540 MW Deir Ammar plant
turned into a BOT agreement

Will be operational in two years

The Cabinet has agreed to turn an agreement to develop a power plant in Deir Ammar into a ‘long-term Power Purchase Agreement’ with Greek Cypriot firm JP Avax, which won the tender more than four years ago. The new deal is tantamount to a ‘Build Operate Transfer’ (BOT) agreement.

Under the terms of the BOT agreement, which expires in 20 years, the government will purchase electricity at 2.95 cents per Kilowatthour (Kwh). Cesar Abi Khalil, Minister of Energy and Water, said: “We lowered the cost of the contract after negotiations with the company down from 4.2 cents per Kwh.” The contract has not been signed yet.

The power plant, which will be built by JP Avax, will be turned over to the government at the end of the contract period.

JP Avax had taken the government to international arbitration because of a dispute between the Ministry of Energy and Water (MoEW) and the Ministry of Finance over whether the Value Added Tax would be part of the contract. The project has been on hold ever since.

Deir Ammar is designed to generate 540 megawatts (MW) of power. Its completion is expected in two years. “We will resort to an international law firm to help us out in the contract’s formation and execution,” said Abi Khalil.

The Cabinet also agreed to extend the contract of the two Turkish power barges, Fatmagul and Orhan Bey, for three additional years. The cost of power generation was lowered to 4.95 cents per Kwh.

During the summer, the government will get 200 MW of additional power from the barges free of charge. This is the equivalent to two hours of electricity per day.

The Cabinet tasked the MoEW with proposing an urgent study for the generation of 850 MW to cover demand until new power plants are built and connected to the grid.