 MW coal-fired power plant in Egypt and highlights the parties’ commitment to execute the project on a fast-track basis.

The first of two phases of the project is expected to cost around $3 billion, said Orascom, adding that the funding will be readied through a mixture of debt and sponsor equity.

The debt is planned to be sourced from a variety of liquidity pools including Egyptian, GCC and international financial institutions as well as export credit agencies, it added.

The Egyptian construction giant said the consortium has already received letters of interest from banks to underwrite the debt portion for up to $1.95 billion.

National Bank of Abu Dhabi will be acting as the project’s co-financial advisor and will be supporting the project as part of the banking consortium.

The MoU signed in November had granted the consortium an 18-month exclusivity period over a project site in the vicinity of El Hamrawein Port on the Red Sea coast.

Under the new agreement, the consortium now has been guaranteed site access to carry out necessary development studies while land allocation formalities are being finalised.

Furthermore, the consortium will carry out port development work relating to the import and handling of coal shipments with full support from the government.

The agreement also covers various operational aspects such as the power purchase agreement (PPA) and connection to the national grid.

Sheikh Mansour bin Zayed Al Nahyan, the chairman of IPIC and Deputy Prime Minister of the UAE and UAE Minister of Presidential Affairs, said the landmark project is one of many examples of future development initiatives between the UAE and Egypt.

IPIC managing director Khadem Al Qubaisi said: "Today’s announcement only relates to the first of two phases of this project with the Egyptian government. IPIC is focused on investments that are expected to make a significant impact on the growth of the Egyptian economy across its areas of expertise," he noted.

Nassef Sawiris, the chairman of Orascom Construction, said: "We are proud to be at the forefront of the recovery of the Egyptian economy and intend to undertake a number of large projects not only in power generation, but also across various infrastructure and industrial sectors."

CEO Osama Bishai said the agreement with the Egyptian government highlights the combined effort of all parties involved to establish a state-of-the-art facility that will become a valuable contributor to Egypt’s infrastructure.-TradeArabia News Service