Scatec Bond

Project Description

The Multilateral Investment Guarantee Agency (“MIGA”) a member of the World Bank Group (WBG), issued on May 18, 2022, a guarantee of US$98.3 million covering a tranche of bond issuance by Virto Finance, S.A.R.L, as part of the US$334.5 million refinancing plan for six photovoltaic (PV)  power plants operating in Benban PV Solar Power Farm, namely Aswan PV Power SAE, Kom Ombo for Renewable Energy SAE, Daraw Solar Power SAE, Upper Egypt Solar Power SAE, Zafarana Solar Power SAE, and Red Sea Solar Power SAE, developed under the Round 2 Solar Feed-in-Tariff Program (FiT Program) in the Arab Republic of Egypt (the Projects). The Projects are currently owned by three sponsors, i.e. Scatec Solar ASA, Africa 50 and Norfund.

MIGA coverage was provided for a period of 19 years against the risks of Breach of Contract, Expropriation, Transfer Restriction and Inconvertibility, and War & Civil Disturbance. The bond tranche that is covered by MGA also benefits from a Liquidity Support Facility provided by the European Bank for Reconstruction and Development (EBRD).

The six project enterprises are currently operational and are located in the Benban Solar Park in the Aswan Governorate, in the Upper Egypt Region. Previously, MIGA issued guarantees amounting US$ 76.43 million on March 2020 to Scatec Solar ASA, and on June 2020 to KLP Norfund Investments AS, covering 90% of their equity investments in the Projects against the risks of Transfer Restriction and Inconvertibility for up to 15 years.

Environmental Categorization

The project is classified category B under MIGA’s Policy on Environmental and Social Sustainability. Click here to view the Environmental and Social Review Summary.

Development Impact

MIGA’s support for the Projects is expected to provide positive development benefits by de-risking country risks and thereby allowing institutional investors – a non-traditional investor class for these types of projects in – to support emerging market, clean-energy projects on a long-term basis. The new financing will provide more cost-effective financial terms for the underlying projects and will free up capital that can be applied for new projects. Moreover, the decrease in borrowing costs will allow sponsors to pass the cost savings to the Government of Egypt. As the first refinancing of Egypt FiT projects through a bond structure, the issuance is also expected to demonstrate the viability of a new financing model in the solar power sector that will be available to draw in institutional investment funds. The project is aligned with MIGA’s strategy and the pillars of Egypt’s World Bank Group Country Partnership Framework FY15-FY19, especially with respect to ensuring sustainable energy supply through private sector engagement.