Building a scalable platform for sustainable aviation fuel in Africa and the Middle East
2 min read
We will need hundreds of SAF projects if aviation is to decarbonize by 2050. The challenge is huge, and the work has to begin now.
Partner|LondonPartner
Partner Kamran Ahmad on the importance of creating repeatable, scalable models for SAF projects.
Client opportunity
Green Sky Capital was looking to develop and finance a first of its kind sustainable aviation fuel (SAF) facility in Ain Sokhna, within Egypt's Suez Canal Economic Zone, as part of a broader SAF development platform. The project is the first such facility in Africa and the Middle East, and will help meet growing global demand for low carbon aviation fuel as airlines respond to tightening decarbonization mandates. Its location on a major trade route allows it to easily source local and Asia-Pacific–origin used cooking oil feedstock and process it into SAF for export.
Our approach
A London- and Cairo-based team advised on the equity and debt raise, and establishment of this SAF platform. The sponsors are Green Sky, Al Mana Holdings of Qatar and Vision Invest of Saudi Arabia. Achieving a bankable, long-term offtake solution with Shell was critical. Offtake discussions are incredibly complex in the development of SAF projects and often delay financial close due to challenges including regulatory complexities specific to the SAF supply chain, a lack of precedent, and mismatches among the needs of offtakers, feedstock suppliers and lenders.
To support the financing, Shell, as offtaker, agreed to buy 100 percent of the facility's production. To address concerns about potential changes to the SAF blending mandates that underpin the development of SAF projects, we negotiated mitigation measures in both the offtake contract and finance agreements. To navigate heightened geopolitical volatility and the risk of maritime disruption to supply chains, the project had to establish alternative logistics routes using road transport and alternative port infrastructure on the Egyptian Mediterranean coast.
Outcome
The transaction resulted in a landmark financing for Green Sky Capital's first SAF facility in its wider platform. It delivers one of the most robust SAF offtake structures in the market, helping redefine what lenders and sponsors regard as bankable offtake for other projects. The innovative platform based strategy aims to create a repeatable and scalable model for future SAF projects in low-cost jurisdictions—echoing the approach toward standardization of risk allocation seen in early European offshore wind projects—creating the potential for projects to scale quickly.
The project's relatively low-cost operating environment, strategic location, long-term offtake agreement and feedstock supply bypassed the issues faced by many European and US-based projects.
