Should you seek a Golden License for your new green energy project in Egypt?

Egypt has recently announced a legal framework to facilitate the licensing process for strategic and national projects, as well as public-private partnerships in the utilities sector. The criteria for qualification are specific and the nature of the projects is closely examined by the “Golden Licenses Unit” created within the General Authority for Investment and Free Zones (GAFI) before granting a license.

The below summary aims to provide you with an overview of the new framework to help you evaluate whether your new project or new project extension would qualify for the license. It also highlights a number of practical tips based on Mazghouny & Co experience in handling projects’ requests for the Golden License in the main green energy sectors.

  1. Relevant projects
  • Companies that are incorporated to set up strategic or national projects that contribute to the achievement of sustainable development in accordance with Egypt’s economic development plan
  • Companies that are incorporated to set up PPPs in the following sectors: public utilities and infrastructure, new and renewable energy, roads and transportation, ports, and IT

  1. Strategic and national projects’ definition for the purposes of article 20 of the Investment Law (based on Cabinet Decree no. 56/2022: must include at least 2 of the following criteria, in addition to being establishment in a relevant area/sector, including those set out below)
  • The project contributes to increasing exports by exporting at least 50% of its production per year, starting within 3 years at most from the project’s start of operations
  • The financing for the project comes in the form of funds transferred from outside Egypt through the Egyptian banking system
  • The project targets the decrease of imports, boosting domestic industry, and increasing local component, such that the percentage of local component, including raw materials and production inputs, is at least 50% calculated by deducting the value of imported components from product cost
  • Incorporated in area in need of development (among those listed in Cabinet Decree no. 7/2020)
  • The project contributes to the transfer of know-how and technology to Egypt and to fostering innovation, development, and scientific research in such way as determined by the Ministers of telecommunications and information technology, of industry, or of scientific research, as may be relevant
  • The project is aimed at securing the supply of strategic goods to the country and reducing their import into Egypt
  • The project is domestic labour-intensive (in accordance with article 11 of the Investment Law’s Executive Regulations)
  • It also contributes to environmental impact mitigation, greenhouse gases/emissions reduction, and climate improvement, as determined by the Minister of environment

  1. Select areas of relevance
    • Electricity and renewable energy
  • Green hydrogen projects (including production, transportation, storage, distribution, and export)
  • Electricity projects feeding electricity on the ultra-high and high voltages to national agricultural development projects carried out by State entities (such as New Delta, Sinai Peninsula Development, Toshka, and Owainat projects)
  • Green Corridor projects aimed at maximising the renewable energy share in the electricity mix
  • Electricity projects transmitting electricity on the ultra-high and high voltages to the State’s national development projects nationwide
  • Renewable energy projects aimed at feeding electricity to water desalination and green hydrogen projects
  • Interconnector projects aimed at linking Egypt’s electricity grid to neighbouring countries and electricity export
  • Electricity storage projects, such as pumping and storage as well as batteries
    • Agriculture
  • Livestock breeding improvement projects
  • Species’ crossbreeding and hybridisation projects
  • Agricultural manufacturing projects aimed at export
    • Environment
  • Manufacturing safe, environment friendly, single-use alternatives of plastic products
  • Integrated waste management activities
    • Petroleum and mineral resources
  • Projects developing crude oil, gas and petroleum resources pipelines and networks to meet local market needs
  • Establishing strategic ports and storage areas for crude oil and petroleum products
  • Digital infrastructure development projects aimed at digital transformation for the natural resources sector
  • Carbon emission reduction and carbon capture projects
  • Projects expanding the use of natural gas as an alternative to diesel and gasoline
  • Water treatment projects associated with the production of crude oil and gas
  • Crude oil atmospheric distillation projects and projects dedicated to developing existing production units at refineries and manufacturing plants in order to produce high-value petroleum products
  • Concrete pipes, and steel pipes and fittings production facilities
  • Projects establishing laboratories for gold refining and casting
  • Petrochemical plants, projects producing metallic silicon and polysilicon, phosphate fertilisers and phosphoric acid, or tantalum extraction and refining

  1. Project company requirements
  • The company must be incorporated in the form of a joint stock company or a limited liability company in accordance with the provisions of the Investment Law no. 72/2017, or the Companies Law no. 159/1981
  • The company must provide evidence of financial solvency for the implementation of the project, based on the requirements to be determined by GAFI
  • The company is incorporated at a date following that of the enforcement of the Investment Law (post-2017)
  • The company must submit a preliminary feasibility study for the project prepared by a reputable and licensed national or international consultancy firm
  • The company must submit a schedule/programme for implementing the project
  • The company must submit an acknowledgment to GAFI in respect of the self-procurement of all infrastructure utilities (including roads, water, sewage, electricity, communications, and waste management)
  • The company must also submit to GAFI an acknowledgment to abide by all requirements and controls pertaining to the company’s activities in accordance with the relevant laws and regulations
  • The company would need to submit to GAFI any other documents which the Golden License Unit may deem necessary

  1. Scope of the Golden License
  • Establishment and operation of the project based on a single license (without requiring any additional license from any other authorities)
  • This includes the construction license, as well as real estate allocation for the project, and GAFI is responsible for liaising all relevant requirements with the concerned authorities
  • The single license may include one or more additional incentives as set out in the Investment Law (including the creation of specified ports for the project’s exports; State bearing part or all of the infrastructure utilities’ costs of the project after its operation; State bearing part of the cost of the technical training of the project labour; refund of half of the cost of land for industrial projects in case of operation within 2 years from land allocation; free land allocation in respect of certain strategic activities; or other non-fiscal incentives which may be determined by Cabinet Decree)

To-date, the scope of the Golden License has not yet been clearly defined and aligned with the various Egyptian authorities. For this reason, certain local authorities and governmental entities with a specialised mandate (such as the Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA) for electricity projects, and the Ministry of Water Resources and Irrigation for water/agriculture projects) may still require obtaining special licenses for the operation of projects having obtained a Golden License, albeit with full facilitations in their licensing process for such projects.

The Golden Licenses framework has certainly been very well-received by investors generally. The implementation practicalities will take time to be fully developed. Mazghouny & Co team has assisted in securing the first 2 Golden Licenses for green energy projects in Egypt. Feel free to reach out to our Projects & Infrastructure team if you wish to discuss your green project qualification for the license and potential benefits.