$25bn in debt to Russia: Egypt pays for al-Sisi and his security services’ mistakes

Egyptian sources have told Egypt Watch that the construction and installation works at El Dabaa nuclear power plant site have already commenced in preparation for building the first of four nuclear power plants agreed upon with the Russian company, Rosatom, at a cost of more than $30 billion; $25 billion of which are borrowed by Egypt from Russian banks.

Last February, Atom Story Export Co., the engineering division of the Russian nuclear company, Rosatom, pronounced that three Egyptian companies won the tender for the construction works at the El Dabaa site. These companies include Hassan Allam Co., Arab Contractors, and Petrojet. Petrojet is to execute the work during the preparatory period for the construction of the site’s facilities at the El Dabaa plant. Hassan Allam company is to construct the main base, buildings, and structures for the drilling works base of the nuclear power plant, while the Arab Contractors Company is to construct the vertical settlement of the sections.

Dr. Amjad al-Wakeel, Head of the Egyptian Nuclear Power Plants Authority (NPPA), stated that the construction approval permit at the El Dabaa site is expected to be issued during the second half of next year, 2021. He explained that the observations on the project are currently being avoided so that the construction permit that allows the concrete bases to be laid is issued. He pointed out that the construction approval permit was applied for on 10 March 2019 in order to commence the construction of the nuclear plant in El Dabaa to generate electricity with a capacity of 4,800 megawatts.

He emphasised that the Nuclear and Radiological Regulatory Commission (NRRC) is the competent authority to issue a construction approval permit to start laying concrete bases for the first nuclear plant with a capacity of 1,200 megawatts, explaining that the contractors’ work at the El Dabaa site is not related to commencing the construction of the reactors. The contractors’ work only targets works related to the grading layouts, the administrative buildings, and the auxiliary buildings and is irrelevant to the issuance of the construction permit. It is expected that the operation of the first nuclear plant will begin in 2026 with a capacity of 1.2 gigawatts.

More debts

According to the declared agreement between Egypt and Russia, El Dabaa nuclear project will cost about $30 billion in construction. The Russian side will fund 85 per cent of the costs through a loan of $25 billion that Egypt shall begin paying off starting from 2029 until 2050, whereas Egypt will fund the remaining 15 per cent. This comes at a time when Egypt’s external debt had amounted to nearly $120 billion at the end of last June according to the International Monetary Fund (IMF) as it received about $9.7 billion from the IMF and the international markets over last May and June.

The most important question about this project, however, concerns its feasibility that is disproportionate with the huge debt of $25 billion. The current construction works have commenced at a time when Egypt has a large surplus in energy production estimated at a fifth of its production of 50 gigawatts, according to the statements of Karim el-Adham, the spokesperson of the NRRC, and Ayman Soliman, Chief Executive Officer at The Sovereign Fund of Egypt affiliated to the president.

In addition, the cost is considered expensive compared to that of other energy projects, like the $8 billion Siemens deal for the construction of power generation plants that use gas and wind with a capacity of 16.4 gigawatts; i.e., about quadruple what will be produced by the nuclear project at a cost of less than a third of that project’s costs.

The timeline of the project, however, sheds the light on that mystery, since the initial agreement on that project took place after the bombing incident of the Russian passenger jet the Metrojet Flight 9268 on 31 October 2015 while it was on its way from Sharm el-Sheikh to Saint Petersburg in Russia; 224 passengers were on that plane and all of them were killed in that incident that took place 100 kilometres only to the south of the Egyptian city of al-Arish.

The investigations revealed that the operation took place after a bomb was planted under one of the seats. The Russian President Vladimir Putin, declared that the plane crash was the result of a terrorist act, whereas the Director of the Russian Federal Security Service, Alexander Bortinkov, explained that the examination of the bags of the passengers on the plane, as well as that of the plane’s parts, revealed the presence of traces of explosives. He put down the reason for the plane crash to the explosion of an improvised explosive device that was planted on the plane, thus putting the entire blame on al-Sisi’s security services.

Immediately afterwards, Egypt signed the initial agreement of the nuclear power plant on 19 November 2015, followed in November 2017 by signing the initial contracts between Abdel Fattah al-Sisi and the Russian President Vladimir Putin, which came into force on 11 September 2017.