MOU Signed between Egypt and South Korea Source: The Egyptian State Information Service, July 28, 2005
Egypt and South Korea signed Wednesday, July 27, a Memorandum of Understanding (MoU) whereby South Korea will grant Egypt $5 million. Following the signing of the MoU with the South Korean Ambassador in Cairo, the Minister of International Cooperation Fayza Abul-Naga said that the grant will be used for implementing 5 development projects, foremost of which are a project for setting up a center for program engineering, distance learning project and a center for vocational training.
The volume of bilateral trade between Egypt and South Korea is estimated at $500 million last year of which total Egyptian exports to South Korea amounted to $200 million while imports were valued at $ 230 million.
South Korean Ambassador said that South Korean investments in Egyptian market were valued at $200 million, saying that this figure is very small and did not rise up to the level of good relations between the two countries.
The U.S. is Egypt’s Key Trade Partner Source: The Egyptian State Information Service, July 26, 2005
A report recently released by the Central Bank of Egypt (CBE) (link here) said the USA was Egypt's key trade partner in the first half of the fiscal year 2004/2005. The volume of U.S. dealings with Egypt was estimated at $1.394 billion or 28.1% of Egypt's trade with foreign countries, which amounted to $4.898 billion.
Italy is ranked second with dealings amounting to $316.3 million or 6.9% of Egypt's trade with foreign countries, followed by Germany whose dealings with Egypt were estimated at $218.5 million during the reporting period, the equivalent of 6.1% of Egypt's bilateral trade, the report said.
Egypt Petroleum Draws U.S. Investors into Mega-Deal Source: Source Media, July 25, 2005
Egyptian General Petroleum Company (link here) closed one of the largest future flow securitizations ever out of emerging markets last week. U.S. investors gobbled up 70% of the mammoth $1.55 billion deal, casting aside concerns of terrorism in the Middle East as mostly irrelevant to this transaction. The company's track record on that front probably helped pre-empt the potential concerns, said one source familiar with the issuer. "Historically, Egypt hasn't had any interruption of shipment because of terrorism," he added.The structure was split into three tranches. Sized at $400 million, the 6-year A1 notes, wrapped by MBIA, priced at 4.623% or 75 basis points over 3-year Treasury’s. The A2 notes, totaling $250 million, were wrapped by XLCA and priced at 4.633% or 76 basis points over, a touch wide of the A1 piece despite having a shorter 5-year maturity. Coming unwrapped, the 6-year A3 class, sized at $904 million, priced to yield 5.265% or 140 basis points over. Moody's Investors Service (link here) and Standard & Poor's (link here) rated the unwrapped piece Baa1' and BBB', respectively. At both agencies the unwrapped tranche pierced the sovereign ceiling of Ba1' and BB+', respectively.BNP Paribas (link here), Merrill Lynch (link here) and Morgan Stanley (link here) were joint leads, with Morgan also acting as global coordinator and structuring adviser. Skadden, Arps, Slate, Meagher & Flom (link here) provided legal counsel for the issuer, while Latham & Watkins (link here) advised the arrangers. Backed by crude oil and naphtha forward sales, the deal settled on July 20, 2005.
In the run-up to the road show, industry players reasoned that Banque Misr (AmCham Member) (link here), EFG-Hermes (AmCham Member) (link here), HC Securities (AmCham Member) (link here), and National Bank of Egypt (AmCham Member) (link here) were brought on as distributors to push the deal in the Gulf region. But the final distribution would appear to belie that theory, as investors from the Gulf accounted for no more than 5% of allocation, just a sliver of the 70% sold to U.S. buyers. While, European investors bought the other roughly 25% of the transaction.
The structure traps about 5% of the issuer's estimated crude output and 27% of its estimated naphtha output. Among the deal's structural enhancements is an off take and price hedge provided by Morgan Stanley Capital Group, which has agreed to purchase all the required shipping crude oil and naphtha products from the issuer, setting a price floor for both products. A variety of oil products can be delivered under the structure. Nevertheless, Moody's described the hedge as "imperfect" in a release.
EGPC is wholly state-owned. While the risk of sovereign interference is mitigated by the structure and disincentives to intervention, it is not absent from this transaction, according both Moody's and S&P. The transaction is understood to be the second largest future flows deal ever from an emerging market. The first was from Petroleos de Venezuela (link here), which issued a $1.8 billion oil-backed deal in 1998. PdVSA has been out of the securitization market for a number of years and indicated that it has no foreseeable plans to return when it bought back nearly all its outstanding oil-backed paper last year.
Bombings Barely Shake Egypt's Market Source: National Post's Financial Post & FP Investing (Canada), Reuters and Bloomberg News, July 25, 2005
The benchmark Egyptian stock index dropped 3% on July 24, in the first trading session after bombings in the Red Sea resort of Sharm el-Sheikh but traders said the reaction was much less serious than expected.
The explosions in Sharm el-Sheikh on Saturday, July 23, Egypt's worst attack since 1981, killed 88 people and have cast a shadow over the $6.6-billion tourism sector, which employs over 1 million people. "We expected the market to drop more, but people are surprised and amazed by the reaction," said Bassim Arida, head of the foreign desk at brokers CIBC (AmCham Member) (link here). "We will see the market going sideways for some time, then slowly but surely we will rise again," he said.
The benchmark Hermes index fell as low as 4.5% in the first 10 minutes of trade but crawled back to close at 42,069.34, down 3.06% from Thursday's, July 21, close of 43,396.29. The broader CIBC index fell 2.4% to 145.02.
Orascom Hotels (link here) shares were the worst hit, plunging 13.44% to LE33.94 ($5.88) per share. Textile Company Arab Polvara also fell 7.8% to LE7.75 a share. But Egyptian American Bank (AmCham Member) (link here) extended the gains it has made since announcing a rights issue plan, rising 8.4% to a new all-time high at LE107.
"Whoever bought that share must have thought that it was a good buy regardless of what happened [in Sharm el-Sheikh]," said Yasser Hassanein, broker at Dynamic Securities. "We cannot say we have absorbed all the impact of the bombings but the reaction tells you that investors see beyond this incident," he said.
"This attack strikes at the core of Egyptian tourism and will have an economic impact bigger than Taba, which prompted a sell-off of stocks," said Philip Khoury; director of research at Cairo based EFG-Hermes Holding SAE (AmCham Member) (link here), which manages $700-million of assets in Arab markets. It took more than a year for tourism to Egypt to recover after a 1997 attack in Luxor, in which 58 foreigners were gunned down, said Ben Faulks, a Middle East analyst with the London-based Economist Intelligence Unit (link here). "In the short-term, the Sharm attack will have a pretty severe effect on tourism," Mr. Faulks said. "The longer-term effect will depend on what foreign embassies advise their citizens about traveling to Egypt."
In 2004, tourist arrivals reached 8.1 million, an increase of 2 million from the previous year. Egypt aims to increase tourist arrivals by 50% to 12 million a year by 2015.
Piraeus Bank to Invest 500 Million Euro in Egypt Source: AFX International Focus, July 22, 2005
Piraeus Bank (link here) is expected to invest 500 million euro in Egypt and the Middle East. Piraeus CEO Michalis Sallas is currently visiting Egypt after the successful acquisition of the Egyptian Commercial Bank (ECB) (AmCham Member)(link here).
Piraeus will fund ECB's expansion to open 50 more retail outlets by the end of the year and another 170 within the next 5 years.
ELNG Train Two Financing Signed Source: Middle East Economic Digest, July 22, 2005
Egyptian Liquefied Natural Gas (ELNG) has signed the documents for the $880 million financing package on its second train project at Idku. Financial close and first draw down is expected in September.
The debt package comprises: A $180 million local loan tranche lead arranged by Commercial International Bank (AmCham Member) (link here), National Bank of Egypt (AmCham Member) (link here), Misr International Bank (AmCham Member) (link here) and National Societe Generale Bank (AmCham Member) (link here).
A $411 million, 12-year international loan facility lead arranged by 22 banks made up of Arab Petroleum Investments Corporation (link here), Arab Bank (AmCham Member) (link here), Banca Intesa (link here), Bank of Tokyo-Mitsubishi (link here), Bayern LB (link here), BNP Paribas (link here), Calyon (link here), Dexia (link here), Fortis (link here), HSBC (AmCham Member) (link here), HVB (link here), ING Bank (link here), KBC Bank (link here), Kreditanstalt fuer Wiederaufbau (link here), Maybank (link here), Mizuho Financial Group (link here), Royal Bank of Canada (link here), Royal Bank of Scotland (link here), San Paolo IMI (link here), Societe Generale (link here), Standard Chartered Bank (link here) and West LB (link here); Two $144 million, 20-year loans provided and guaranteed by the European Investment Bank (EIB) (link here).
For Amcham’s Banking Sector Developments in Egypt Soon
For Amcham’s Proceedings of the Conference on the “Reform of the Egyptian Financial Sector” New (click here)
Egypt to Tender Third GSM Source: AME Info, July 25, 2005
Egypt is to put its third GSM network out to tender in the second half of September. Communications Minister Tarek Kamel announced that the new network would be up and running in late 2006 or early 2007. It will compete with Vodafone Egypt (AmCham Member) (link here) and Orascom's Mobinil (AmCham Member) (link here).
LinkdotNet Wins New Certification Source: Trade Arabia, July 19, 2005
LinkdotNet (AmCham Member) (link here), a Microsoft Gold Certified Partner in integrated e-business solutions, has gone one more step ahead by securing the gold certification in Microsoft Business Solutions. This certification complements the standing of the leading privately owned Internet service and solutions provider in Egypt and the Middle East. It makes the provider a premier company in its field and reinforces customers' confidence in it, said the company.This new Microsoft competency comes following the implementation of the Microsoft Business Solutions customer relationship management (CRM) solution internally among LinkdotNet's employees.
The CRM team at LinkdotNet is the largest of its kind in Egypt, the company claimed. "It is also the most qualified, having passed all the required certification exams. The results were of the internal implementation were impressive, causing Microsoft to cite this implementation as one of its case studies on its official website," said Karim Bichara, chief commercial officer.
Egypt’s Pharmaceutical Sector is Set to Cross $1 Billion Annually Source: Mena Report, July 14, 2005
Egypt’s booming pharmaceutical sector is worth over $1 billion annually, and shows signs of further growth in 2005, boosted by the government’s modernization drive and increased private sector involvement.
Glimpses into the high-growth sector will be provided at the third Middle East and North Africa (MENA) Exhibition, MEDITECH 2005 (link here), which will showcase pharmaceuticals, medical equipment, hospital supplies and instruments.
MEDITECH 2005, to be held from September 22 to 25, 2005, at the Cairo International Fair Ground, is a premier exhibition for medical technology and implements. Its scope has been widened to include additional medical sectors in response to the area’s requirements. The show is expected to witness a substantial increase in trade visitors and exhibitors this year, thus providing an ideal platform to serve the strategic health modernization plans in Egypt and the region.
The healthcare sector throughout the Middle East is experiencing significant growth following modernization programs and increased private participation in the health sector. The Egyptian government in particular has started a five-year program of upgrading medical facilities. The Ministry of Health and Population in Egypt has undertaken an ambitious Health Sector Reform Program (HSRP) to modernize the nation’s health system, supported by funding from the African Development Bank (link here), European Commission (link here), USAID (link here) and the World Bank (link here).
With a pharmaceutical market valued at more than $1 billion, Egypt is the largest producer and consumer of pharmaceuticals in the MENA region with a 30% share of the supply in the MENA markets. The region also absorbs most of Egypt's pharmaceuticals exports. Medical imports to Egypt are expected to grow at a rate of 15% and the ongoing heath sector modernization program is generating major demand for high-tech medical items, especially laboratory and testing equipment. MEDITECH presents a perfect opportunity for foreign suppliers and manufacturers to step in to fill the gap and penetrate the regional market.
Egypt and Morocco Agree to Invest $105 Million in New JVs Source: Mena Report, July 18, 2005
Egyptian and Moroccan businessmen have agreed to establish seven joint projects by a total investment of $105 million. The projects cover fishing, tourism, production of PVC to be used in the petrochemical industries and production of sport and medical equipments.
The signing of the agreements regarding these projects is expected to take place in Cairo on the sidelines of the upcoming meeting of the Egyptian-Moroccan Business Council on a ministerial level. This meeting is slated for November 2005, according to Ibrahim Abu Umaira, the head of the Egyptian side in the joint business council.
The PVC plant is expected to cost $50 million, and to be established on a 3,000 square meter area in the city of the Tenth of Ramadan in Egypt. The project for production of sport equipment is estimated to cost $13 million, while the medical equipment project is expected to cost $19 million.
As for the costs of the fishing and tourism projects, they are still under negotiations between the two sides. The expected cost of a project for production of chemicals, to be established in Al-Abour on 8000 meters area, is $10 million.
EPPC Plant Award Nears Source: Middle East Economic Digest, July 29, 2005
Egyptian Propylene & Polypropylene Company (EPPC) is in the final stages of evaluating commercial proposals submitted in early July for the contract to build a major propane dehydrogenation (PDH) and polypropylene (PP) complex near Port Said.
Only two companies remain in the race for the contract – Japan’s Toyo Engineering Corporation (link here) and Germany’s Uhde (link here)– after Linde (link here), also of Germany, pulled out due to a heavy workload after winning large-scale jobs in Saudi Arabia and Iran. Among the issues being discussed are the project’s financing arrangements and whether to carry the scheme out on an engineering, procurement and construction (EPC) or cost-reimbursable basis.
EPPC, a 50:50 joint venture between the local Oriental Petrochemicals Company (OPC) (link here) and the state-owned Egyptian Petrochemicals Holding Company (ECHEM) (AmCham Member) (link here), is also in the final stages of finalizing an agreement for propane gas feedstock from Union Gas Derivative Company (UGDC), a joint venture of the UK’s BP (AmCham Member) (link here) and Italy’s Eni (link here).The estimated $400 million plant will comprise a 400,000-tonne-a-year PDH unit, which will feed a PP plant of the same capacity.
Grand Museum PMC tender withdrawn Source: Middle East Economic Digest, July 22, 2005
The Culture Ministry has officially notified bidders for the project management consultancy (PMC) on the estimated $550 million Grand Egyptian Museum (GEM) project that the tender has been cancelled. No reason has been given for the cancellation.
Five companies were short listed in mid 2004 for the contract, following the submission of bids by 15 international and local firms. The short-listed companies were Hill International (link here), Fluor Corporation (link here) and Turner Construction International (link here), all of the US, Australia’s Bovis Lend Lease (link here) and the UK’s Mace International (link here).
With a total built-up area of 38,000 square meters, the planned exhibition building in Giza will have as its centerpiece the King Tutankhamun collection. The design team, led by Dublin-based Heneghan Peng Architects and including representatives of UK engineering firms Arup (link here) and Buro Happold (link here), has prepared schematic designs for the landmark project.
Concepts Invited for Future City Scheme Source: Middle East Economic Digest, July 29, 2005
Local and international architects have been invited by the local Arab Contractors (Osman Ahmed Osman & Company) (AmCham Member) (link here) to submit design proposals by November 15, for a new urban development on the outskirts of Cairo. The successful winner of the design competition on the scheme, called Future City, will be chosen by year-end and receive a prize of $75,000.
"Future City will be a completely new concept," Ibrahim Mahlab, chairman and chief executive officer of Arab Contractors. "It will be an ultra-modern city that will accommodate at least 200,000 people."
The city will be built on a 46 million-square-meter plot of land at a location bordering Cairo’s existing city limits, and is planned to be linked to the rest of the city through a rail-based modern public transport system. The multi-billion-dollar development will offer a mix of commercial, residential and office real estate. Arab Contractors will provide land to developers and is securing support from local banks and international investors for the project. Construction on certain elements of the scheme is planned to begin as early as 2006.
In an attempt to deal with urban migration and high population growth, several new cities and satellite districts have been built in the greater Cairo area to direct economic activities and population away from the core city.
Tender Awaited for New Cairo Runway Source: Middle East Economic Digest, July 29, 2006
Tender documents are due to be released on the project to build a new runway at Cairo International Airport. The airport’s third runway will serve both the two existing terminals and the planned new third terminal, which is under construction by a joint venture of Turkey’s Tepe Akfen Ventures (TAV) (link here) and the local Holding Company for Roads & Bridges.
The runway has been designed by Aeroports de Paris (AdP) (link here), with Beirut-based Dar al-Handasah (Shair & Partners) (AmCham Member) (link here) acting as the project manager. Both Dar al-Handasah and AdP are also working on the designs for a new control tower, which will also serve the existing and the new terminals. The client is Civil Airport Company.
Japanese Firms Secure Contract Success Source: AFX News Limited, July 25, 2005; Business Monitor International, July 28, 2005
Arabian Oil Company (link here), a unit of Japan's AOC Holdings Inc, plans to start producing crude oil at two locations in Egypt in the latter half of 2007 at an estimated combined daily output of 12,000 barrels. This will be the firm's first production at its own oil field in the Middle East since it lost the 280,000-barrel-a-day operation in Saudi Arabia's Khafji oil field in 2000.
Arabian Oil plans to invest 30 billion yen by fiscal 2007 for the project. Production at the Northwest October area in the middle of the Gulf of Suez is expected to start in fall 2007 at a daily output of 6,000 barrels. The company has already found 15 million barrels of oil reserves in the area. But it aims to continue prospecting in areas that have not yet been explored. If new oil reserves are found, output at the location could rise to as high as 27,000 barrels a day.
Another new production site, located at an oil field in South Zeit Bay on the southern part of Gulf of Suez, will be established on behalf of Alexoil SA of Switzerland. The operation is to begin in the second half of 2007, and the estimated daily output of 6,000 barrels is expected to be split between Arabian Oil and Alexoil.
Fellow Japanese energy firm Teikoku Oil (link here) has extended its existing PSC for the West Bakr Block in Egypt by 10 years, allowing operations to continue on the site until 2020. Teikoku has operated the concession since 1980 and is currently producing 5,400 barrels of oil per day (b/d) from the site. The firm also holds interests in Egypt's Southeast July, South October and North Qarun blocks.
Powertek in Talks to Buy Power Plants in Egypt Source: Financial Times Information, July 20, 2005
Malaysia’s Powertek Berhad (link here), the Power Generation branch of Tanjong PLC, a gaming and power company, is in talks to buy two power plants in Egypt from the world's largest power company Electricite de France (EDF) (link here). Controlled by tycoon Ananda Krishnan, the company said it was in exclusive negotiations with the French state-owned utility to buy the plants that have a combined capacity of 1,366 megawatts (MW). EdF is being advised on the sale by ABN Amro (AmCham Member)(link here).
Malaysian power companies are looking overseas for growth as supply far exceeds demand in the local market with spare capacity of about 40%. "The plants are located close to Suez and Port Said respectively and registered a combined turnover of $174 million in 2004," Tanjong said in a statement to Bursa Malaysia.
The plants were built by EDF on a build, own, operate and transfer basis with the Egyptian authorities. EDF is the world's largest power company with an installed generation capacity of 125,447 MW and serves 42.1 million customers worldwide.
Egypt and Palestine Sign MoU on Energy Cooperation Source: The Egyptian State Information Service, July 22, 2005
Minister of Petroleum Sameh Fahmy and Palestinian Minister of Energy and Natural Resources Assam Al-Shawa on Thursday, July 21, signed a Memorandum of Understanding (MoU)on cooperation in the energy domain.
In statements after the signing ceremony, Fahmy said that the two sides had reached an agreement on outlining technical and economic studies with a view to providing natural gas to the Palestinian power stations and their expansions in the future through setting up a pipeline from Arish to Palestinian territories.
Exporting Natural Gas to Cyprus Source: Egyptian State Information Service, July 20,2005
Egypt and Cyprus signed a Memorandum of Understanding on Tuesday, July 19, for bilateral cooperation in the fields of oil and natural gas.
The memo includes agreement on cooperation in the field of prospecting for oil and natural gas as well as cooperation in the field of Seismic search.
The MoU includes exporting Egyptian liquefied natural gas to Cyprus in order to meet Cypriot markets' need of natural gas. The memo also includes implementing pipelines networks and providing natural gas for houses and factories. The Cypriot party asked the assistance of Egyptian expertise in the field of prospecting for oil and natural gas. The Cypriot party voiced its desire to import Egyptian natural gas.
The Finance & Administration Department of the Ministry of Communication & Information Technology issued on July 28, 2005 a request of offers from specialized IT companies for setting up an information system & a national network for citizens treatment under state coverage including related databases & Internet publishing. The specification fee is LE3,000. The Bid Bond is LE50,000. Deadline for the submission of offers is September 5, 2005.
Water & Waste Water
The Egyptian Public Authority for Drainage Projects issued on July 17, 2005 a request of international offers from companies of member countries of the World Bank, Switzerland, Taiwan & China to supply 1000 metric tons PVC compound & 10 tons purge materials for collector pipes. The specification fee is LE500. The Bid Bond is 2%. Deadline for the submission of offers is August 31, 2005.
Transportation
The Purchases & stores Department of the Egyptian National Railways Authority issued on July 25, 2005 a request for International offers for the supply of electric spare parts & motors for the rehabilitation & revamping of 60 Canadian locomotives. The specification fee is LE10, 000. The Bid Bond is $650,000. Deadline for submission of offer are August 31, 2005.
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