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  • Signing of Japanese ODA Loan Agreements with the Arab Republic of Egypt: Contributing to economic development through infrastructure support in the power and transportation fields

Press Releases

March 1, 2016

Signing of Japanese ODA Loan Agreements with the Arab Republic of Egypt: Contributing to economic development through infrastructure support in the power and transportation fields

photoJICA President Shinichi Kitaoka signs the agreement with the heads of state of Egypt and Japan in attendance (photograph courtesy of the Cabinet Public Relations Office).

On February 29, the Japan International Cooperation Agency (JICA) signed loan agreements with the Government of the Arab Republic of Egypt to provide loans of up to a total of 54.176 billion yen for assistance for three projects.

Since the political turmoil in 2011, tourism and manufacturing—Egypt’s most important industries—have stagnated and overseas investment has dropped, adversely affecting the country’s economy. Inclusive and sustainable growth is needed to address the declining living environment and high rate of youth unemployment, which are underlying causes of political instability in the country. As a result of reforms and other measures promoted by the current administration, the level of public and private investment has increased and the economy has recovered from a growth rate of 2.2 percent in fiscal year 2013–14 to 4.2 percent in fiscal year 2014–15, which is expected to remain at least at four percent. To support inclusive and sustainable growth in Egypt, JICA will employ Japanese technology to create high-quality infrastructure as a base for a wide range of socioeconomic activity.

The features of the Japanese ODA loans are outlined below.

(1) Increasing the power supply while supporting efficiency and reliability

The electricity peak demand in Egypt has been growing at an annual rate of 6 percent since 2004, which is higher than the annual economic growth rate of 4.4 percent, and at this rate the electricity peak demand will outstrip the capacity of the currently installed power equipment by fiscal year 2017–18. To address this projected electricity shortage, the installed capacity of electricity generation must be increased while promoting the use of renewable energy. In addition, the energy efficiency must be improved by improving the transmission and distribution facilities.

Targeting the service areas of the Electricity Distribution Companies of Alexandria, North Cairo and North Delta, the Electricity Distribution System Improvement Project will install and upgrade electricity distribution facilities with technologies such as power distribution management systems and smart meters. These measures will reduce the electricity distribution loss and increase the efficiency and reliability of the electricity supply.

As a project qualifying for the Special Terms for Economic Partnership (STEP), the Hurghada Photovoltaic Power Plant Project will construct a large-scale solar power plant and install storage battery systems in the Hurghada region. This will increase the electricity supply while preventing instabilities in the transmission grid due to the increased use of renewable energy.

JICA will also contribute to mitigating climate change by reducing greenhouse gases through these two projects, which will reduce electricity distribution loss and promote the use of renewable energy.

(2) Supporting sustainable economic growth and creating employment with air transportation infrastructure

Borg El Arab International Airport is located near Alexandria, a city on the Mediterranean coast with the second largest population in Egypt, and went into full operation with completion of the first passenger terminal in 2010 (1). As excessive demand at the airport has resulted in a decline in the service level and operation restrictions, strengthening the capacity to handle travelers is an urgent issue.

By constructing a new passenger terminal, and expanding and improving incidental facilities, the Borg El Arab International Airport Extension Project will meet the demand for airport transportation at a level that supports the tourism industry and overseas workers in Egypt which are major sources of foreign currency for Egypt. It is expected that the project will increase the convenience and safety of air transportation, and stimulate the Nile Delta region where the airport is located.

As Japanese environmentally friendly advanced technologies are planned for utilization, STEP conditions will be applied to this project. The project will also alleviate climate change by adopting the Eco-Airport concept to reduce the environmental load.

1: The new passenger and cargo terminals, the administration building and taxiway were built with a Japanese ODA loan from JICA. The Loan Agreement (L/A) was signed in 2005, construction was completed in September 2010, and service began in December 2010. Airport management training at Narita Airport has been provided for 140 airport employees.

Reference
1. Terms and Amount of Loans

Project title Amount
(million yen)
Annual interest rate (%) Repayment
period
(years)
Grace
period
(years)
Procurement
Project Consulting services
Electricity Distribution System Improvement Project 24,762 0.3 0.01 40 10 General untied
Hurghada Photovoltaic Power Plant Projec 11,214 0.1 0.01 40 10 Tied*
Borg El Arab International Airport Extension Project 18,200 0.1 0.01 40 10 Tied*

* Special Terms for Economic Partnership (STEP) apply.

(1) Electricity Distribution System Improvement Project

(a) Background and Necessity
Averaging an annual economic growth rate of 4.4 percent over the decade from fiscal year 2004–05 to 2013–14, Egypt has also undergone an increase in the electricity peak demand, which, at an average of 6 percent per year, has grown faster than the economy, placing pressure on the electricity supply. As there has been an increasing trend in the network loss since fiscal year 2010–11 and that loss changes with the square of the electric current, there are concerns that an increase in the amount of electricity supplied will result in a steep rise in the network loss. To provide a stable supply of electricity, the installed capacity of electricity generation must be strengthened, and the energy efficiency must be improved through the construction and improvement of electricity transmission and distribution facilities to meet the rising power demand.

(b) Objective and Summary
By updating and installing electricity distribution equipment in the service areas of Alexandria Electricity Distribution Company, North Cairo Electricity Distribution Company and North Delta Electricity Distribution Company, this project will reduce the electricity distribution loss and improve the efficiency and reliability of the electricity supply, thereby promoting economic development and mitigating climate change.

Specifically, along with the installation and upgrade of the electricity distribution equipment, electricity distribution management systems will be installed to monitor the conditions of the electric current, creating optimal distribution network systems with reduced power loss. Also, automatic meter reading systems will be installed with smart meters capable of remotely communicating data, including the amount of power consumption and physical breakdown notifications, making meter measurements more accurate and making it easier to respond to malfunctions and electricity theft.

The funds for this loan will be allocated to upgrading and installing electricity distribution management systems, automatic meter reading systems, and smart meters, and to consulting services (basic design work, bidding assistance, and construction monitoring).

(c) Executing Agency
Egyptian Electricity Holding Company
Address: Ramsis St., Ext, Abbasia, Cairo, Egypt
Phone: +20-2-3360-0745, fax: +20-2-2402-7863

Alexandria Electricity Distribution Company
Address: 9 Metwalli St., Attarein, Egypt
Phone/fax: +20-3-4960081

North Cairo Electricity Distribution Company
Address: 2 Nasr Road, Nasr City, Cairo, Egypt
Phone/fax: +20-2-26713052/+20-2-22708991

North Delta Electricity Distribution Company
Address: Abd El Salam Aref St., adjacent to Stadium, Mansoura, Egypt
Phone/fax: +20-50-2304171

(d) Planned Implementation Schedule
(i) Completion of project: January 2023 – with the completion of the smart meter installation work by the electricity distribution companies
(ii) Issuing of letters of invitation for consulting services (including construction supervision): Complete
(iii) Tender announcement of initial procurement package for international competitive bidding on project construction: November 2016


(2) Hurghada Photovoltaic Power Plant Project

(a) Background and Necessity
Power generation in Egypt depends heavily on thermal power (89 percent), of which 77.8 percent is generated from natural gas. However, since the Arab Spring of 2011, petroleum and natural gas development has not moved forward due to the unfavorable investment environment, and power outages are frequent due to the lack of natural gas. The Government of Egypt wishes to diversify its energy sources from a perspective of energy safety and security, and aims to reduce its dependency on fossil fuels (natural gas, fuel oil and diesel fuel) by 2022 and increase the amount of electricity produced from renewable energy sources that have a low environmental burden to 20 percent of the total amount of power produced.

(b) Objective and Summary
This project will construct a 20-megawatt solar power plant and incidental facilities at the Hurghada wind farm, 15 kilometers northwest of Hurghada on the Red Sea coast. This will increase the supply of power, stabilize the grid and promote the use of renewable energy, thereby promoting socioeconomic development and mitigating climate change.

Outstanding Japanese storage battery systems will be installed as this is a STEP project. By installing the facilities on a trial basis, the project will contribute to stabilizing the power supplied by solar power plants as well as the voltage of the grid in the region, and to an increase in the electricity supply at night.

The funds for this project will be allocated to the construction of a solar power plant, storage batteries and the like, to the installation of cables to the central Hurghada substation and power conditioning and energy management systems, and to consulting services (bidding assistance, construction management and training).

(c) Executing Agency
New and Renewable Energy Authority
Address: Dr. Ibrahim Abu El Naga St, Ext. Abbass El-Akkad St. Nasr City, Cairo
Phone: +20-2-2271-3176, fax: +20-2-2271-7173

(d) Planned Implementation Schedule
(i) Completion of project: September 2019 – when the facilities are put into service
(ii) Issuing of letters of invitation for consulting services (including construction supervision): March 2016
(iii) Tender announcement of initial procurement package for international competitive bidding on project construction: April 2017

(e) JICA Contact Information
For further information about the procurement schedule, please contact the party listed below.
Contact Point for Electricity Sector, JICA Egypt Office
Address: World Trade Center 8th Floor, 1191 Corniche El Nile St., Boulak, Cairo, Egypt
Phone: +20-2-25748240, fax: +20-2-25748243


(3) Borg El Arab International Airport Extension Project

(a) Background and Necessity
Borg El Arab International Airport is located near Alexandria, a city on the Mediterranean coast with the second largest population in Egypt, and began full operations in 2010 with the completion of the its first passenger terminal. Of the passengers at the airport, 80 percent are Egyptians who mainly aim to work abroad. The number of annual passengers far surpasses the projection of one million for 2014 made when the airport began full operation. The larger-than-expected number is due to the increased demand for labor in Persian Gulf nations and the new entry of low-cost airline companies. The airport served more than 2.2 million travelers in 2013, making it the fourth busiest airport in Egypt and that number is expected to reach 3.6 million travelers by 2020. The excessive demand at the airport has led to a decline in the service level and operation restrictions, and strengthening the capacity to handle travelers is therefore an urgent issue.

(b) Objective and Summary
The project will construct a new passenger terminal along with expanding and developing incidental facilities at Borg El Arab International Airport to strengthen the capacity to handle the rapidly increasing demand for airport transportation, thereby improving the convenience and safety of air transportation in Egypt.

A STEP qualification review is in progress concerning the utilization of advanced Japanese environmentally friendly technologies, including low-energy air conditioning systems, solar power generation, LED illumination, and photocatalysis, a technology to promote organic decomposition for toilets and wall glass to reduce the frequency of cleaning.

The loan funds will be allocated to the construction of a new passenger terminal, the expansion and development of the apron and incidental facilities, and consulting services (bidding assistance, construction monitoring and airport employee capacity development).

(c) Executing Agency
Egyptian Airports Company
Address: Airport Road, in front of Ministry of Civil Aviation, Cairo, Egypt
Phone: +20-2-2268-3764, fax: +20-2-2268-3763

(d) Planned Implementation Schedule
(i) Completion of project: July 2020 – when the facilities are put into service
(ii) Issuing of letters of invitation for consulting services (including construction supervision): Complete
(iii) Tender announcement of initial procurement package for international competitive bidding on project construction: October 2016

(e) JICA Contact Information
For further information about the procurement schedule, please contact the party listed below.
Contact Point for Transport Sector, JICA Egypt Office
Address: World Trade Center 8th floor, 1191 Corniche El Nile St., Boulak, Cairo, Egypt
Phone: +20-2-25748240, fax: +20-2-25748243

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