The government has finalized the operating agreement for the Gabal El-Zeit wind power station. The tariff for electricity produced by the plant will be denominated in US dollars, with payment made in Egyptian pounds at the prevailing exchange rate at the time of settlement, a source at the Ministry of Electricity told Al Manassa.
On Monday evening, the government announced the signing of investment, operation, and power purchase agreements for the Gabal El-Zeit wind farm on the Red Sea, between the New and Renewable Energy Authority and the Egyptian Electricity Transmission Company on one side, and UAE-based Alcazar Energy on the other.
According to the government statement, the agreement’s investment value stands at $420 million, and includes the foreign partner assuming responsibility for operations, technical management, and maintenance—ensuring the project continues to run to the highest standards while maximizing returns on assets.
A source at the Ministry of Electricity familiar with the agreement told Al Manassa that the electricity tariff under Alcazar’s operation will be valued in dollars, while payment will be made in pounds at the prevailing exchange rate at the time of settlement.
This marks a shift in the plant’s pricing mechanism, which had not previously been linked to foreign currency exchange rates. The source, who requested anonymity, said: “When the state, represented by the New and Renewable Energy Authority, was operating the Gabal El-Zeit wind farm, there was no standalone electricity sales contract denominated in dollars or pounds, because production fed directly into the national grid.”
The source added that “during the evaluation and tendering process, a reference tariff of 2.4 cents per kilowatt-hour was used.”
Enterprise previously reported that the government’s move toward dollar-denominated pricing for Gabal El-Zeit electricity during privatization negotiations was a condition designed to protect the foreign investor against exchange rate fluctuations.
The 2024 tender for the plant sparked widespread controversy, with critics accusing the government of selling off the project for less than it cost to build. The Ministry of Planning rejected the claims, stressing that the deal was structured as a 25-year usufruct arrangement, after which both the plant and the land would revert to the state.
The source clarified that the plant’s remaining operational life currently ranges between 9–12 years, but that discussions are underway with Alcazar to extend this through turbine replacements or upgrades, improvements to control systems and networks, and enhanced operational and maintenance efficiency.
He added that the plant could continue operating for years beyond 2038 if technical and economic feasibility is confirmed, noting that some wind farms reach lifespans of 25 years or more following major upgrade programs. The signed agreement, he said, may therefore contribute to improving and extending the life of existing assets—not merely running them down to the end of their current projected lifespan. He suggested that operating the plant at full efficiency could save between 350 and 450 million cubic feet of natural gas per day.
Should the plant not be upgraded or its life extended, the project land would revert to the Ministry of Electricity to be tendered as a new project with different capacities and specifications, the source concluded.
Earlier this month, Prime Minister Mostafa Madbouly announced that the government intends to list four to five state-owned companies on the stock exchange before the end of the year, having provisionally listed 16 companies so far.
The government faces criticism from the International Monetary Fund over the slow pace of its privatization program, which it justifies by citing the low value of offers received. An earlier Enterprise report had noted that the value of the Gabal El-Zeit deal rose from $300 million to $420 million after the government insisted on securing the best possible price.
