Deutsche Bank, HSBC Said Arranging $3.7 Billion Egypt Power Loan

Egypt, the most populous Arab country, is seeking to raise about $3.7 billion in loans to fund power plants after signing a deal with Siemens AG to build the projects, according to three people with knowledge of the plan.

Deutsche Bank AG, HSBC Holdings Plc. and Kfw-Ipex Bank AG are helping state-controlled Egyptian Electricity Holding Co. raise the financing, the people said, asking not to be identified because the information is private. The loan is being supported by export credit agency Euler Hermes Group, they said.

A draft loan agreement has been referred to the economic ministers’ group for review, Mohamed Shaker, minister of electricity, said in a phone interview from Cairo, without confirming the loan’s size and the banks. The loan carries a guarantee from the country’s Ministry of Finance with the first tranche expected to be drawn in about six months, he said.

German industrial group Siemens signed a deal last month to supply Egypt with equipment to generate 16.4 gigawatts of energy, including three gas-fired combined cycle power plants with 4.8GW capacity and eight turbines each. It also agreed to set up 12 wind farms with 600 turbines and 2GW capacity as well as to set up a rotor blade plant in Egypt with 1,000 employees.

Egypt expects to spend $2.6 billion with foreign companies for electricity, including equipment, this summer, Prime Minister Ibrahim Mahlab said in May. The country generated about 25,000 megawatts of power in April, compared with demand of 27,000 megawatts, the presidency said that month.

Spokesman for HSBC, Deutsche Bank and Thomas Krick, a spokesman for KfW Ipex-Bank, all declined to comment. Matthias Jansen, a spokesman for Euler Hermes, said in an e-mail from Berlin that the company was aware of the deal though no decision had been taken to back it.

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