Egypt: US$ 20 million loan to finance 2nd phase of Second Pollution Abatement Project
The World Bank has approved a US$ 20 million loan to finance the second phase of the Second Pollution Abatement Project (SPAP) for the Republic of Egypt.
One of the main objectives of SPAP is to demonstrate applicability of market-based instrument for promoting industrial pollution abatement in hotspots locates in the areas of Alexandria and Greater Cairo. This project will provide assistance to the Egyptian government for improving its environmental management capabilities in continuation of the successful collaboration that was developed during Phase 1 over the past several years.
“With this project, Egypt is considered the first country to receive the largest resources on pollution control from the World Bank and its partners. It is a demonstration of global commitment to the Millennium Development Goals,” commented Hocine Chalal, the project’s Task Team Leader. “SPAP negotiations were conducted in a spirit of cooperation and collaboration to find the most appropriate and efficient formula for the SPAP partnership,” Chalal added.
The World Bank US$ 20 million loan succeeded in attracting an additional US$145 million of concessionary lending and grants from: The Japan Bank for International Cooperation (JBIC); The European Investment Bank; Agence Française de Développement; and the Government of Finland are now completing the steps for securing their participation to SPAP. The project will be also accompanied by a parallel operation to be financed by the Global Environment Facility (GEF) for an estimated amount in the order of US$ 7.5 million. GEF’s support will focus on the conservation, protection and development of Lake Mariout of Alexandria, one of the pollution hotspots in Egypt. This will also address the regional concern of pollution of the Mediterranean.
SPAP includes essentially two components: An Environmental investments component that will focus on pollution abatement in major hot spots in Alexandria and Greater Cairo areas. These investments will target the industrial sector through soft loans targeting pollution abatement measures. The second component is a technical assistance one to provide the necessary expertise to the financial sector, the beneficiary companies to be selected and the Egyptian Environmental Affairs Agency on regulatory and institutional aspects.
In addition, a Carbon Finance sub-program will be developed in parallel that will consist in promoting Clean Development Mechanism (CDM) projects for which the Bank will purchase Carbon emission reduction credits with a particular focus on ensuring significant local sustainable development contribution. This initiative aims also at contributing to Egypt’s effort in addressing Climate Change. A share of the revenues generated through this purchase will be transferred to the Egyptian Environmental Protection Fund for the establishment of a financing system that can contribute efficiently to the sustainable development agenda of Egypt.
“Our support through carbon finance is expected to contribute to public financing needs for environmental protection consistently with the goals set forth in the Country Assistance Strategy,” commented Emmanuel Mbi, World Bank Country Director for Egypt. “Egypt is also the first country for which, as part of a project finance by the World Bank, the national standards for Environmental Assessment will be used instead of the World Bank guidelines.”