In a landmark step reflecting growing economic cooperation between Cairo and Riyadh, the Egyptian parliament approved on Monday an agreement aimed at connecting the two country's electricity grids.
The agreement, signed between the heads of the two countries in Cairo on 22 November last year, will be financed by a loan from the Kuwaiti Fund for Arab Economic Development.
"The fund will provide 30 million Kuwaiti dinars in a loan to be used for implementing this landmark project, which will become a key hub in the Arab electricity grid," said the parliamentary report on the deal.
The report, prepared by the committees on legislative and energy affairs, said the agreement, which does not violate Egypt's 2014 constitution, primarily aims to boost the electricity-generating capacity of both countries.
According to the report, the two electricity grids of Egypt and Saudi Arabia will be interconnected via three stations – with the first in Egypt in the city of Badr and the other two in Saudi Arabia in the cities of Medina and Tabuk.
"These three stations will be linked via aerial lines and naval cables in the Gulf of Aqaba and will help interconnect the two electricity grids of the two countries and boost their total power-generation capacity to more than 90,000 megawatts," said the report, adding that "they will represent the two biggest electricity grids in the Arab world."
The report also indicated that implementation of this long-awaited project will begin once it is endorsed by the Egyptian parliament.
"While the Egyptian Company for Electric Transfer will be in charge of implementing the first station on Egyptian land, the Saudi Electricity Company will be responsible for implementing the two stations on its land," said the report, adding that "it is the Egyptian Company for Electric Transfer which will also take care of implementing the naval cable linkage works on behalf of both Egypt and Saudi Arabia."
The report indicated that there will be a 2.5 percent interest rate on the KD 30 million loan. "It will be repaid in the form of installments over 20 years, with a five year grace period," said the report.
It also explained that the project will help exchange energy between the two countries in peak hours, to a maximum of 3,000 megawatts, as well as help them export surpluses in electricity.