Project Summary

Project General Description

The Electricity and Green Growth Support Program (EGGSP) is designed as a programmatic series of two consecutive Sector Budget Support (SBS) operations over the financial years (FY) 2019/20 – 2020/21 for a total indicative financing package of EUR 450 million. The proposed operation is an ADB sovereign loan of two hundred and twenty-five million Euros (EUR 225 million) to the Arab Republic of Egypt to finance the first phase. EGGSP will support the government in maintaining the reform momentum to limit the deterioration of macroeconomic balances and create additional fiscal space that enables it to expand social spending, especially on health for combating COVID-19, and deploy further protection measures to alleviate poverty and socioeconomic hardship. Specifically, the program will support enhancing the resilience of the power sector and deepening private sector participation for fulfilling the interconnected goals of the country’s energy strategy for ensuring security of energy supply through enhanced sustainability, governance and competition. EGGSP comprises two components that have been selected based on the current priorities for the next steps in the electricity sector reform agenda. The two components complement each other by improving the financial position and competitiveness of the electricity sector to help attract more private investment in clean energy and energy efficiency for promoting climate change mitigation, green and sustainable growth. Its implementation is expected to contribute to Egypt’s aspirations for becoming a regional energy hub by improving the security of energy supply and enhancing sector competitiveness.

Project Objectives

EGGSP will support government efforts in deepening and sustaining the ongoing energy sector reforms, with focus on the electricity sector. In line with the ISES, the main goal of the program is to promote a sustainable, competitive and diversified electricity sector for ensuring security of supply and supporting green growth. The purpose of the EGGSP is to support the reforms in two main critical areas, namely: i) restructuring the electricity sector for enhancing its financial sustainability and improving its governance and competitiveness; and ii) promoting clean energy and energy efficiency for addressing climate change mitigation and fostering green growth.

Beneficiaries

EGGSP will benefit the population of Egypt, particularly the most vulnerable, because of the increased social allocations, including for coping with COVID-19, using the fiscal space that will be created by the reforms supported by the program. Furthermore, with near universal access to electricity in Egypt, the population will benefit from better energy service delivery and reliability. Promoting energy efficiency through the EGGSP will not only help the country make better use of its natural resources, but also help consumers reduce their expenditures on energy. Industries, including SMEs, should also benefit from the increased competitiveness in the energy sector that should help them improve their comparative advantages. EGGSP will benefit the GoE by supporting the continuation and deepening of the country’s comprehensive economic reform program for promoting sustainable development and green growth. The Program will benefit the Ministry of Electricity and Renewable Energy (MoERE) and the public power utility (EEHC & EETC), NREA and Egypt ERA with improved financial positions, better governance and higher operational efficiencies.

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