Project detail - Shokeir Wind Energy S.A.E

Who is our prospective customer?

Shokeir Wind Energy S.A.E. or Gulf of Suez III (the “Company”) is a project company established to develop, build, own, and operate and maintain a 900 MW onshore wind power plant (the “Project”) located in West Gabal El Zayt, Gulf of Suez, Egypt. The Project is being developed by a consortium comprising Aeolus (40%), a subsidiary of Toyota Tsusho Corporation, ENGIE (35%), and Orascom Construction (25%) (together, the “Sponsors”). Toyota Tsusho Corporation and ENGIE are large, internationally active companies with strong financial profiles and extensive experience in renewable energy development and operation, including in Egypt. Orascom Construction complements the Sponsor group as a core developer, bringing substantial experience in the delivery of large-scale infrastructure projects, including a growing and relevant track record in the wind sector. The Sponsors have successfully jointly developed and operated precedent wind projects in the Gulf of Suez region.

What is our funding objective?

FMO intends to provide a senior secured long-term loan of up to USD 60 mln to the Company under a Friendship Facility led by Proparco, alongside other development finance institutions and commercial lenders. The proceeds of the financing will be used to fund the construction and development of the Project. Long tenor project finance of this nature is not readily available from local or regional commercial banks in Egypt.

Why do we want to fund this investment?

The Project contributes to Egypt’s renewable energy targets by adding a significant amount of new wind generation capacity, supporting the country’s transition towards a lower carbon electricity mix and reducing greenhouse gas emissions. FMO’s investment aims to support activities that contribute to climate mitigation, contributing to SDG 13, in line with FMO’s methodology to determine the green finance attribution.

What is the Environmental and Social categorization rationale?

FMO has assigned an Environmental and Social (E&S) Category A for this transaction, due to the scale of the Project and its location in the Gulf of Suez, a globally significant migratory bird corridor, with potential for significant biodiversity risks and cumulative impacts on migratory soaring birds, alongside other environmental and social risks. Key E&S risks under assessment include impacts on avian biodiversity (in particular migratory soaring birds), community health and safety, labor and working conditions during construction, cumulative impacts with other existing and planned developments in the region, and potential human rights risks in the wind turbine supply chain. FMO has informed the Sponsors that its financing decision remains subject to the sensitivity map, the key required output of the ongoing Strategic Environmental and Social Assessment (SESA) and the updated Cumulative Impact Assessment (CIA) for the Gulf of Suez, which identifies red zones and designated go/no go areas within the Gulf of Suez. This includes confirmation that the Project and associated infrastructure are not situated in areas identified as sensitive for migratory birds. A satisfactory outcome of the SESA/CIA, demonstrating compliance with the relevant requirements relating to critical habitats and biodiversity under the Exclusion List of the European Development Finance Institutions (EDFI) Association (as applied by FMO), constitutes a condition for FMO’s financing. According to the information currently available, based on a draft Environmental and Social Impact Assessment (ESIA), the following IFC Performance Standards (PS) are expected to be triggered: • PS 1: Assessment and Management of Environmental and Social Risks and Impacts • PS 2: Labor and Working Conditions • PS 3: Resource Efficiency and Pollution Prevention • PS 4: Community Health, Safety and Security • PS 5: Land Acquisition and Involuntary Resettlement (to be confirmed during due diligence, if applicable) • PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources Green Label: FMO’s investment aims to support activities that contribute to climate mitigation contributing to SDG 13, in line with FMO’s methodology to determine the green finance attribution.