QIZ to Cover 4,500 Industrial Units Source: The Egyptian State Information Service, November 1, 2005
Egypt and the US have reached a deal whereby the number of industrial zones benefiting from the Qualified Industrial Zones (QIZ) (link here) agreement will be increased, a senior government official announced on October 31.
Minister of Foreign Trade and Industry, Rachid Mohamed Rachid, who led the Egyptian side in the talks with the Americans, said the deal was reached after many rounds of talks that came in response to requests from many Egyptian industrialists wishing to become part of the QIZ deal signed on December 14.
The expansion of the QIZ protocol would give the firms in provinces of Gharbiya, Daqahliya, Menoufiya and Damietta, plus companies in industrial zones in Greater Cairo, Suez Canal and Alexandria the concession to export to US markets free of customs tariffs and quotas. According to the new deal, 4,500 manufacturing units in chemicals, engineering, leather goods, foodstuffs, clothing and textiles will benefit from the QIZ protocol.
For further information on Egypt-U.S. Relations (click here).
For AmCham’s latest research on textiles and clothing (click here).
$35 Million for Egypt’s Industrial Modernization Drive Source: Ministry of Foreign Trade and Industry, October 19; Trade Arabia, October 23, 2005
Close to $35 million are being poured into Egypt's National Supplier Development Program (NSDP), a project initiated by the ministry of foreign trade to boost the country's industry.
Egypt's industrial sector is being electrified by the modernization program of public-private partnership aimed at making hundreds of small suppliers competitive on the global market.
The Program is launched in partnership with the Industrial Modernization Center (IMC) (link here) and Commercial International Bank (CIB) (AmCham Member) (link here), Egypt’s Largest commercial and investment bank. The NSDP has been operational, in the form of a pilot project, over the past three months.
The NSDP seeks to upgrade Egypt’s local supplier industry, turning small and medium enterprises (SMEs) currently supplying the domestic market, into outward-oriented exporters with a firm foothold in an existing global supply chain. Over the past few months, the government has approached 100 of Egypt’s leading exporters (mother companies) and offered to upgrade their respective suppliers, to international standards, at no cost to the company. In return, each of the large exporters is committed to include those suppliers that successfully completed their upgrade on their global sourcing network.
To date, 200 suppliers have joined the program for upgrading. A total of LE1 million will be spent on every single supplier.
Of that money, 85% is provided by the IMC, which itself is financed up to two-thirds by the European Union (EU) (link here). The remaining 15% can be borrowed at a preferential interest rate.
So far, 37 large industrial companies have signed up, including Egyptian and regional groups, as well as multinationals such as US behemoths General Motors (AmCham Member) (link here) and Procter and Gamble (AmCham Member) (link here).
The scheme also includes European giants Mercedes (link here), Unilever (AmCham Member) (link here), Nestle (link here), Siemens (AmCham Member) (link here) and Cadbury Schweppes (link here).
These companies currently weigh $4.3 billion and employ 50,000 people. The target for the NSDP is to generate a growth of $2.6 billion and 25,000 jobs over the next five years.
Fiscal Prudence Earns Good Credit Rating Source: Ministry of Investment, October 22, 2005
Egypt has received a boost for its economic reforms from a leading international credit rating agency, which influences the government’s standing in financial markets. Capital Intelligence (CI) (link here), the international emerging markets rating agency, rated Egypt's long- and short-term foreign currency as BB+/B.
Egypt's short and long-term local currency was rated BBB/A3. Looking forward, CI expects a stable credit rating for Egypt.
The various reform measures taken by the Egyptian government in the past year received praise, especially the structural reform program. The economic improvement is attributed to the flow of foreign investments, said the CI report.
Several institutions expect Egypt's economy to emerge as more dynamic and more able to face external economic changes in the medium term.
The report highlighted the Egyptian cabinet's achievements in controlling foreign debt and improving the balance of payments. The current balance recorded a remarkable surplus for the fourth year in succession, CI notes approvingly. This achievement has reflected positively on the balance of payments in general. The inflow of foreign currency increased the foreign reserves.
"The Egyptian economy has a stable foreign debt, which stands at medium levels as compared to GDP and the current balance of payments", said the report. The report looks forward to:
· Continuing surplus in the current balance of payments in coming years, attributed to the Egyptian pound's competitive rates, increased oil prices, high tourism receipts and increasing amounts of liquid natural gas (LNG).
· Continuing improvement of the Central Bank's (link here) foreign reserves during 2006 and 2007.
· Lower budget deficits in coming years with high proceeds from sales in the asset management program.
· Increasing the Egyptian economy's potential to face external changes, due to high foreign reserves and a more flexible exchange rate system implemented by Egypt.
Egypt Ranks Among Top Reformers in Doing Business 2006 Source: World Bank, October 26, 2005
Doing Business in 2006: Creating Jobs is the report cosponsored by the World Bank (WB) (link here) and the International Finance Corporation (IFC) (link here), the private sector arm of the World Bank Group.
The Doing Business 2006 report provides a global ranking of 155 nations on key business regulations and reforms. It tracks a set of regulatory indicators related to business startup, operation, trade, payment of taxes, and closure by measuring the time and cost associated with various government requirements. The new indicators in this year’s report further reinforce the overwhelming need for reform, especially in poor countries. The report finds that poor countries levy the highest business taxes in the world. These high taxes create incentives to evade, driving many firms into the underground economy, and do not translate to higher revenues. Similarly, the analysis shows that reforming the administrative costs of trading can remove significant obstacles to exporting and importing.
Egypt ranked sixth on the list of top 12 reformers in the past year which also included in order: Serbia and Montenegro, Georgia, Vietnam, Slovakia, Germany, Finland, Romania, Latvia, Pakistan, Rwanda, and the Netherlands. “Recent reforms in Egypt represent an important benchmark toward making the investment climate more business friendly,” said Michael Klein, World Bank/IFC Vice President for Private Sector Development and IFC Chief Economist.
Egypt’s ranking among top reformers was earned as a result of a broad economic and political reform agenda that was launched in July 2004 including reforms in the company registry, the credit registry, the property registry, and the customs office.
In addition, Egypt was recognized as the world’s top reformer of customs due to “simplification procedures” which resulted in establishing a single window for trade documentation and merging 26 approvals into 5.
According to the report, it takes investors 34 days to run business in Egypt and Jordan, 64 days in Saudi Arabia and 106 days in the West Bank and Gaza Strip.
The ADB Loan For Egyptian Power Plant Source: Business Monitor International, October 24, 2005
The African Development Bank (ADB) (link here) has agreed on a EUR175.9 million ($210.68 million) loan to finance the construction of El Kureimat power plant project in Egypt.
The funding will be used to build a 750-MW combine cycle power plant in the premises of the existing El Kureimat Power Station. The increased power generation will be used to meet growing electricity demand in the short to medium-term.
The beneficiaries of the scheme will include households, 98% of which are linked to the national grid, the agricultural sector, which relies on electricity to irrigate farmlands, as well as industry.
NBE Loan Upsized Source: Middle East Economic Digest, October 28, 2005
A syndicated loan for the National Bank of Egypt (NBE) (AmCham Member) (link here) has been increased in size to $400 million from $300 million due to subscription of about $460 million.
The three-year facility, priced at 47.5 basis points over LIBOR, is due to be signed at the end of October. The mandated lead arrangers (MLAs) are Bank of Tokyo-Mitsubishi (link here), Barclays Capital (link here), Citigroup (link here), National Bank of Egypt (UK) (link here) and Standard Chartered Bank (link here).
HSBC and Calyon Eye Egypt Bank Stake Source: Al Alam Al Youm, October 24, 2005
HSBC Holdings (AmCham Member) (link here) and Calyon (AmCham Member) (link here) are close to making an offer to buy an unspecified stake in Egyptian American Bank (AmCham Member) (link here), Egypt's second largest publicly traded lender.
The banks have almost finished auditing Egyptian American Bank, a joint venture between American Express (AmCham Member) (link here) and the state-owned Bank of Alexandria SAE (AmCham Member) (link here) with a market value of almost LE4 billion ($694 million).
OCI to Invest in a $540 Million Ammonia Plant Source: AFX News Limited, October 26, 2005
Orascom Construction Industries (OCI) (AmCham Member) (link here) has announced that it is investing in a 30% stake in Egypt Basic Industries Corporation (EBIC), which is about to construct a 2,000 metric ton per day greenfield ammonia plant, the largest of its kind in Egypt, with a total investment cost of $540 million.
OCI's share in the equity of the project amounts to $57 million, which makes it the largest single shareholder.
Other project sponsors include PSK Holdings (project promoter) (link here) , Amiral Group, and the Egyptian General Petroleum Company (link here) , the state-owned oil and gas company. Kellog Brown & Root (link here) will act as the Engineering, Procurement & Construction (EPC) contractor for the greenfield plant and OCI will be the lead subcontractor.
The plant will be constructed on a surface area of 260,000 square meters to be located in the industrial park that is managed and operated by OCI's majority owned subsidiary Suez Industrial Development Company (SIDC) (link here) in Ain Sokhna. In addition, a pipeline connecting the plant to storage tanks located in the nearby Sokhna Port will be built to facilitate export operations.
EBIC has just signed agreements for $350 million in long-term project finance debt on a non-recourse basis of which $225 million will be an export-credit facility guaranteed by the Export-Import Bank (link here) of the United States (EX-IM bank).
This is the first industrial project finance transaction for US EX-IM bank in Egypt. These International Loan facilities have been signed with 5 mandated lead arrangers (MLAs) including BNP Paribas (AmCham Member) (link here) , HSBC (AmCham Member) (link here) , Natexis Banques Populaires (link here) , SG (link here) and WestLB (link here) on a club deal transaction structure.
A take-or-pay agreement for 100% of the new plant's output has been secured with New York-based Transammonia (link here) , a leading specialized international trader. The plant will use natural gas as its primary fuel source and has already signed a 25-year Gas Supply Agreement with EGPC.
Fl Smidth Sells Off Cement Shares Source: Middle East Economic Digest, October 21, 2005
Denmark’s FL Smidth (link here) has announced the sale of its 7.5% stake in the local Sinai Cement (link here) to Vicat (link here) of France for DKr 100 million ($16 million). Vicat in March 2003 acquired a strategic stake in Sinai Cement, which is located in the northern part of the Sinai Peninsula. Sinai Cement’s 1.4 million-ton-a-year facility began production in early 2001.
For Amcham’s Banking Sector Developments in Egypt New (click here).
Tekelec Announces a Deal With MobiNil Source: Business Wire, October 27, 2005
Tekelec (link here) , a leading developer of telecommunications products for next-generation fixed, mobile and packet networks, announced a multi-million Euro deal with the Egyptian Company for Mobile Services (MobiNil) (AmCham Member) (link here) to deploy significant capacity extensions to the Tekelec EAGLE 5 Signaling Application System (SAS) and Integrated Application Solution (IAS) monitoring platform.
The extensions enable Egypt's leading mobile operator to double its network capacity and support rapid future growth.
Since 2000, Tekelec has maintained and grown a scalable, reliable and future-proof signaling network that has provided continuous service and processed more than five billion MobiNil calls. By delivering an intelligent, high-density signaling system 7 (SS7) and SIGTRAN routing platform, the Tekelec EAGLE 5 SAS occupies a strategic position in MobiNil's plans for core network evolution to IP.
Tekelec also will expand its installed IAS network-wide monitoring and business intelligence solutions, distributing critical transversal customer and network performance data and applications to enhance MobiNil's customer care, fraud detection and roaming management.
Telecom Egypt Selects Ericsson-Cisco Solution to Upgrade Fixed Network Source: Mena Report, October 30, 2005
Telecom Egypt (TE) (link here) has chosen Ericsson (link here) in cooperation with Cisco Systems (link here), as one of the suppliers to upgrade its fixed network to a carrier-class, Internet Protocol (IP) Next Generation Network.
The deal, which will address both classic telephony and new multimedia services, is an essential element in TE's mission to become Egypt's “best total solution communication provider”.
According to the contract, Ericsson will upgrade parts of Telecom Egypt's core network of circuit-switched technology, based on AXE-10 exchanges, with a future-proof, IP Telephony Softswitch solution.
The solution, based on the combination of Ericsson's Telephony Softswitch solution and Cisco's 12000 Series routers, allows Telecom Egypt to migrate its Public Switched Telephony Network (PSTN) to a Voice Over IP network with minimal risk while building a platform for new IP-based services. Ericsson will provide end-to-end integration of the Ericsson-Cisco solution and related support services.
With this contract, Telecom Egypt is taking the first step towards establishing a single IP core network, including interoperability between softswitches and the consolidation of carrier-class services.
The Ericsson-Cisco solution will cover a part of the fixed-telephony network, including local and transit network layers.
The Ericsson-Cisco solution gives Telecom Egypt a secure migration path along which they can evolve their circuit-switched network to a multi-service network. It is capable of carrying large and growing volumes of voice and data traffic and enables integrated traditional fixed telephony with IP-based broadband traffic on a single network.
Nasr City Fixed Network to be Expanded Source: Middle East Economic Digest, October 21, 2005
Germany’s Siemens (AmCham Member) (link here) has started work on the estimated LE40 million-60 million ($7 million-10 million) contract to expand the outside plant copper cable network in Al-Nasr City operated by state-owned operator Telecom Egypt (TE) (link here).
Under the deal, signed in September, Siemens will install an additional 120,000 phone lines over a period of 15-16 months.
TE has also taken steps towards launching an initial public offering (IPO) in the first half of 2006, by announcing a 1:10 stock split raising its number of shares to 1,710 million, each valued at LE10 ($1.7). A team of Credit Suisse First Boston (link here) and the local EFG-Hermes (AmCham Member) (link here) are the global coordinator and book runner for the Ministry of Communications & Information Technology (link here).
IEOC Connects Offshore Oil Rigs with Redline’s Wireless Broadband Solution Source: Business Wire, October 24, 2005
Redline Communications (link here) , a leading provider of standards-based broadband wireless equipment, announced that International Egyptian Oil Company (IEOC), a subsidiary of ENI Group Italy (link here) , has established a wireless broadband network connecting its onshore and offshore operations using Redline's systems.
Redline’s WiMAX-based equipment ensures secure, long-distance links between offshore rigs and onshore base stations.
The network was engineered and installed by Econnect Business Innovations, an Egyptian-based systems integrator and Redline partner. IEOC is the first oil and gas company in Egypt to use wireless broadband technology to improve its operations.
Econnect has established wireless broadband connections between IEOC's onshore base station and its offshore rigs, at distances of more than 40 km across the Mediterranean Sea. Each link is delivering speeds of up to 72 Mbps over the air, with built-in security and network features that can be managed from IEOC's base stations. The wireless broadband network has enabled IEOC to immediately transfer critical data and establish secure communications with its offshore teams.
Emaar to Launch Project in Cairo Smart Village Source: AME Info FX, October 29, 2005
Emaar Properties (link here) has signed a Memorandum of Understanding (MoU) with the Egyptian Government to start work on a new development in Cairo, an integrated community based in Egypt’s new Smart Village (link here).
The development, located in the Egyptian capital at the beginning of Cairo-Alexandria highway, represents a multi million-dollar investment and will have at its epicenter a world-class convention center to meet the needs of the growing meetings and conferences market, which find Cairo an interesting and historical location.
The 2.4 million sq ft of land development features an integrated convention and exhibition center, hotel, serviced apartments, commercial, office space and shopping village. The development, located within Egypt’s state-of-the-art Smart Village, will complement the high tech environment of its surroundings by providing business support through the premier commercial, corporate and leisure offering.
The Convention Center development will be designed to increase the corporate and business facilities and services available in the Smart Village by providing an eight-story hotel plus serviced apartments for corporate visitors and a high-tech office tower.
The convention center is multi functional and can be used for banquets as well as exhibitions and conventions and the main hall can accommodate up to 6,000 delegates in theatre style seating. Other amenities include a ballroom, meeting rooms and grand foyer.
The development also includes a Shopping Village measuring 163,000 sq ft of retail space ranging from boutique shops to fine dining that offers a village like atmosphere with low buildings, meandering streets and grand open squares - modeled after souqs of old town Egypt.
This latest announcement signals Emaar’s second move into Egypt, following its August announcement of the Dh14.5 billion ($4 billion) Cairo Heights development in the Egyptian capital. In addition, Emaar’s latest projects unveiled last week in the Syrian capital Damascus - Eighth Gate and Damascus Hills – sees the property major rolling out its strategy of undertaking prestigious master planned residential developments across the globe.
ACC Wins Marriott Hotel Refurbishment Job Source: Middle East Economic Digest, October 21, 2005
Lebanon’s Arabian Construction Company (ACC) (link here) in mid-October was selected by Egyptian General Company for Tourism & Hotels (EGOTH) (link here) to carry out refurbishment of the Cairo Marriott Hotel & Omar Khayyam Casino (link here) complex.
Under the LE167 million ($29 million) contract, ACC will strip out and remove all old finishing in rooms, baths and corridors, and carry out all related mechanical, electrical and plumbing (MEP) works.
ACC will also carry out the entire refurbishment and all related MEP works. The contract duration is 22 months. The Marriott hotel and casino complex consists of two 20-storey towers and a low-rise building. The hotel has a total of 1,012 rooms and 117 suites.
Ivanhoe Takes Aim at Alex GTL Project Source: Middle East Economic Digest, October 28, 2005
Ivanhoe Energy (Middle East) (link here), 100% owned by Canada’s Ivanhoe Energy, announced on October 25, the signing of a Memorandum of Understanding (MoU) with Egyptian Natural Gas Holding Company (EGAS) (link here) to carry out a feasibility study for the construction and operation of a grassroots gas-to-liquids (GTL) plant. The proposed site for the facility is El-Hamra, to the west of Alexandria.
The MoU came after EGAS committed to supply about 600 million cubic feet a day (cf/d) of gas feedstock for the proposed project, which will have an operating life of 20 years.
The next stage in the project implementation will be the signing of a gas sales agreement. "The project will be feasible only at a certain price. Using the Syntroleum technology, you are normally looking at about $2 a million BTUs [British thermal units]," says an industry source.
Ivanhoe has already started work on the project’s engineering and design. The plant will have capacity of 45,000 barrels a day (b/d), with an option to double capacity to 90,000 b/d through the construction of a second train. The Canadian firm also plans to carry out detailed engineering and design and market analysis studies.
The Egyptian project is Ivanhoe’s second attempt to build a GTL plant in the Middle East. In mid-2003, it announced that it had terminated negotiations with Qatar Petroleum (QP) (link here) over its planned integrated project. The proposed plant was designed to have capacity of 185,000 b/d.
Melrose Egyptian Discovery Source: Business Monitor International, October 21, 2005
UK oil firm Melrose (link here) Resources has struck gas-filled sand in its Abu Arida exploration well on the El Mansoura concession, reporting estimated reserves of 420 million cubic meters (mcm). The company will continue its drilling program before deciding on the concession's commercial viability.
Melrose won the concession in Egypt's February licensing round and has had a relatively successful drilling program so far. Such success will please the Egyptian government, which is frantically trying to attract investment in the gas sector to stave off an expected production decline later this decade.
Egypt's burgeoning liquefied natural gas (LNG) market needs large quantities of natural gas to continue to grow. BMI expects gas production to increase dramatically in order to fuel these LNG export schemes. Much of the growth in production will be from the BG (AmCham Member) (link here) and Edison (AmCham Member) (link here) Nile Delta discoveries.
The Cashier of El Nasr Company for Utilities & Erection issued on October 22, 2005 a request for supply & erection of the electromechanical equipment pertaining to phase 2 of El Khanka potable water treatment station in Kalioubiya Governorate. The specification fee is LE1,000. The Bid Bond is LE300,000. Deadline for the submission of offers is January 24, 2006.
Information Technology
The Finance & Administration Department of the Ministry of Communication & Information Technology issued on October 27, 2005 a request of offers from specialized companies for setting up an integrated information system for the Ministry of Social Affairs to support all its operations & extend the needed technical support thereto. System aims at familiarizing public with services extended by the Ministry & enabling citizens to easily benefit from them. The specification is LE5,000. The Bid Bond is LE20,000. Deadline for the submission of offers is November 30, 2005.
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