Parched Egypt Seeks Partners for $2.5 Billion Desalination Plan

Egypt is seeking partners to invest in a $2.5 billion initiative to build more than a dozen renewable energy-powered desalination plants by 2025, as the country tries to tackle looming water scarcity.

Officials plan 17 new plants that would run on solar and other green sources, with each built, owned and operated by Egypt’s sovereign wealth fund in partnership with a group of local and foreign investors, according to the fund’s chief executive officer, Ayman Soliman. 

The Arab world’s most populous nation relies on the Nile River for almost all its fresh water and is confronting a yawning supply deficit that officials fear will be worsened by a giant hydropower dam Ethiopia is filling on the main tributary.

“Egypt is keen to build a sustainable technology base to control its destiny when it comes to water security,” Soliman said in an interview. The wealth fund targets taking a minority stake in all the plants alongside the winning bidders, he said.

Read: Why Ethiopia’s Mega-Dam Has Its Neighbors Fuming: QuickTake

Population growth and climate change have also made Egypt vulnerable to water scarcity. The world needs to spend $6.7 trillion on water infrastructure by 2030, according to the United Nations, which says that around 1.2 billion people already live in areas of physical shortages.

Egypt, which needs about 114 billion cubic meters of water each year to cater for its more than 100 million people, receives only about half that from natural sources, according to the Irrigation Ministry. It addresses the shortfall by steps including recycling agricultural wastewater and groundwater and importing extra food instead of irrigating more crops.

The 17 plants, which are targeted to produce a combined 2.8 million cubic meters of desalinated water per day, are part of a broader plan to add 6.4 million cubic meters of daily capacity by 2050, Soliman said. 

The ministries of housing, planning, finance and electricity are all involved, and the government will be the off-taker for the desalinated water at “competitive tariffs.”

Egypt was operating 76 desalination plants able to produce nearly 832,000 cubic meters per day as of May, according to the state-run Ahram Online news website.

Egypt’s first-ever sovereign fund, which was established in 2018, is modeled after initiatives in Malaysia and India. The fund aims to partner with the private sector and generate additional wealth from under-utilized state assets that it plans to manage.

Investor Outreach

Several investors have expressed interest, Soliman said, without identifying them. The European Bank for Reconstruction and Development and International Finance Corp. will give technical support and advise on the bidding. That’s slated to begin in the first quarter of 2022 with a tender for producing about 1 million cubic meters, he said.

The project will benefit from Egypt’s competitive advantage in producing cheap renewable power and also allow access to green financing, potentially reducing costs, according to the CEO.

Some 8.6% of Egypt’s electricity comes from renewables, with a goal of raising that to 20% by 2022 and more than doubling that by 2035. Benban, a $4 billion solar park near the southern city of Aswan, is one of the world’s biggest, while the country also operates wind farms along the Red Sea.

Egypt’s cabinet last month said officials held talks with Scatec ASA of Norway about possible collaboration on projects using renewable energy for desalination.

“We are going to manage different types of partnerships to cater to a very aggressive timeline,” Soliman said, citing “huge appetite.”

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