CBE'S CAPITAL TO BE INCREASED TO LE4 BILLION Source: Egypt State Information Service, August 3, 2008
Finance Minister Yousef Boutros Ghali agreed to increase the Central Bank of Egypt (CBE)'s (link here) capital from LE1 billion to LE4 billion. In statements, Ghali said that the finance ministry has covered the LE3 billion increase. He said the measure was part of joint efforts and constant coordination between the Egyptian ministry and the CBE. By such a measure, the ministry supported the CBE's endeavors in developing the banking sector, he said. He noted that the move would also boost the CBE's financial capabilities to activate its financial instruments in managing the monetary policy. The measure further goes in line with the financial policy outlined in H.E. President Hosni Mubarak's electorial platform, he said.
182.8 MILLION EUROS FINANCIAL ASSISTANCE TO EGYPT Source: Arab Finance, August 10, 2008
The Egyptian German bilateral committee for Economic and Technical Cooperation has endorsed 182.8 million Euros financial assistance to Egypt. That includes 23 million Euros non-refundable grants. Funds would back projects in the fields of education, renewable energy, potable water and sanitary drainage and irrigation including the rehabilitation of the old Aswan Dam. Egypt is the largest recipient of German assistance reaching almost 4 billion Euros since 1973.
EGYPT INFLATION HITS RECORD 23.1% Source: Middle East Times, August 10, 2008
Inflation soared to a record of 23.1 percent in Egypt in July, fuelled by skyrocketing food prices. The dramatic rise in the national consumer price index, the highest jump in 16 years, was mainly due to an increase of 32.5 percent year-on-year in food prices, said CAPMAS (link here). Year-on-year inflation in urban areas was 22 percent for July and 24.3 percent in rural areas. Urban inflation stood at 19.7 percent in May.
Egypt's inflation seemed under control until the start of the year, but began to surge in March due to the rising cost of foodstuffs on the world market, particularly for wheat, of which Egypt is a major importer. CAPMAS listed the most noticeable price increases as being 71.1 percent year-on-year for butter, 38.5 percent for dairy products, 39.1 percent for poultry and 32.8 percent for pasta.
For the fifth time this year, the Central Bank of Egypt (CBE) last week raised by half a point its prime rates, to 11 percent for deposits and 13 percent for loans. While the rates increase is aimed at calming inflation, it could also have a negative effect on economic growth, which had been heading for a strong seven percent this year, economists warn.
RICE & CEMENT EXPORT BAN STILL IN EFFECT Source: Al Mal, August 4, 2008
The government will not remove the ban on rice and cement exports in the short term until it is sure that domestic markets and international prices have stabilized, said the Minister of Trade and Industry, Rachid Mohamed Rachid. No new measures will be taken to remove the ban on rice and cement exports, and the ban on cement exports will be reviewed when new factories commence production soon. The ban on rice exports will not be reviewed before the new season’s harvest is available in the local market and prices stabilize. There is also no intention of banning exports of long staple cotton, to maintain its export markets, added the Minister.
DUBAI CAPITAL GROUP BUYS 5.24% STAKE IN EGYPT'S CIB Source: Arabian Business, August 3, 2008
Commercial International Bank (CIB) (AmCham member) (link here) said that a firm owned by Dubai's ruler had bought a 5.24 percent stake in the bank, the Gulf emirate's second major investment in a year in Egypt's financial sector. Dubai Capital Group, part of government-owned Dubai Holding, had accumulated the stake of Egypt's largest publicly traded lender from the Cairo & Alexandria stock Exchanges (CASE) (AmCham member) (link here) and London stock exchange (link here) over the past few months. Dubai Holding is owned by Dubai's ruler Sheikh Mohammed bin Rashid Al-Maktoum. Another Dubai government-owned firm bought a 25 percent stake in EFG-Hermes (AmCham member) (link here), Egypt's largest investment bank by market value, in November.
CIB spokesman Sherif Khalil said the bank informs its shareholders when any group acquires 5 percent or more. Dubai Capital Group had informed the Central Bank of Egypt (CBE) of its acquisition but it did not need central bank permission, he added. US buyout firm Ripplewood, the largest investor in CIB, leads a consortium that owns 18.7 percent of the Egyptian lender.
TAMWEEL OFFICIALLY LAUNCHES ITS OPERATIONS IN EGYPT Source: Noozz Editorial, August 4, 2008
Tamweel Egypt, the wholly owned subsidiary of UAE-based Tamweel Holding (link here), has launched its operations officially. The company has an authorized capital of EGP500 million, of which EGP100 million is paid in. The real estate finance market in Egypt has grown significantly in the past two months but is still in need of diversification of services and finance programs, said the CEO of Tamweel Egypt Ahmad Abouzaid.
NGOs TO OFFER INSURANCE SERVICES Source: Beltone News, August 5, 2008
The Egyptian Insurance Supervisory Authority (EISA) (link here) is preparing to permit non-governmental organizations (NGOs) to offer micro-insurance services, after studies conducted in the Insurance Companies Union indicated companies might face problems in providing micro-insurance services, due to the relatively high administrative costs and low returns. Preparations are underway at the EISA to establish a specialized unit to monitor and supervise micro-insurance to expand insurance services in the lower income groups and in small and medium enterprises.
EFIC TO HOLD 18% STAKE IN NEW MILLION PHOSPHATE FERTILIZER PROJECT Source: EFG-Hermes, August 7, 2008
Egyptian Financial and Industrial Co (EFIC) (link here) is taking an 18% stake in a new phosphate fertilizer company, Egyptian Company for Phosphate and Compound Fertilizers (Egyphos), which will be based in Edfu in southern Egypt. Four other Egyptian companies, Abu Qir Fertilizer Co (link here), El Nasr Mining Co (link here), Helwan Fertilizer Co and Polyserve, will also each have an 18% stake. The Greek fertilizer firm Indagro and U.S. Agrifos (link here) will own a 5% stake each.
The new company will have a paid-in capital of USD300 million and an authorized capital of USD1.5 billion. It will produce phosphoric acid, diamunium phosphate (DAP), and triple super phosphate (TSP). The new company will work on getting a mining concession to have direct access to phosphate rock, which will also be provided by El Nasr Mining Co, to minimize costs.
HDB AND EGYPTIAN ARAB LAND BANK TO COMPLETE MERGER IN 2009 Source: Al-Mal, August 6, 2008
Housing and Development Bank (HDB) (AmCham member) (link here), which is partly owned by the state, and state-owned Egyptian Arab Land Bank (link here) are expected to complete their merger in 2009, said Egyptian Arab Land Bank’s deputy chairman Mohamed El Etreby. The two parties have completed their due diligence, he added. The chairman of two banks, Fathi El Sebaei, had earlier suggested that the merger was awaiting the restructuring of Egyptian Arab Land Bank. The bank has settled around 75% of its non-performing loans so far under the restructuring, with the remainder expected to be settled by year-end, El Etreby said. The Central Bank of Egypt allowed Egyptian Arab Land Bank to resume operations in 2006 after it was stopped since 2001 due to its accumulation of unprovisioned bad debt. The bank’s deputy chairman estimates that the bank has a market share of around 20% in mortgage lending, based on a value of EGP2.4 billion of total mortgage loans outstanding between banks and mortgage companies. Egyptian Arab Land Bank has also started participating in syndicated corporate loans.
SODIC ACQUIRES AL YUSR Source: AME Info, August 7, 2008
Sixth of October for Development and Investment Company (SODIC) (AmCham member) (link here) signed a contract for the acquisition of Al Yusr for Projects and Agricultural Development (Al Yusr). Al Yusr, which owns 1,360,800 square meters of land at 43.5km off the Cairo Alexandria desert road, is 4.5km from SODIC's Allegria and Westown developments and 6km from the Smart Village. The deal valued at EGP312.572 mn gives SODIC 100% ownership of Al Yusr, which owns the land with a 700 meter frontage on the desert road. The area will be designed as a low density apartment buildings complex, offering a variety of upper middle income apartment buildings and is expected to be launched in 2009.
EL SEWEDY ACQUIRES 70 PCT OF INSULATORS COMPANY Source: Daily News Egypt, August 3, 2008
El Sewedy Cables (AmCham member) (link here) acquired 70 percent of Egyptian Company for Manufacturing Electrical Insulators (ECMEI) (link here). The acquired company is expected to generate an annual top line of LE102 million by 2011.
ECMEI is located in Tenth of Ramadan City, and is considered the only specialized producer in manufacturing electrical porcelain insulators in the MENA region with an annual capacity of 3,000 tons.
El Sewedy Cables plans to invest in restructuring the company and expanding its capacity to 7,000 tons. The acquired company also enjoys a tax break through 2012. According to Eng. Ahmed El-Sewedy, El- Sewedy Cables’ CEO, more than 80 percent of the raw materials used in producing insulators are “sourced locally at a very competitive cost.”
ADFS ACQUIRES CONTROLLING STAKE IN AL SALAM BROKERAGE Source: AME Info, August 2, 2008
Abu Dhabi Financial Services Company (ADFS) (link here), the financial brokerage arm of National Bank of Abu Dhabi (NBAD) (link here) and one of the leading brokerage companies in the UAE, has agreed on the general plan and the major articles concerning its acquisition of a controlling stake in Al Salam Brokerage Company, an Egyptian joint company.
'The selection of Al Salam Company was based on their long existence in the Egyptian market and its expertise in stock brokerage since 1994,' said Khaled Abdel Rahman Khaled, ADFS' General Manager. 'Final details of the transaction are being finalized in order to take necessary actions for execution, and will be announced in due course,' ADFS' General Manager concluded.
EGYPT PLANS $7B FOREIGN INVESTMENT IN OIL & GAS EXPLORATION Source: Mining Exploration News, August 5, 2008
Egypt plans to implement a program for oil and gas exploration and development in fiscal year 2008/2009 with total foreign investments of $7 billion, said Abdul Aleem Taha, executive president of the Egyptian General Petroleum Corporation (EGPC) (link here). Egypt has confirmed that crude oil and condensate reserves hit 4.2 billion barrels by end of last June, the highest in the history of the country, breaking the 4.1 billion-barrel record in fiscal year 1993/1994, Taha said. Average crude oil output has reached 690,000 barrels a day, realizing an increase for the first time in 14 years, Taha added.
EGYPT TO LAUNCH INTERNATIONAL AUCTION FOR GAS & OIL EXPLORATION Source: Dow Jones, August 12, 2008
Egypt is preparing to launch an international auction for gas and oil exploration projects in seven new areas in the Mediterranean. These areas' gas reserves represent 81% of the country's confirmed gas reserves. The current fiscal year is expected to witness the launch of 14 projects to develop and start production at new oil and gas explorations with total investments of about $3 billion. These projects will add a daily output of more than one billion cubic feet of gas and 1,300 barrels of petroleum condensates and with total reserves of 5.8 trillion cubic feet of gas and two million barrels of condensates.
GSPC BID FOR THREE OIL AND GAS OFFSHORE Source: Daily News Egypt, August 4, 2008
Gujarat State Petroleum Corporation (GSPC) (link here) has bid for three oil and gas offshore exploration blocks at the recently concluded bidding round in Egypt. The company is also exploring opportunities to participate in the ongoing bidding round in Australia. It has existing interests in both countries. GSPC-led consortia bid for three blocks during the round which concluded in mid-July. Public sector oil majors HPCL (link here) and Oil India Ltd (link here) participated in the consortium in two blocks. Adani Welspun Exploration Ltd (link here), the E&P arm of Adani Group (link here), partnered GSPC’s bid for one block.
EGYPT TO BUILD OIL REFINERY COMPLEX Source: Zawya, August 2, 2008
Egypt's state-owned oil company, along with other unnamed investors, will spend $9 billion over five years to build an oil refinery complex in the north of Egypt, said the petroleum minister. The refinery will have a capacity of 350,000 barrels per day (bpd) and should begin operations by 2010, said Minister Sameh Fahmy. It will be located either in the city of Port Said or the town of Gamassa. The minister declined to reveal the identity of investors that would join the state-run Egyptian General Petroleum Corporation (EGPC) in the project.
ROMANIAN COMPANY TO INVEST USD50 MLN IN EGYPT Source: ANSAmed, August 5, 2008
Romaniŕs Electroputere Craiova (link here) will invest $50 million in Egypt to establish high and medium voltage electric plants. An agreement is currently being concluded with Egypt’s Industrial Development Authority (link here) to allocate the sites needed for the company's projects. A number of Egyptian engineers are currently preparing the feasibility study required for the project.
PLEXUS WINS 750,000 POUND ORDER FROM SHELL EGYPT Source: Reuters, August 11, 2008
Oil and gas engineering services company Plexus Holdings Plc said it has won a 750,000 pound contract from Shell Egypt (AmCham member) (link here) for well-head systems in the Egyptian Eastern Mediterranean Sea. Revenue from the contract is expected to start in 2009, Plexus said.
ECHEM TO INVEST $4.2 BLN IN PETROCHEMICAL PROJECTS Source: Arab Finance, August 7, 2008
Hany Soliman, president and chairman of the board of the Egyptian Petrochemicals Holding Company (Echem) (AmCham member) (link here), said that Egypt will launch seven projects for alkyl benzene, methanol, ammonia, urea, polypropylene and polyester with a total investment cost $4.2 billion. The move is in line with the national plan to develop the petrochemicals industry. The projects will add 3.5 million tons of petrochemical products a year with a total value $4.5 billion at current prices.
EGYPT COMPANY TO INVEST $1 MLN TO GROW RICE IN BRAZIL Source: Gulf Daily News, August 11, 2008
Egyptian company Rice said it will invest from $500,000 to $1 million in rice production in South of Brazil. Company representatives visited the Rice Institute of the State of Rio Grande do Sul (Irga) to present their project. Their aim is to produce in Brazil in order to supply both to the Brazilian market and the Arab countries. Mohamed El-Helw, the company’s CEO, said that the objective of the investment is to introduce newly-developed Egyptian technologies. The goal is to develop a variety of Arab-Brazilian rice.
NEW STEEL PLANT PLANNED IN QENA Source: Daily News Egypt, August 3, 2008
The General Public Authority for Industrial Development and the Ministry of Investment (link here) are in the process of planning for the development of a new steel plant, located in Qena governorate in Upper Egypt. The plant is expected to have a production capacity of 1.5 million tons and will require a net investment ranging between LE 5.5 million and LE 7 million. Accordingly, the initial feasibility studies are expected to be completed by the end of next month. The Holding Company for Metallurgical Industries will be one of the main shareholders.
NEW POLICY TO LOCATE INDUSTRIAL PROJECTS NEAR RESIDENTIAL AREAS Source: Beltone News, August 4, 2008
The Ministry of Trade and Industry (link here) is implementing a new policy to locate new industrial projects near residential areas to provide more jobs to the areas’ residents said the Minister of Trade and Industry, Rachid Mohamed Rachid. Four new industrial zones will be established, in cooperation with the Ministry of Investment (link here), in the Delta area on public companies’ idle land. The Ministers of Investment and Trade had announced that around EGP5.3 billion will be invested in new projects in sugar, paper, cement, coke and copper production, with public metallurgical companies producing steel.
SPINALEX TO BUILD LE250 MLN THREAD UNIT Source: Arab Finance, August 7, 2008
Alexandria Spinning and Weaving (SPINALEX) bought a new 150,000 square meter plot of land in Sadat City to construct a new thin-thread unit. The total investment cost of the project is estimated around LE250 million ($47.27 million). The new unit is expected to start its operations by end of 2009.
AGRIUM TO ENTER INTO AGREEMENT WITH MOPCO Source: Beltone News, August 12, 2008
Agrium Inc. (AmCham member) (link here) announced that it has entered into an agreement with Misr Oil Processing Company (MOPCO) (link here), whereby MOPCO will acquire the EAgrium project, and EAgrium shareholders will obtain an equity interest in the combined entity. Agrium will own a 26% interest in the combined entity, which includes the recently completed 675,000 tonne urea MOPCO facility which is expected to commence commercial production by the start of the fourth quarter of 2008. The combined entity intends to construct two additional urea trains on the MOPCO site, which will increase the total annual capacity to approximately two million tonnes of urea.
IRRIGATION SECTOR INVESTMENTS TO REACH LE23.1 BILLION UNTIL 2017 Source: Egypt State Information Service, August 3, 2008
"The Ministry of Water Resources and Irrigation (link here) is adopting an all-out policy to be implemented until 2017 with the objective of achieving the utmost benefit of available water resources," said Water Resources and Irrigation Minister Mahmoud Abu Zeid during a meeting with Egyptian university youths at the Leaders Preparation Institute in Helwan. These Investments will be channeled into financing projects to be carried out as part of the plan, Abu-Zeid said. He underlined that the ministry backed the participation of the private sector in water resources management. The ministry also boosted cooperation mechanisms with the Nile Basin countries and Africa at bilateral and regional levels, he said. Meanwhile the Nile water level in Lake Nasser remained stable on Monday at 179.48 metres for the eighth straight day, according to High Dam and Aswan Reservoir General Authority. The Nile water level in the lake on the same day last year stood at 176.38 metres.
BESIX SIGNS EUR 525 MILLION JV BOOT IN ABU DHABI Source: Market Wire, August 4, 2008
Besix (link here) Signs EUR525 million Joint Venture BOOT Contract (Build, Own, Operate, and Transfer) for a Wastewater Plant in Abu Dhabi Orascom Construction Industries (OCI) (AmCham member) (link here) confirmed that Besix (50% owned by OCI) has been awarded joint venture with Veolia Water (link here), a BOOT contract to finance, construct and operate two new wastewater treatment plants for the city of Abu Dhabi and Al Ain in the UAE.
The contract has been signed with the Abu Dhabi Water and Electricity Authority (ADWEA) (link here) for a period of 25 years of which 2.5 years will be required for the construction of the Abu Dhabi and the Al Ain plants. Besix will participate (33%) in the operation and maintenance of the plants, for a period of 22.5 years. The consolidated contract value is EUR525 million of which Besix has a 50% share. The wastewater plants have a capacity of 300,000 m3 and 130,000 m3 for Abu Dhabi and Al Ain respectively. The plants will provide complete treatment of the water, in conformity with the requirements of ADWEA, thus making it possible to use the water for irrigation and for the green zones in both cities. This project is the second BOOT contract for Besix succeeding the concession signed with the Emirate of Ajman in February 2006 valued at EUR429 million.
EMAAR MISR SIGNS MOU WITH RITZ-CARLTON TO MANAGE LUXURY RESORT IN MARASSI Source: BI-ME, August 12, 2008
Emaar Misr (AmCham member) (link here), the wholly-owned country subsidiary of Emaar Properties, has signed a memorandum of understanding (MoU) with The Ritz-Carlton Company (link here) of Chevy Chase, Maryland in the US, to manage a beachfront resort in Marassi, Egypt scheduled to open in 2012. The 6 kilometers seafront land featuring the luxury resort is considered among the finest beaches in the region and stretches across the picturesque Sidi Abdel Rahman Bay on the Mediterranean.
As per the MoU, the proposed development will include a 150-room resort and 50 private villas, all in close proximity to a world-class golf course, thus bringing in the sheer luxury of golf-side living in a seafront environment. The Ritz-Carlton at Marassi will be an elegantly designed resort that derives architectural and functional inspiration from its surrounding beachfront location. The resort will feature an extensive array of amenities including international restaurants and beverage outlets, and a spa. The proximity to a golf-course will give guests added leisure options. They can also pursue marine sports at the Marina Club in Marassi, which is the only one of its kind in the region.
NEW LAW IN THE WORKS TO FACILITATE INDUSTRIAL ACTIVITY Source: Beltone News, August 4, 2008
The Minister of Trade and Industry cancelled 83 decrees, issued since 1958 under different economic and industrial conditions, which had been impeding industrial and commercial activity. The Industrial Development Authority (IDA) (link here) is working with non-governmental organisations and the Federation of Egyptian Industries (FEI) (link here) to review legislation related to industrial activity and formulate a new legislative framework in preparation for the issuance of a unified industrial law.
Compiled by: Business Studies & Analysis Center E-mail: Studies@amcham.org.eg If you want to receive this bulletin on a regular basis, fill out this form
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