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Four desalination plants to be built in Egypt with Kuwait Fund financing

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  • Four desalination plants to be built in Egypt with Kuwait Fund financing

About the entity

Kuwait Fund
The Kuwait Fund extends Loans on concessionary term to finance development projects in the developing countries. The Fund also provides technical assistance to finance the costs of the feasibility studies of projects.
Global Omnium
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A loan agreement and a supplementary loan agreement between the Arab Republic of Egypt and the Kuwait Fund for Arab Economic Development have been signed in Sharm El-Sheikh, the Arab Republic of Egypt, on the sideline of the "Africa 2018 Forum", whereby Kuwait Fund extends a loan in an amount of 15 million Kuwaiti Dinars (equivalent to about US$ 50 million) to participate in the financing of the establishment of four sea water desalination plants project and a supplementary loan of 25 million Kuwaiti Dinars, (equivalent to about US$ 85 million) to participate in the financing of the construction of Bahr Al Baqar Water Drainage Systems project in the Arab Republic of Egypt.  It is worth mentioning that the Fund is a Kuwaiti public corporation, which relies entirely on its own resources for making loans and providing other kinds of development assistance.

Both the loan and the supplementary loan agreements were signed by Her Excellency Dr. Sahar Ahmed Mohammed Abdul-Moniem Nasr, the Minister of Investment and International Cooperation, on behalf of the Arab Republic of Egypt, and His Excellency Mr. Abdulwahab Ahmed Al-Bader, Director-General of Kuwait Fund for Arab Economic Development, on behalf of Kuwait Fund.

The Establishment of four sea Water desalination plant project aims to meet the increasing demand for drinking water, reduce the losses in transport networks, protect public health and provide basic services to improve the living standards of the population in South Sinai Governorate by establishing four seawater desalination plants with a total production capacity of 56 thousand cubic meters per day including seawater intakes and discharge pipes made from high-density polyethylene (HDPE), and connecting it to consumers in the province. It is worth noting that the project contributes to the achievement of Goal 6 of the Sustainable Development Goals of achieving clean water and sanitation by increasing the efficiency of water use in the agricultural sector.

The project includes the construction of four seawater desalination plants, including a production capacity of about 30,000 cubic meters per day in the city of Sharm el-Sheikh, a production capacity of 15,000 cubic meters per day in the city of Abu Redis and a production capacity of 6,000 cubic meters per day In the city of Nabq (Sharm El Sheikh), and a production capacity of 5 thousand cubic meters per day in the city of Taba. The project also includes the transfer of desalinated water from the stations to the distribution tanks located in the mentioned cities with a total length of about 38 km and diameters between 600 and 800 mm. the project is expected to be completed by the end of 2022.

The construction of Bahr Al Baqar Water Drainage Systems project aims at meeting expected demand for agricultural water, contribute to environmentally protection of Lake Al Manzala and creation of about 100 thousand of new jobs.

The project consists of the construction of civil and mechanical facilities to divert about 5 million cubic meters per day of water from three drainage systems; Bahr Al Baqar, Shadr Azam and Om Al Reesh, to be treated at a new treatment plant facility with capacity of about 5 million cubic meters per day that will be constructed east of Suez Canal. The project consists of reclamation of about 330 thousand acres of agriculture lands, in addition to 70 thousand acres currently cultivated, bringing the total cultivated land to 400 thousand acres. The project also includes consultancy services for detailed design and supervision of construction. It is expected to be completed by the end of 2022.

The total cost of the Establishment of Four Sea Water Desalination project estimates are based on 2018 for similar projects at about Egyptian Pounds 1960 million, equivalent to about Kuwaiti Dinars 32.9 million of which Egyptian Pounds 1062 million in foreign currency, equivalent to about Kuwaiti Dinars 17.4 million, representing about 54% of the total cost of this project. The fund loan will cover about 47% of the total cost of the project. The Fund intends to extend a supplementary loan within the allocations of its lending programme for the current year so as to complete the financing plan of the project.

The loan, referred to in the preceding paragraph, is made for a term of 25 years, including a grace period of 6 years, and is amortized in 38 semi-annual instalments, the first of which will be due on the first date on which any interest or other charges on the loan shall  fall due after the elapse of the grace period.  The loan will bear interest at 1.5% per annum in addition to a charge of 0.5% for meeting administrative costs and expenses of implementation of the loan agreement.

The total cost of the construction of Bahr Al Baqar Water Drainage Systems project estimates are based on 2017 prices for similar projects at about Egyptian Pounds 54 billion, equivalent to Kuwait Dinars 908 million, of which Egyptian Pounds 32.9 billion, equivalent to Kuwaiti Dinars 553 million, representing about 67% from the total cost. The Kuwait Fund's first loan, which is Kuwaiti Dinars 50 million, will cover 21.2% of the basic cost not including the agriculture components. The supplementary loan amounting to Kuwait Dinars 25 million and the first loan combined will cover about 31.8% of the total basic cost not including the agricultural components of the project. The Fund is also planning to participate in providing additional financing through a second supplementary loan. The supplementary loan will be extended on the same lending terms of the first loan and consolidated with it.

The loan relating to the establishment of four sea water desalination plants project represents the 49th loan made by Kuwait Fund for the financing of projects in the Arab Republic of Egypt, as the fund has previously made 48 loans to the Government of the Arab Republic of Egypt or to entities which are subordinate to it, to finance projects in various sectors, with a total amount of about Kuwaiti Dinars 973 Million (equivalent to about US$ 3.308 Million), whereas the fund supplementary loan extended to participate in financing Construction of Bahr Al Baqar Water Drainage Systems Project, represents the 50th Loan extended to finance projects in the Arab Republic of Egypt.  The fund also provided 17 grants and technical assistance allocations to Egypt with a total amount of about Kuwaiti Dinars 3.9 Million (equivalent to about US$ 11 Million) allocated for financing technical and economic feasibility studies for certain projects, and financing other activities. Kuwait Fund also administered two Grants provided by the Government of the State of Kuwait to the Arab Republic of Egypt with a total amount of about Kuwaiti Dinars 4.8 Million (equivalent to about US$ 16 million) for the purpose of reconstruction of some schools that were affected by earthquake in 1993, and the reconstruction of some villages that were damaged by floods in 1995.