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Tabdreed’s district cooling plans for Egypt’s CapitalMed go kaput on FX crisis: UAE-based district cooling firm Tabreed has terminated its contract with Egyptians for Healthcare Services (EHCS) to build a district energy plant for the latter’s CapitalMed medical complex in Badr City, CEO Khalid Al Marzooqi told Asharq Business on Friday. The FX crisis rendered the project “financially unsustainable,” given that the project’s financial returns were pegged in EGP, he explained.
Background: Tabreed landed an EGP 1.6 bn contract to design, build, and operate a heatingand cooling plant for CapitalMed back in September 2022 — a few months after it entered the local market with a contract to provide cooling services for Marakez’s D5M shopping center in East Cairo.
How did EGP volatility impact the contract? Tabreed had asked EHCS to modify the watertariff rate set in the contract in response to the steeper-than-expected currency devaluation, but the latter declined the request, prompting the Emirati firm to withdraw from the project, Asharq reported, citing a source it says is in the know.
Not the end for Tabreed in Egypt: While Tabreed’s Chief Financial Officer Adel Al Wahedi said in July that thecompany was “slowing down” plans for additional investment in the country as it waits for a stable outlook on the EGP, Al Marzouqi told Asharq that Tabreed is “still committed to investing in the Egyptian market.”
A big blow for Egypt’s district cooling potential: Egypt is eager to join in on the regional trend — spearheaded by Gulf countries — to expand its district heating and cooling systems, in efforts to reduce energy consumption and therefore emissions. Some 50% of electric power in the North African country goes to air conditioning during the summer months, according to Alaa Olama, a UNEP consultant, and the Head of the Egyptian District Cooling Code. In 2022, UNEP completed a feasibility study on a district cooling system for Egypt’s New Alamein City which found that a district cooling system could reduce refrigerants emissions by 99% and CO2 emissions by 40%.
