PROJECT UPDATE- The Dabaa nuclear power plant: Egypt’s nuclear energy production strategy is seeing progress as construction begins on the planned 4.8 GW nuclear power plant in Dabaa. The project — which has faced delays due to covid-19 — is now moving ahead, with more tenders kicking off for the third reactor at the plant, after the Egyptian Nuclear and Radiological Regulatory Authority (ENRRA) gave Russian state nuclear company Rosatom a construction permit for the reactor.

REFRESHER- Rosatom was contracted in 2015 to handle the construction and provide fuel for Dabaa, Egypt’s first nuclear power plant. The company broke ground on the USD 30 bn project last summer. Dabaa will include four 1.2-GW reactors and is set to come online at the beginning of the next decade. Construction work was set to begin in the second half of 2020 and complete by the 2028-2029 fiscal year, but disruptions caused by the pandemic now means that the plant is unlikely to be up and running before 2030.

What’s happening now? The process of selecting contractors and consultants for the third reactor is currently underway after ENRRA granted Rosatom the construction permit for the reactor, a source with knowledge of the matter told Enterprise. Rosatom subsidiary Atomstroyexport is the plant’s main contractor and is issuing tenders for subcontractors for the project.

Who’s already working on the plant: Our friends at Hassan Allam Construction, alongside Arab Contractors and Petrojet, were awarded contracts in three separate tenders to work on the site of the plant back in 2020. Hassan Allam was awarded a USD 20 mn contract to prepare the “pioneers base camp” for staff working on the facility, while Arab Contractors were tapped to do leveling work for the camp.

The new tenders are expected to draw interest from contractors, particularly considering the tax holiday that will be granted to all contractors on the project, our sources tell us. The tax exemption was introduced last year through amendments to the law regulating the Nuclear Power Plants Authority (NPPA) to fully exempt from taxes all parties involved in building and operating nuclear projects, including contractors, sub-contractors, equipment suppliers, and workers.

What’s the timeline for the reactor looking like? Now that ENRRA has handed Rosatom the construction permit for the third reactor, it’s expected that technical work to lay the first concrete foundation for the reactor will begin in the second quarter of the year, sources from the Electricity Ministry who requested to remain anonymous told Enterprise.

The good news: The timeline to complete the plant is unlikely to be affected by fiscal constraints at the state budget level, since the vast majority of the work is being executed by the private sector, or financed through loans and grants, our Electricity Ministry sources said. This means that work on the plant is expected to move ahead without further delays, the sources explained.

And: Contractors are getting their compensation payouts for delayed state projects: Generally speaking, the procedures for contractors who have suffered losses on state projects due to macroeconomic headwinds to receive compensation from the government are going smoothly, head of the Egyptian Federation of Construction and Building Contractors Mohamed Sami Saad told Enterprise. These payouts are helping to boost liquidity in the sector, which is increasing contractors’ appetite to compete on new projects, including the contract for the third reactor, Saad said.

Background:Late last year, President Abdel Fattah El Sisi ratified amendments to the Contractors Compensation Act to hand out compensation from the government for losses they incurred on state projects. The amendments came as contractors suffered from a combination of headwinds, including higher costs of raw materials, previous import restrictions, EGP devaluation, and limited financing options. The government is expected to dish out some EGP 40 bn in compensation, Saad had previously told us.

Your top infrastructure stories for the week:

  • A Russian and a US firm reportedly intend to bid to build small nuclear reactors in Egypt.
  • President Abdel Fattah El Sisi discussed energy links with Cypriot counterpart Nikos Christodoulides in Cairo.
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