The entire freshwater source for Egypt is the Nile river, and the colossal dependency on the river has led to massive water scarcity for the 104 million population. The desalination project is expected to generate about 3.3 million cubic metres of water daily in phase 1 and then expand eventually to generate up to 8.8 million cubic metres daily capacity with an $8 billion cost.
Egypt is underway to accede to investment deals to construct 21 large-scale water desalination plants in the first phase, with a daily capacity of 3.3 million cubic metres, announced on Thursday, December 1st. The project’s cost is framed at $3 billion to tap into cheap renewable energy. The Ministry of Planning and Economic Development has undertaken the project through The Sovereign Fund of Egypt (TSFE).
The entire freshwater source for Egypt is the Nile river, and the colossal dependency on the river has led to massive water scarcity for the 104 million population. The desalination project is expected to generate about 3.3 million cubic metres of water daily in phase 1 and then expand eventually to generate up to 8.8 million cubic metres daily capacity with an $8 billion cost. More than 200 developers from at least 35 countries have laid their eye of interest for the first phase.
Egypt recently hosted the 2022 United Nations Climate Change Conference (COP27). The country looks towards boosting lagging investments in renewable energy and has a planned series of green hydrogen projects lined up for 2025-26. During the conference, TSFE signed multiple cooperation agreements with nine renewable energy developers at a valuation of $83 billion. The agreements are to be finalised in the second quarter of 2023, and construction shall follow in the months to come.
The Sovereign Fund of Egypt was set up in 2018 with the objective of attracting private investments in state-owned projects and assets through a series of partnerships and co-investments. At present, the focus is on scoring private consortia to help develop brownfield infrastructure. The aim also emphasises the use of private equity to develop enterprises owned by the state ahead of public listings.
The green hydrogen projects of the country have been under negotiation for quite some time, and investors have finally sealed the initial agreements and are set to undertake feasibility studies and lock in the finances required, in addition to seeking partners, both local and international.
The call for privatisation plans has been pushed aside time after time, with the government justifying the setbacks on the grounds of economic shocks, covid-19 pandemic, Russian aggression on Ukraine and certain legal turbulences. State control advocates have also opposed privatisation plans.
At the COP27 conference, the government of Egypt formulated framework agreements of 9 out of 15 Memorandum of Understanding (MoU) for the eco hydrogen projects that are to be constructed in the Suez Canal Economic Zone (SCZONE) and along the Mediterranean coast. The projects would generate millions of tonnes of hydrogen and ammonia.
The potential fuel exports to Europe hold a key revenue factor as the country will have a competitive pricing advantage owing to the low-cost production of renewable energy because of the abundant resources available. The green hydrogen will be produced using electrolysis that is powered by renewable energy that splits oxygen from water. It is viewed as an extensible future power source that will bring down carbon emissions. However, the challenge to growth remains on factors of cost, inputs and also safety concerns.