When Egypt announced plans to develop renewable power in 2014, investors piled in, drawn by year-round sunshine and chronic electricity shortages. Two years on, many projects have stalled, hitting confidence among foreign investors Egypt sorely needs.
Developers who prequalified for solar and wind projects under attractive feed-in-tariff (FiT) schemes say they face delays and currency risks while wrangling with the government over contract terms has complicated efforts to secure financing.
Some foreign firms now say they will shelve projects at a time when Egypt is seeking to boost foreign investment to ease a hard currency shortage that is choking the economy and to diversify after gas shortages caused blackouts in 2013 and 2014.
One such company is Italy's Enel Green Power, which prequalified in 2015 for one solar and two wind projects under Egypt's FiT schemes and entered a build-own-operate tender for a 250 megawatt wind project.
"Continuous uncertainty from the local authority in managing the process as well as delays in assigning contracts, have lead EGP to freeze its business development operations in the country," an Enel spokeswoman said.
A source from another consortium of foreign investors that prequalified for a solar FiT project said Egypt's insistence on domestic arbitration in any dispute had prompted a multilateral lender that was co-financing the project to withdraw.
"I can't believe they would do this to foreign investors and big lenders when Egypt needs them," said the source. "The feed-in-tarrifs were high, but the whole thing has turned into an Egyptian soap opera. No one knows what's going on and they don't seem to care."
Egypt's New and Renewable Energy Authority did not respond to Reuters requests for comment. Its chairman Salah El-Sobky was quoted in Al Shorouk newspaper this week as saying the Electricity Ministry was taking the developers' concerns into consideration but was not responsible for their funding.
Egypt announced in 2014 ambitious plans to develop renewable energy, originally targeting 4.3 gigawatts of wind and solar projects to be installed over three years.
The International Finance Corporation, an arm of the World Bank, said last year Egypt's renewable energy projects could require $8 billion in capital investment over the next four years, a significant opportunity for investors and lenders.
Egypt had aimed to meet 20 percent of its energy needs from renewable sources by 2020, but has pushed that back to 2022.
