Egyptian firm gets $12.5m loan to buy electric buses

From the newsletter

Egypt’s first privately-owned inter-city bus company Go Bus has secured a loan of €10.6 million ($12.5 million) from the European Bank for Reconstruction and Development (EBRD) to launch an electric bus fleet. Go Bus will renew its fleet by acquiring 30 new inter-city buses, as well as six electric micro-buses for shorter routes and three other EVs for intra-city journeys. 

• Go Bus was established in 1998 as Egypt’s first privately owned inter-city bus company, fully owned by the Fady Nassif family. The company currently operates 29 routes throughout Egypt, including 16 originating from Cairo and serving approximately 1.9 million passengers annually.  

• The company may not have to look outside the country’s borders to purchase the electric buses. This week, Egypt inaugurated a modern electric bus production line belonging to MCV. The project was established with investments of EGP 3 billion ($62 million), with a production capacity of up to 1,200 electric buses annually. 

More details

• Egypt is a founding member of the EBRD. Since the start of the Bank’s operations in the country in 2012, the EBRD has invested over €13.5 billion ($16 billion) across 206 projects in the country. Its Go Bus loan will benefit from 10% first-loss risk cover provided by the European Union (EU) through its European Fund for Sustainable Development Plus (EFSD+) initiative under the Municipal Infrastructure and Industrial Resilience guarantee programme.

• The loan will be accompanied by a comprehensive technical cooperation package financed through the EBRD’s Southern and Eastern Mediterranean Multi-Donor Account covering legal aspects of the project. In addition to that technical cooperation, a grant will be provided under the EU’s EFSD+ Municipal, Infrastructure and Industrial Resilience programme to support corporate governance. The project will also include training opportunities for new fleet drivers. 

• Buses are a popular and accessible means of transportation in Egypt, serving as a crucial part of the North African country’s public transport system. Egypt recently launched a multi-phase Bus Rapid Transit (BRT) system in Cairo, utilizing 100 locally-made electric buses on dedicated lanes to replace microbuses to reduce congestion. 

• The country’s public transport system includes large public buses, private minibuses, and various coach services for intercity travel in the country of more than 107 million people. The majority of these buses run on diesel.  

• Egypt is home to MCV, the largest bus manufacturer in the Middle East and Africa, which produces various types of buses for both domestic and international markets. Following the launch of its new factory this week, the company will have the capacity to make 1,200 electric buses annually. The company however says that this capacity can be expanded to 2,500 depending on demand. 

• Electric buses are gaining prominence in Africa, where they are mainly used for public transport. In Kenya, local startup BasiGo is struggling to meet the high demand for electric buses, which are proving to be a hit among public transport companies. In Uganda, government-owned Kiira Motors Corporation seeks to increase production of electric buses, but its output has been constrained by inadequate funding. In South Africa, Golden Arrow Bus Services is buying 120 electric buses from BYD. 

• Producing electric buses is a capital-intensive process, which has constrained local assembly in Africa. Bus operators are increasingly importing fully-built buses from foreign companies like China’s BYD and Yutong. At the same time, electric bus prices remain very high, far beyond the reach of many bus operators. This has meant that new models such as Pay-As-You-Go have become pivotal for adoption of electric buses, especially in Kenya.

Our take

• MCV's new production capacity could position Egypt as a leader in electric bus manufacturing in Africa, potentially serving as a regional hub for the export of these vehicles. Its vast experience in manufacturing and exporting diesel buses will be handy. 

• The partnership between EBRD, the EU, and Go Bus should serve as a model for future green transport initiatives in Egypt and other African countries. This includes the technical cooperation and governance support, which are crucial for the long-term success of such projects.

• Growing local electric bus production capacity in Egypt, Uganda and Kenya can help meet local demand. This means that the continent doesn’t have to rely on imports. However, prices must come down for local assemblers and manufacturers to compete in the long term.