Project Financing for Onshore Wind Farm Expansion Project in Egypt
Supporting Renewable Energy Power Generation Project of Japanese Companies

• Region: The Middle East
• Infrastructures
• Environment
• Overseas Investment Loans
• Project Finance

1. The Japan Bank for International Cooperation (JBIC; Governor: HAYASHI Nobumitsu) signed on November 18 a loan agreement for project financing^*1 amounting to up to approximately USD51 million (JBIC portion) with RED SEA WIND ENERGY S.A.E. (RED SEA) of Egypt, for an expansion project of the Gulf of Suez 2 onshore wind farm project^*2. RED SEA is owned by a consortium of Toyota Tsusho Corporation (20%), Eurus Energy Holdings Corporation (20%), Engie S.A. (35%) in France and Orascom Construction S.A.E. (25%) in Egypt. The loan is co-financed with the European Bank for Reconstruction and Development (EBRD), Sumitomo Mitsui Banking Corporation, the Norinchukin Bank, and Société Générale S.A., bringing the total co-financing amount to approximately USD106 million. Nippon Export and Investment Insurance (NEXI) will provide the insurance for the loan by the private financial institutions. In October 2022, JBIC signed a Memorandum of Understanding (MOU) with the EBRD to fortify cooperation between the two organizations^*3, and this is a co-financing project with the EBRD based on the MOU.
     
2. RED SEA is building a 500 MW onshore wind farm in Ras Ghareb within the Red Sea Governorate along the shore of the Gulf of Suez, located 200 km southeast of Cairo, the capital of Egypt. In this project, additional wind turbines on the site will be installed to increase the capacity by 150 MW. They will be operated along with the existing turbines as a single wind farm, and the electricity generated by the wind farm will be sold to Egyptian Electricity Transmission Company for a duration of 25 years.
     
3. In the Infrastructure System Overseas Promotion Strategy 2025 (supplemented in June 2023), the government of Japan, in support of the transition to carbon neutrality and decarbonization, established the policy of providing support for quality energy and electricity infrastructure that harnesses sophisticated technologies to reduce the burden on the environment in a way that is compatible with the energy policy of the host countries. In addition, the outline of a new strategy looking ahead to 2030, which was approved in June 2024 by the Ministerial Meeting on Strategy relating to Infrastructure Export and Economic Cooperation, aims to respond flexibly by taking social changes, such as green transformation (GX) and digital transformation (DX), as opportunities. The loan is in line with such policies and will financially support an overseas infrastructure project where Japanese companies have invested and will be involved in operation and management for the long term, thereby contributing toward maintaining and improving the international competitiveness of Japanese industry.
     
4. Also, in the Tunis Declaration, which was released at the Eighth Tokyo International Conference on African Development (TICAD 8) in August 2022, the government of Japan called for the promotion of Japan’s Green Growth Initiative with Africa (GGA), which aims to achieve structural changes toward low greenhouse gas (GHG) emissions and green growth reflecting the different circumstances of each African country through public-private partnerships in order to mobilize financial resources for climate adaptation and mitigation, including through collaborations with multilateral development banks. The project, including the co-financing with the EBRD, is in line with this initiative of the government of Japan for Africa.
     
5. The government of Egypt revised its Nationally Determined Contribution in June 2023. It aims to increase renewable energy in the energy mix to 42% by 2030 in order to reduce its dependence on thermal power and to achieve a 37% reduction in GHG emissions in the power sector by 2030. This project will contribute toward the energy transition policy of the government.
     
6. As Japan’s policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in the overseas expansion of their infrastructure businesses toward decarbonization by drawing on its various financial facilities and schemes for structuring projects and by performing its risk-assuming function.
     

Note

1. *1 
   Project finance is a financing scheme in which repayments for a loan are made solely from the cash flow generated by the project.
2. *2 
   See press release on March 6, 2023.
3. *3 
   See press release on October 17, 2022.