GOVERNMENT IMPOSES EGP300 PER TON EXPORT TARIFF ON ANIMAL FEED Source: Al Mal, July 2, 2008
The Ministry of Trade and Industry (link here) has imposed a one-year export tariff on animal feed of EGP300 per ton to increase domestic supply and tame rising poultry, meat and dairy products prices. The government has been working to soften inflation, which rose to 19.7% Y-o-Y in May. Inflation has been driven by food prices, which increased 27% Y-o-Y in May. In early June, the government extended an existing ban on rice exports until April 2009 and lowered customs on a number of food items.
INFLATION INCREASES TO 20.2% Y-O-Y IN JUNE
Source: Al Ahram, July 10, 2008
The increase in the consumer price index slowed to 0.6% M-o-M in June from 2.7% in May, said Minister of Economic Development, Othman Mohamed Othman. The food price index rose by only 0.8% M-o-M compared to an average of 3.5% for the first five months of the year while the remaining items stabilized, which resulted in a slower increase in inflation, he added. On an annual basis, this translates to an inflation figure of 20.2% Y-o-Y in June, slightly higher than 19.7% in May. Food prices, driven by lower prices of a number of food items (fruits, meat, tomatoes and chicken), increased 0.8% M-o-M, which translates into a 27.2% Y-o-Y increase, up from 27% in May. For FY2007/08 (which ended 30 June), inflation averaged 11.7% Y-o-Y, up from 11% in FY2006/07.
LARGEST STATE BUDGET GOES INTO EFFECT Source: Egyptian International Trade Point, July 2, 2008
Egypt’s new state budget of LE379.3 billion, the largest in the nation’s history, goes into effect as of July 1, 2008. Finance Minister Youssef Boutros Ghali said that the new state budget for the 2008/2009 fiscal year was larger by 55 percent compared to the previous budget.
It is higher by LE109.7 billion in contrast to last year’s budget. Ghali said LE215 billion of the new budget has been allocated for improving natives’ living conditions, higher by 55 percent compared to previous allotted sum, and indicated that the country’s top strategists opted to earmark a much larger budget, considering the global soaring inflation marked with a drastic hike of prices of necessities.
OCI'S SUBSIDIARY RECEIVES USD 400 MILLION CONTRACT Source: ArabFinance, July 2, 2008
Orascom Construction Industries (AmCham member) (link here) confirmed that BESIX (link here) (50% owned by OCI) has been awarded a USD 400 million contract to design and build the Al Safooh Transit System in Dubai, UAE in consortium with Alstom (link here). BESIX’s share of the contract is approximately USD 175 million.
The contract value represents Phase I of the USD 1.2 billion transit system project from the Dubai government’s Roads & Transport Authority (RTA). Phase I of the project will span 10 km with 13 stops and 11 Citadis - a low-floor tram built by Alstom in several European cities - and a total of 402 trams. The project is expected to enter into commercial service in 2011 and Dubai will be the first city in the Gulf region to be equipped with a tramway transit system.
BESIX also expects to pursue additional work on Phase II which consists of a planned 4 km extension with 6 more stations and 14 additional trams. Upon completion, the transit system will link Madinat Jumeirah, Mall of the Emirates, Dubai Marina and Jumeirah Beach Residence. OCI proportionately consolidates BESIX’s construction backlog in its quarterly results report.
CEMENT PRICES DECLINE TO EGP420 PER TON & STEEL RISE TO EGP1,000 PER TON Source: Al Mal, July 2, 2008
The price of cement has declined to EGP420 per ton due to increased supply, while steel prices have risen. Cement producers are concerned they may face losses and be forced to shut production lines should supply continue to increase and if raw material prices continue to rise. The prices of the raw material for steel have also increased. Al Ezz Dekheila Co (AmCham member) (link here) set its ex-factory price at EGP6,250 per ton for July, 10% (or EGP550) higher than last month, leading retailers to sell it for EGP6,560 per ton. Other steel companies announced price increases of EGP700 to EGP1,000 per ton.
AVERAGE YIELD RISES ON 91-DAY EGYPT T-BILLS Source: Reuters, July 6, 2008
The average yield on Egyptian 91-day treasury bills inched higher to 10.106 percent at an auction on Sunday from 10.077 percent at last week's auction. The Central Bank of Egypt (CBE) (link here) said it accepted bids for bills worth 500 million Egyptian pounds, the same amount it was seeking. It accepted bids at rates between 9.998 and 10.230 percent, compared to a range of 9.501 to 10.251 percent at the previous auction.
NATIONAL BANK OF EGYPT SELLS STAKES IN 6 COMPANIES Source: EgyptWire, July 1, 2008
State-owned National Bank of Egypt (AmCham member) (link here) has sold its holdings in six companies for a combined total of EGP5.29 billion. Accordingly, the buyers were Abu Qir Fertilisers and Chemicals, Ezz Dekheila Steel (AmCham member), Egyptian Resorts, Alexandria Mineral Oils Company (AMOC), Sidi Kerir Petrochemicals and Misr Cement Qena.
The sale is linked to the failed attempt to auction off the state-owned Banque du Caire. Proceeds of the auction were expected to have been divided between National Bank of Egypt and state-owned Banque Misr (AmCham member) (link here) to pay off the public sector's debts to both banks and finance their restructuring.
EGB TO BUY 22% STAKE IN PRIME HOLDING Source: EFG-Hermes, July 10, 2008
Egyptian Gulf Bank (EGB) (AmCham member) (link here) will buy 16 million newly created shares in Cairo-based financial services company Prime Holding (AmCham member), a purchase that will give it a 22% stake. EGB will pay EGP108 million (USD20 million), or EGP6.75 per share. It will be the only subscriber in Prime’s capital increase. Prime shareholders will be asked to officially approve the transaction in a general meeting on July 24.
The purchase will help EGB expand into investment banking, brokerage and ancillary activities and represents a strategic step for the bank, said EGB chairman Omar Alseesi. It also will help Prime expand locally and regionally, Prime chairman and managing director Sherine Al Kady said. Prime is majority-owned by private Egyptian investors.
ELECTRICITY MINISTRY SIGNS EGP610 MILLION CONTRACTS FOR WORK AT AL-ATF AND SIDI KRIR Source: Al-Alam Al-Yom, July 2, 2008
The Ministry of Electricity and Energy (link here) awarded four contracts worth EGP610 million for works and installation of machinery at the Al-Atf and Sidi Krir power plants near Alexandria. The contracts, signed by state-owned West Delta Electricity Production Company and Central Delta Electricity Production Company, which own the plants, were awarded to a consortium of Japan’s Toshiba Energy Systems (link here) and Toyota Tsusho (link here). The power plants will produce 1,000 megawatts within a year and a maximum of 1,500 megawatts by 2010, said Minister of Electricity and Energy Hassan Younes.
LIBYA TO BUILD REFINERY IN EGYPT Source: Khaleej Times, July 3, 2008
OPEC member Libya is planning an oil refinery and a natural gas pipeline in Egypt, helping to raise Libyan investment in its Arab neighbour to $10 billion over the next two years, the Libyan prime minister said on Thursday. Al-Baghdadi Ali al-Mahmoudi said that Egypt and Libya signed an agreement to boost Libyan investment in sectors such as energy, agriculture and real estate, as well as loosening restrictions on movement between both countries. "We have now about $2 billion (of investments) and we expect that within a period of two years maximum this will reach $10 billion," he said. "It was agreed that an oil refinery will be built west of Alexandria with Libyan funding and it will be used for Libyan crude," he added. The Mediterranean port of Alexandria is the second-largest city in Egypt. The refinery would have a capacity of 250,000 barrels per day.
GOVERNMENT TO RAISE PRICES OF NATURAL GAS AND ELECTRICITY Source: Al Masry Al Youm, July 7, 2008
The Prime Minister issued a decree raising the prices of natural gas and electricity for energy-intensive industries. The decree raised the prices of natural gas for energy-intensive industries to USD3/mBTU and for non-energy intensive industries by USD0.46/mBTU annually for three years, raising the price from USD1.25/mBTU to USD2.65/mBTU at the end of the three years. Energy-intensive industries, according to the decree, include cement, iron and steel, petrochemicals, fertilisers, glass, ceramics, aluminum and copper production which use over 50 million KW/Hr of electricity or 66 million cubic metres of gas annually. Electricity prices will rise to EGP0.202/KWHr for very high voltage, EGP0.245/KWHr for high voltage and EGP0.334/KWHr for medium voltage use. The higher price of natural gas will be charged to industries that use the gas as fuel, while industries that use the gas as feedstock will be charged with a price based on an equation linked to the price of the final products.
INVESTMENT IN MEDITERRANEAN PROJECT LAUNCHED Source: Ministry of Investment, July 2, 2008
A delegation of the General Authority for Investment and Free Zones (GAFI) (link here) took part in launching the Investment in Mediterranean Project signed between the European Union (link here) and a Consortium of ANIMA Investment Network (link here), Union of Chambers of Commerce and Industry in Mediterranean Countries and the Union of European Chambers of Commerce. GAFI delegation was headed by GAFI vice chairperson, Ms. Wafaa Sobhy and included the advisor to the Minister of Investment for investors’ affairs.
The project, financed by the EU, is aimed at attracting more investment to south Mediterranean countries and increasing trade between north and south Mediterranean. A relevant conference reviewed the priority sectors which may represent a potential for economic cooperation among member states of the consortium.
BELTONE PARTNERS WITH SIPAREX TO INVEST IN EGYPT Source: AMEInfo, July 13, 2008
Egypt-based Beltone Financial (AmCham member) (link here) is joining forces with France's leading independent private equity investment group to invest in small medium enterprises (SMEs) in Egypt and the GCC. Cairo-based Beltone Private Equity (AmCham member) and Sigefi Private Equity part of the French Siparex Group (link here) are launching a $150m private equity fund to invest in SMEs in Egypt and the GCC.
The Fund will invest in independent, unlisted, financially sound, and promising SMEs or potential spin-offs from large companies with growth and export potential. Dr. A.M. Omran, Director of Beltone Private Equity, will be the managing director of the new Joint Venture which will manage the Fund. Beltone Private Equity will utilize its expertise in Egypt and the region to manage the Fund and ensure maximum returns to the investors.
Sigefi will provide its long global knowledge to the Fund, appoint a representative on the Investment Committee and participate in the management team.
Beltone and Sigefi combined knowledge of the market, industries and financial relations will provide a strong flow of investment pipe line for the fund and support to the companies by adding an incremental value to all of the Fund's investments.
EGYPTIAN RESORTS APPROVES SALE OF THREE PLOTS AT SAHL HASHISH Source: EFG-Hermes, July 2, 2008
The board of Egyptian Resorts Company (ERC) has approved the sale of three plots of land at Sahl Hashish at an average selling price of USD151 per sqm. The plots have a combined 211,854 sqm. ERC has also granted a preliminary approval for the sale of another three plots with a combined 270,552 sqm at an average selling price of USD186 per sqm.
The six plots are located in phases II and mostly in prime locations, near or directly on the coastline. Prices per sqm for the two transactions are 26% and 54% higher than the USD120 per sqm sale price for a 60,695 sqm phase II land plot sold in December 2007. Once these sales are concluded, ERC’s unsold land bank will be around 24.9 million sqm, or 78% of ERC’s total land bank of 32.0 million sqm. Most of the unsold portion is concentrated in phase III (20.0 million sqm).
EATP OFFERS EIGHT LAND PLOTS IN MARSA ALAM Source: Noozz Editorial, July 14, 2008
The Egyptian Authority for Tourism Promotion (EATP) will offer eight land plots designated for tourism investment in Marsa Alam. The authority expects to attract investments of EGP1.5 billion to construct 6,000 new hotel rooms on the offered land. Fourteen other land plots have been allocated earlier to create 7,000 new rooms at a cost of EGP1.7 billion. EATP expects to attract EGP35 billion in tourism investments, which is estimated to add 180,000 new hotel rooms by 2017.
IHG TO MANAGE FOUR HOTELS IN PORT GHALIB IN MARSA ALAM Source: The Financial, July 12, 2008
InterContinental Hotels Group (IHG) (link here) announces that Sovereign Hospitality Holdings, owned by M.A. Kharafi Group (link here) of Kuwait, has awarded IHG the exclusive management contract for Port Ghalib Resort, in Marsa Alam.
The resort will now feature an InterContinental Hotel (AmCham member), two Crowne Plaza hotels (AmCham member) and an International Convention Centre. IHG will also manage the Marina Lodge Hotel which will remain individually branded. IHG is commencing operation of the four primary properties from today.
The 309 room InterContinental, which includes 14 Royal Suites, has extensive views of the Red Sea from every angle. The 347-room Crowne Plaza Sahara Sands Port Ghalib Resort and the 292-room Crowne Plaza Sahara Oasis Port Ghalib Resort sit alongside the northern and eastern sides of a manmade lagoon. With a grand ballroom capable of seating 1500 people and 18 meeting rooms equipped with the latest in digital technology, the International Convention Centre is the only one of its kind on the Red Sea.
TALAAT MUSTAFA GROUP WINS A LAND CONCESSION IN LUXOR Source: Al Ahram Weekly, July 10, 2008
Talaat Mustafa Group (TMG)'s (link here) 74 percent-owned Arab Company for Hotels and Tourism Investment (ICON) has won a land concession in Luxor. Earlier this year, TMG said it will build a new Four Seasons (AmCham member) (link here) luxury hotel on the land plot. Offering the highest bid, ICON won a 50 year concession which can be renewed for another 50 years. According to the deal, ICON will pay an annual fee of LE6.8 million starting in January 2012. This sum will increase by five percent each year to a maximum of LE20 million in 2034. The company also plans to build a cruise ship to be managed together with the hotel by the Four Seasons group. TMG's most recent residential compound, Madinaty, also includes a Four Seasons hotel.
EGYPT QUOTA OF AGRICULTURAL EXPORTS TO EU TO INCREASE BY 30% Source: ANSAmed, July 7, 2008
Egypt's quota of agricultural exports to the European Union will increase by 30%. This is the decision taken following an agreement between the Egyptian Ministry of Trade and Industry (link here) and the EU delegation to Cairo. The trade with the EU represents some 40% of the Egyptian foreign trade. The agreement will give to the exporters in Egypt free access to the EU market for some 90% of agricultural products and fish. Egypt will continue applying the taxes on the import of tobacco, wine and spirits, pork meat and will halve the taxes on the confectionery, chocolate, pasta and bread industry. Between 2005 and 2007 the EU exported to Egypt products for some 600 million euro which still today are subject to custom taxes, while Egypt exported products for some 540 million euro in the same period. According to the agreement, the EU market will be open to all the products except from the ones considered "more vulnerable" such as tomatoes, watermelons, artichoke, courgette, grapes, vinegar, strawberries, rice, sugar, processed products with high content of sugar, processed tuna and sardines.
MOHIELDIN APPROVES EGYPTIAN AUDIT STANDARDS Source: Ministry of Investment, July 2, 2008
The Minister of Investment, Dr. Mahmoud Mohieldin issued decree No. 166/2008 approving the Egyptian Standards for Audit, Limited Inspection and Other Ascertainment Tasks. The decree is to be employed in auditing annual financial statements or examining quarterly financial statements of joint stock companies subject to companies law No. 159/1981, which regulates joint stock companies, companies limited by shares and limited liability companies, or the capital market law No. 95/1992 and their amendments.
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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