The proposed nuclear facility at Dabaa is attempts to satisfy Egypt’s future energy needs.
Rosatom will build the reactors and inject 85% of the USD $25 billion project. Egypt will pay the loan with 3 % interest, over 22 years from 2029.
The Dabaa deal was compared with other nuclear projects in the region. The Middle East Economic Survey (MEES) estimates that Egypt will ultimately pay USD $6.1 billion per GW of generating capacity, whereas Iran’s two new plants at Bushehr will cost USD $5.5 billion per GW, and the UAE’s reactors at Barakah USD $3.6 billion.
In addition, the Russian loan is a long-term fiscal challenge given Egypt’s recent foreign reserve shortages and growing budget deficit.
The project will increase Cairo’s dependence on Russian technical expertise as well. The vice president of Egypt’s Nuclear Power Plants Authority acknowledged that the country does not have enough experts to run the plant, so Russian engineers will operate it for the first ten years, which increase the cost of operation for the country.
Finally, the project is cost-ineffective compared to other energy deals Cairo signed in recent years.
For example, last year’s $9 billion deal with Siemens to build gas- and wind-powered plants will add 16,4 GW to Egypt’s grid — more than three times the output of the proposed nuclear plant for roughly a third of the cost.
In August 2015, the Italian firm Eni discovered the huge gas field along Egypt’s northern coast, in Zohn and this September 2016, BP discovered another massive field.
Extracting these resources are still cost effective compared to the construction of the nuclear plant, especially since nearly three-quarters of Egypt’s electricity is generated by natural gas.
