The Russian loan stops Dabaa Nuclear power plant

The Russian loan stops Dabaa Nuclear power plant

Egypt is facing a rapid decline of its electricity production and. The production of electricity from the Aswan high dam dropped significantly and Egypt needs to double its electricity production three to five times over the next twenty years if to achieve a breakthrough in the industrialization and investment.

Furthermore, the government faces a problem of water irrigation from the Nil River, which is shared with Sudan and Ethiopia. Egypt is currently in discussion with China and Singapore to build desalinization plants, in order to support supply of water for its new project: Dabaa nuclear power plant

Last May, Abdel Fattah El-Sisi approved the loan agreement with Russia worth $ 25 billion to build four units of 1200 MW in Dabaa. Rosatom is the planning to connect the first unit to the grid by 2022. But a source in the Ministry of Electricity, said that the ministry assessed the cost of the electricity generated from the Dabaa plant and found that it would be too high compared to renewable energy

The Ministry of Finance is holding the project and fears the economy in Egypt is not strong enough to guarantee the loan, and respect the terms. The agreement included –published by the Official newspaper– that Egypt will get the loan within 13 years and paid back on 22-year interest rate of 3% per annum «through 43 semi-annual installments level on April 15 and October 15 of each year, provided that the payment of the first installment of the loan in October 15 2029 ».

The Russian loan covers 85% of the value of the nuclear plant construction, while Egypt will provide the rest. The establishment of Dabaa reactor is considered as strategic for the government. The government wants an Industrial and Technological leapfrog, and this project will improve relations between Egypt and Russia*.

Abdel Fattah El-Sisi is expected to visit Vladimir Putin, Egypt, during the October, and open tourism traffic back to Sharm El Sheikh, in addition to the signing of final contracts for the station Dabaa nuclear. President El-Sisi will also sign contracts with Russian oil companies to supply equipment for oil and liquefied gas shipments to Egypt.

* Relations between both countries were degraded after the accident of the Metrojet Flight 9268 and the death of the passengers and seven crewmembers.

Source: Christiandogma

About Author

Arnaud Lefevre

Arnaud Lefevre is the Chief Executive Officer of Dynatom International. Arnaud is in charge of the international development of the business portfolio.