Project detail - VIRTUO FINANCE S.A.R.L.

VIRTUO FINANCE S.A.R.L.

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Who is our client

Scatec ASA as main sponsor developed a portfolio of six 50MW solar PV plants in the BenBan complex located in the Aswan province in Egypt. The 6 projects are operational since 2019 and customers of FMO through B-loans under the EBRD umbrella till May 2022 and through a bond issued by Virtuo Finance since May 2022. The projects are ultimately owned by Scatec ASA, Africa 50, Norfund and KLP.

Funding objective

FMO invested USD 72.5 mln in a direct subscription in a green project bond (the “Bond”) of USD 334.5 mln of which the proceeds are on-lend to the 6 project companies owning the 6 solar projects to refinance the existing debt facilities.

Why we fund this project

The Benban solar projects diversified Egypt’s energy sources by exploiting the country’s renewable energy potential and have set a precedent for future developments in the sector. The Bond is the first private green renewables-backed project bond issued in Egypt and obtained a verified certification from the Climate Bond Initiative (CBI). FMO is an anchor investor in this innovative Bond, facilitating private sector investors to invest in the Egyptian renewable energy sector. The transaction is accompanied by an inclusion program, including introducing a certified training program for agribusiness entrepreneurs and enhancing the role of women in the local economy.

Environmental and social rationale

The transaction has been categorized as Category B+, in line with FMO environmental and social risk categorization. The Benban Solar Power Project is located near Aswan and contains about 25 km2 of solar panels. The project has been fully completed and is operational, providing solar power to the national grid. The project has been designed and constructed by 20 different developers, who own and operate 35 individual plots located in the project. FMO Client Scatec owns and operates six individual plots. A Strategic Environmental and Social Impact Assessment (SESIA) was developed by an independent qualified Consultant for the entire Benban complex, based on a Terms Of Reference prepared by the Lenders against national legislation and Lenders requirements including the IFC Performance Standards and the EBRD Performance Requirements. The SESIA included baseline studies, community consultations, risk assessments and outlines for specific management plans. Examples of impacts during Construction are on labour standards, local community health and safety, waste management and community benefit sharing. Developers have, as next step, developed plot-specific Environmental and Social Impact Assessments (EIA) for their respective plots, all within the framework of the SESIA and including plot specific management plans. During the Operational Phase, impacts are limited (solar power plants in operational phase come with little activity) and the key action is on implementation of the Community Development Plan. The following IFC Performance Standards (“PS”) are triggered by the transaction: PS1: Assessment and Management of Environmental and Social Risks and Impacts; PS2: Labor and Working Conditions; PS3: Resource Efficiency and Pollution Prevention; PS4: Community Health, Safety and Security; PS5: Land Acquisition and Involuntary Resettlement is not triggered. The SESIA included a robust screening and confirmed PS5 is not applicable. PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources is not applicable. The SESIA confirmed PS6 is not applicable. PS 7 Indigenous Peoples is not triggered because no impacts on local groups qualifying as Indigenous were identified. PS 8 Cultural heritage is not triggered, as no cultural objects or places were identified. However, in line with Egypt’s rich cultural history, specific mitigation measures including chance find procedures were developed for the Construction Phase.

Region
Africa
Country
Egypt
Sector
Energy
Signing date
5/13/2022
Total FMO financing
USD 72.50 MLN
Fund
FMO
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
B+