A model deal for a model city

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aqualia and Orascom have convinced local banks to back Egypt’s first wastewater PPP at New Cairo. It is an important breakthrough.

Four banks – including National Société Générale Bank (NSGB), Commercial International Bank (CIB), Arab African International Bank and Ahli United Bank – have so far signed up to provide a total debt package of around EGP600 million ($110 million) to fund the engineering, procurement and construction (EPC) phase of the New Cairo wastewater project in Egypt.

Based on a 70:30 debt-to-equity split, the total EPC cost of the project is around EGP857 million ($157 million), against a total contract value of EGP2.646 billion ($483 million) – which includes O&M costs over the contract’s 20-year duration.

The 50:50 developer consortium of aqualia and Orascom Construction Industries (Orasqualia) beat off stiff competition to take New Cairo, but the Spanish-Egyptian JV faced a less familiar proposition in raising the debt for Egypt’s first competitively bid buildoperate- transfer project. Despite this, a number of Middle Eastern banks are showing positive sentiment towards investing in Egypt’s huge infrastructure BOT programme, which encompasses roads and hospitals, as well as water and wastewater projects.

The late January deadline for financial close at New Cairo is on course to be met, and aqualia’s Middle Eastern director Jose Enrique Bofill regards the willingness of local banks to supply debt to the showpiece project as a major success. “After a lot of work from the financial and the concession departments of both aqualia and Orascom, it turned out there was a list of regional banks willing to come into the deal – not just one or two,” he explained to GWI.