Russia, Egypt Sign $30 Billion Nuclear Deal as Ties Warm

(Bloomberg) -- Egypt and Russia signed a $30 billion deal to build North Africa’s first nuclear power plant as the Kremlin moves to expand its influence in the region

Russian President Vladimir Putin and his Egyptian counterpart Abdel-Fattah El-Sisi witnessed the signing ceremony in Cairo on Monday.

The high-profile project will increase Russia’s economic presence and political influence in the Middle East, already on the rise since Putin intervened in Syria’s war in 2015 and began playing a more active role in Libya, conflicts where the Russian leader and El-Sisi see eye to eye. His visit to Cairo comes less than two weeks after the countries said they were in talks to use each other’s military air bases.

Russia and Egypt agreed three years ago to begin work on a nuclear power project, with Russia’s state nuclear monopoly Rosatom Corp. initially expecting the deal to be sealed in early 2016. But progress was delayed after the bombing of a Russian airliner over Egypt in late 2015 in which 224 holidaymakers were killed.

Russia suspended flights to Egypt after the bombing by a local affiliate of Islamic State, dealing a major blow to tourism just as the country sought to revive an economy battered by political upheaval since the 2011 uprising. Egypt has been working to improve airport security and persuade Russia to resume flights ever since.

Russia, Egypt Sign $30 Billion Nuclear Deal as Ties Warm

RIA reported Russian Transport Minister Maxim Sokolov as saying on Dec. 8 that his country was likely to discuss restoring flights during Putin’s visit, along with other topics including regional security and trade links.

On the eve of the visit, banners could be seen at Cairo airport pointing Aeroflot passengers in various directions.

Power Hungry

Rosatom expects to clinch a deal to build four reactors of the El Dabaa power plant and reach a 60-year agreement to supply nuclear fuel and ultimately decommission the plant, the company said in June. The 4,800-megawatt unit, some 130 kilometers northwest from Cairo, is estimated to cost about $30 billion and Russia is expected to provide a $25 billion loan to help finance the project.

Electricity Ministry spokesman Ayman Hamza said the first phase would begin production nine years after the project’s launch, with the remainder coming online one or two years later. “We have finalized technical, financial and legal aspects of the deal,” he said by phone.

Egyptian newspapers hailed the expected nuclear deal as a historic moment for Egypt, the second-largest energy-consumer in Africa after South Africa, currently home to the continent’s only nuclear power plant. Egypt was also the fastest-growing energy market in the Middle East and Africa, according to BP Plc statistical reports. 

Regional Influence

Russia has a history of pursuing large-scale energy projects in Egypt, often as part of a broader effort to challenge U.S. political, military and economic influence in the region. The Soviet Union helped build the Aswan High Dam in the 1960s.

Moscow was also a major power in the Middle East during the Cold War, arming Arab states against Israel. Its influence waned with the collapse of communism, leaving the U.S. as the pre-eminent superpower in the region.

©2017 Bloomberg L.P.