The Al-Mal newspaper has published a draft agreement, signed between Russia and Egypt in November, for a loan of US$25 billion to finance a nuclear power station in Dabaa.
The draft agreement complements the framework agreement signed between the two countries for services, equipment, construction and operation of the nuclear plant's four power generation units.
The plant in Dabaa, approximately 130 km (75 miles) south of Cairo, "will be the largest joint project between Russia and Egypt since the Aswan Dam was set up. It will be comprised of four nuclear power units, each of which can generate 1,200 megawatts", according to Russian state news agency Sputnik.
The loan covers 85 percent of the costs. As for the remaining 15 percent, Egypt will pay it directly to the state-run Rosatom company either in US dollars or Egyptian pounds the daily newspaper Al-Mal said.
According to the draft agreement, Egypt is not obliged to pay its share of the costs if Russia fails to provide the loan. It also gives each party the right to estimate the losses incurred, in the event the other party does not meet the financial obligations at any time before the completion of the project.
Russia will provide the loan in batches from 2016 to 2018, in accordance with a preliminary timetable that the Russian Finance Ministry may modify. These batches are contingent upon presenting bills of lading and other documents confirming the delivery of equipment and completion of work stages.
Egypt is to repay the amount used from the Russian loan over a period of 22 years in the form of semi-annual installments payable on April 15 and October 15 of each year. The first payment will be made on October 15, 2029, at an annual interest rate of 3 percent, which will be calculated on a daily basis and start from the date each amount of the loan is used.
In the event the interest is not paid within 10 days of the due date, it will increase by 150 percent. And in the event the principal loan or the interest or both are not paid within 10 days of the due date, they are increased by 120 percent.
The Russian side has the right to suspend other uses of the loan in the event the late arrears or their interests are not paid within 80 days. And in case of a delay of 180 days, it has the right to collect the total amount of the owed debt, as well as the interest. This compounded total debt will have a daily interest rate of 4.5 percent.
The Russian government exempts the amounts paid by the Egyptian side of any taxes, restrictions, deductions, withdrawals or countervailing duties.
Egypt will pay its financial obligations in a sequence that begins with the payment of the compound debt’s interest, then the compound debt, then the interest of the late payments, then the late payments, then the loan’s original interest and then the original loan.
Russia has authorized Vnesheconombank, and Egypt has authorized the National Bank, to prepare the detailed financial arrangements within 90 days from the date the agreement starts.
According to the agreement, any dispute arising between the parties is to be settled through negotiations, though it did not specify how that would be done.
Prime Minister Sherif Ismail said Egypt expects to start generating power from the Dabaa plant by 2024.