Egypt's cabinet approves two Chinese deals for coal-fired power plants

Egypt's cabinet approved two conditional deals with Chinese companies to build coal-fired power plants with a total capacity of 6,600 megawatts, according to a cabinet statement released on Wednesday.

Dongfang Electric Corporation plans to build six units to produce 660 megawatts each. The first phase of the power plant will begin with three units at a combined capacity of 1,980 megawatts for a cost of almost $2 billion.

Shanghi Electric will construct four units at a combined capacity of 2,640 megawatts for a cost of $2.24 billion for the foreign components and LE3.1 billion for the domestic components.

The projects will be financed through Chinese banks, the spokesperson for the Ministry of Electricity, Mohamed El-Yammany, told Ahram Online without specifying details.

"The deals are not final yet, they remain conditional upon the results of negotiations on the finances and tariffs," he said.

The plants will be built in the Hamrawein area in the Red Sea governorate east of the country, he added.

The government signed a memorandum of understanding with the two companies for the projects in March 2015 during the Sharm El-Sheikh Economic Development Conference.

The use of coal for power generation was approved by Egypt in 2014 as the country faced a shortage of natural gas, raising controversy on its environmental impacts.

Egypt has turned into a net importer of natural gas from a net exporter in the past few years on the back of rising consumption and falling production.

The country has been experiencing an energy crunch since the summer of 2008, taking a further blow following the 2011 uprising.