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Signature of a Loan Agreement for Financing the Construction of Bahr Al Baqar Water Drainage System Project in the Arab Republic of Egypt
A loan agreements was signed today in Cairo between the Government of the Arab Republic of Egypt and Kuwait Fund for Arab Economic Development whereby, the Fund will make a loan of Kuwaiti Dinars 50 Million (equivalent to about US$ 170 Million) to assist in financing the Construction of Bahr Al Baqar Water Drainage System Project. It is worth mentioning that the Fund is a Kuwaiti Public Corporation, which relies entirely on its own resources for making loans and providing other kinds of development assistance.
The Agreement was signed on behalf of the Government of the Arab Republic of Egypt by Her Excellency Dr. Sahar Ahmed Mohammed Abdul-Moniem Nasr, the Minister of Investment and International Cooperation, and on behalf of Kuwait Fund for Arab Economic Development by Mr. Abdulwahab Ahmed Al-Bader, Director-General of the Fund. H.E. Mr. Mohammad Saleh Al-Thuwaikh, Ambassador of the State of Kuwait to Arab Republic of Egypt attended signing ceremony.
The Project aims at meeting expected demand for agricultural water, contribute to environmentally protection of Lake Al Manzala and creation of about 100 thousand of new jobs.
The Project consists of the construction of civil and mechanical facilities to divert about 5 million cubic meters per day of water from three drainage systems; Bahr Al Baqar, Shadr Azam and Om Al Reesh, to be treated at a new treatment plant facility with capacity of about 5 million cubic meters per day that will be constructed east of Suez Canal. The project consists of reclamation of about 330 thousand acres of agriculture lands, in addition to 70 thousand acres currently cultivated, bringing the total cultivated land to 400 thousand acres. The project also includes consultancy services. The Project is expected to be completed by the end of 2022.
The total cost of the Project is estimated based on 2017 prices at about Egyptian Pound 54 Billion, equivalent to Kuwait Dinars 908 Million, of which Egyptian Pound 32.9 Billion, equivalent to Kuwaiti Dinars 553 Million, representing about 67% from the total cost. The Fund first loan, which is Kuwaiti Dinars 50 Million, will cover 21.2% of the basic cost not including the agriculture components. The fund is also planning to participate in providing additional financing through a second and a third Loan.
The Loan will be for a term of 25 years, including a grace period of 6 years, and is to be repaid in 38 semi-annual instalments, the first of which will be due on the first date on which interest or other charges on the Loan will fall due in accordance with the Loan Agreement, after the expiration of the said grace period. The Loan bears interest at the rate of 1.5% per annum, in addition to a service charge of 0.5% per annum to meet administrative costs and other expenses related to the implementation of the Loan Agreement.
It is worth noting that the project contributes to the achievement of Goal 6 of the Sustainable Development Goals of achieving clean water and sanitation by increasing the efficiency of water use in the agricultural sector.
The loan represents the 48th loan made by Kuwait Fund for the financing of projects in the Arab Republic of Egypt, as the Fund has previously made 47 loans to the Government of the Arab Republic of Egypt or to entities which are subordinate to it, to finance projects in various sectors, with a total amount of about Kuwaiti Dinars 923.1 Million (equivalent to about US$ 3,139 Million). The Fund also provided 17 grants and technical assistance allocations to Egypt with a total amount of about Kuwaiti Dinars 3.9 Million (equivalent to about US$ 11 Million) allocated for financing technical and economic feasibility studies for certain projects, and financing other activities. Kuwait Fund also administered two Grants provided by the Government of the State of Kuwait to the Arab Republic of Egypt with a total amount of about Kuwaiti Dinars 4.8 Million (equivalent to about US$ 16 million) for the purpose of reconstruction of some schools that were affected by earthquake in 1993, and the reconstruction of some villages that were damaged by floods in 1995.