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follow up
egyptian hospitals’
y2k readiness questioned
[“egypt, outside differ on y2k,” october 1999]
the less-than-encouraging news on egypt’s y2k preparedness
continues to trickle in. and as the clock ticks down, some are beginning
to question official assurances about the y2k compliance of the
country’s health care system.
in an oct. 13 town meeting at the u.s. embassy in cairo, health
care headed a list of sectors whose y2k readiness was surveyed.
the news was, for the most part, fairly upbeat: the power grid has
been tested and pronounced compliant. power plants, which are largely
dependent on natural gas, are stocking up on crude oil in case of
interruptions in the gas supply. the public telecommunications system
is 85 percent compliant and will be 95 percent compliant by new
year’s.
but the ministry of health has essentially conceded its y2k vulnerability
and is now focusing on limiting the po-tential damage. “the
health sector has shifted its focus to contingency planning,”
said u.s. ambassador daniel kurtzer.
nny2k preparation at egypt’s university hospitals, which are
run by the ministry of higher edu-cation, is lagging, kurt-zer said.
the ministry of health hospitals were judged to be in better shape,
but kurtzer said that they aren’t expected to have all their
equipment up to speed in time. and while he noted that efforts to
contain the damage appear to be go-ing well, kurtzer said some y2k-related
equipment problems are likely given the sheer volume of equipment.
nnministry of health of-ficials acknowledged that the goal of total
y2k compliance is essentially unreachable. instead, the ministry’s
strategy has changed to gathering the resources and equipment needed
to maintain “minimal acceptable services,” said dr. tayseer
el sawy, director general of the ministry’s information center.
el sawy said that egypt’s still-modest level of technological
advancement is actually an insulating factor against the y2k problem
– which stems from the inability of computers that identify
years only by their last two digits to distinguish between 2000
and 1900.
the kind of large-scale interdependent computer networking that
could pose major problems in case of a failure doesn’t really
exist in egyptian hospitals, and patient records and treatment information
are still recorded on paper. “to an extent, that relieves us,”
el sawy said.
but equipment such as respirators, monitors and incubators could
contain embedded processors which could fail when the clock turns
over. one key problem, el sawy said, is a history of haphazard purchasing
by the ministry’s 340 hospitals. it’s not uncommon, he
said, to find five different brands and models of respirators in
a single hospital.
“how can i make an evaluation or assessment of that?”
el sawy said. “if it was just one or two manufacturers, that
would be different.”
el sawy’s office, which is helping coordinate the ministry’s
y2k preparations, has gathered a database of makes and models for
vital equipment such as dialysis machines, incubators, blood-bank
refrigerators and operating-room monitors. now they’re contacting
the manufacturers of that equipment to determine its y2k vulnerability.
based on a survey of 80 of the country’s largest hospitals,
el sawy estimated that 5 percent to 7 percent of the vital equipment
at any given hospital is not y2k compliant, with the status of a
much greater percentage uncertain.
the ministry is working to replace or upgrade necessary systems
over the next two months. but it’s a tight deadline, and more
so in egypt than elsewhere. the traditionally nonproductive fasting
month of ramadan is scheduled to begin in the first week of december,
so november is the only real chance to make headway.
on new year’s eve, any equipment that officials aren’t
totally sure of will be set aside, and hospitals will have to make
do with what remains. elective surgeries and non-em-ergency operations
will be postponed until mid-january at the earliest. but, el sawy
said, the nature of the medical sector means that injuries, accidents
and births don’t conform to policymakers’ schedules, and
the hospitals will do their best to be ready.
“the babies that are going to be born are going to be born,”
he said. “i can’t tell them to stop.”
over at the university hospitals, officials acknowledge that the
u.s. embassy assessment was a blow to their credibility, but they
knew that it was coming.
“we’re a little late, but i’m not worried,”
said dr. abdel moeti hussein ali, director of kasr el aini university
hos-pital. “we’ve been working for months to get ready
for this.”
the university hospitals have been identifying vital systems and
equipment and contacting manufacturers to gauge their vulnerability.
the full scope of the problem should be apparent by the end of october.
“everything should be clear then,” said ali, who estimates
that 60 percent of his time over the next two months will be spent
on y2k preparedness. “we’re working on it.”
ashraf khalil
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aic sees falling earnings
for 1999
[“egypt’s mirror markets,” september 1998]
eic, a leading private-sector contractor, will report at best flat
earnings for the fiscal year ending dec. 31, ceo mohamed metwalli
said in mid-october.
metwalli attributed the weakness to delays in a $360 million hydroelectric
project in uganda, which aic will design and build and from which
the company had expected revenues of $100 million this year. metwalli
said the project has been delayed until february 2000 while the
world bank, which is providing a risk guarantee for the project,
reviews its activities in uganda.
delays in the project produced a 30 percent drop in first-half 1999
earnings from the year before, said metwalli, who added that the
hole isn’t likely to be filled this year.
“i don’t think we’ll be able to get it flat,”
metwalli said of aic’s full-year 1999 earnings compared with
1998. “if we manage to get it flat, we’ve done one hell
of a job.”
speculation that the company’s first-half earnings would be
poor – in addition to poor communication by the company, which
metwalli conceded exacerbated the problem – by press time had
brought aic’s share price down by about a quarter since sept.
1. aic hit a year-low £e 13.85 on oct. 3 and closed oct. 19
at £e 14.01.
aic’s woes stand in sharp contrast to the company’s stock
performance a year ago. as we reported in septem-ber, private sector
stocks led by aic and others substantially outperformed the market
as a whole. this year, however, investors have preferred large capitalizations
and deep liquidity. with the exception of mobinil, private sector
shares have been creamed.
before the recent troubles, the company’s aggressive outlook
had made its shares a favorite of investors – particularly
institutional investors, who metwalli said hold 87 percent of aic’s
42 percent free float. established in 1985, aic, which used to call
itself arabian international construction, has used joint ventures
with foreign partners and acquisitions to grow rapidly into one
of egypt’s leading contractors.
aic had a backlog of £e 2.3 billion as of the end of march.
the company is working on a number of high-profile infrastructure
projects in egypt, in addition to power-sector projects in libya
and uganda.
metwalli said the company plans to issue a $100 million eurobond
early next year to finance further acquisitions. aic hopes by march
to be doing business in 15 countries, up from six at present, and
expects to earn 60 percent of its year-2000 revenue abroad.
but aic’s rapid growth has also been a cause of concern among
analysts, who fear the company is adding new business faster than
it can manage it.
“i’m worried they might be overextended,” said hassan
badrawi, an analyst at efg-hermes. “we’re worried about
the risk of that much growth in too many places.”
the delay in the uganda project merely fueled such concerns, observers
said. efg-hermes forecast in may that aic would close the 1999 fiscal
year with earnings of £e 55 million, up from £e 42 million
in 1998. at press time, aic hadn’t released its first-half
earnings, which were being audited. but the company said they would
be in the range of £e 15 million to £e 17 million, down
from £e 23 million in the same period last year.
in a nod to concerns about overextension, aic hired seven executives
this year from international companies like balfour beatty of the
u.s. and tarmac construction ltd. of the u.k., as well as the world
bank and fleming ciic, a cairo-based, joint-venture investment bank.
metwalli said the hiring had doubled aic’s head-office overhead,
contributing to the company’s poor first-half performance,
but that the expansion was necessary if the company was to meet
its growth targets. “our managers are good managers, but they
are functional managers,” metwalli said. “we needed to
add a new layer.”
metwalli believes aic will grow its way out of the current earnings
problem. the company reported revenues of £e 567 million in
1998. revenues for 1999 will be flat at best, but aic is forecasting
a big jump next year.
“i think in the year 2000 we are looking at turnover of at
least £e 1 billion,” metwalli said. “so 2000 won’t
be af-fected.”
andrew dowell
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edison buys stake in sidi
krir boot project
[“new power plants for the private sector,” june 1998]
dison spa, the lead energy company of italy’s montedison group,
has acquired a 39 percent stake in intergen sidi krir co., a special-purpose
company developing a private-power project near alexandria, egypt,
edison announced in mid-october.
edison paid $36 million for its stake, which it purchased from intergen,
a private-power joint venture be-tween bechtel enterprises inc.
and shell generating ltd. edison will also commit up to another
$14 million in equity to secure its share of the financing for the
project, a 680 megawatt thermoelectric power plant whose total cost
is expected to reach $450 million.
the acquisition gives edison its most significant stake in power
generation outside italy and expands the company’s activities
in egypt, which already include natural gas exploration, production
and transmission.
“our internationalization starts from egypt,” edison ceo
giulio del ninno said in cairo. “it is the first country in
which we have a not-negligible interest.”
fabrizio de candia, director of development for inter-gen (uk)
ltd., said intergen had approached edison about taking a stake in
order to free up capital for other investments in egypt and to establish
a strategic partnership through which it could pursue new business.
inter-gen is also in discussions with a potential local partner
to take a 10 percent stake in the company, de candia said.
the plant at sidi krir is the first in egypt to be developed under
a build-own-operate-transfer, or boot, arrangement. intergen reached
finalized financing in july, and startup is slated for january 2002.
intergen and edison both said they were interested in bidding on
future private-power projects in egypt, perhaps together. “we
have an understanding to discuss collaboration on other projects,”
de candia said.
edison has a particular interest in egypt’s recent call for
prequalifications for a tender to build a pair of combined-cycle
boot power plants, because its experience operating 12 combined-cycle
plants in italy gives it an edge, del ninno said.
“we think we’d be in a good position from a technical
point of view,” del ninno said.
the plants will be the fourth and fifth of 14 that egypt is contracting
in an effort to roughly double the country’s power output by
adding 13,000 megawatts of private power by 2010, at a cost of $7.2
billion.
top
abc secures rating, mulls
acquisition
[“things brewing (late) at stella,” april 1997]
al ahram beverages co., egypt’s dominant brewery, announced
in october that it secured a bb long-term corporate credit rating
from standard & poor’s.
the formerly state-owned company solicited the rating to be prepared
to issue debt to fund future acquisitions and to set a benchmark
for investors, said ashraf moftah, financial adviser to the chairman.
cash-rich al ahram acquired competitor nile brewery and state-owned
monopoly winery gianaclis earlier this year, and the company continues
to scout for targets in egypt and the region to fuel its growth.
“opportunities always present themselves here, and we are in
the market,” moftah said. “we can’t continue to sit
on all this cash.”
al ahram reported that it had £e 163 million in bank balances
and cash at the end of its fiscal year on june 30, up from £e
91 million the year before.
moftah said al ahram was considering regional acquisitions in its
core beverages business and “upstream,” or input-related,
acquisitions in egypt. “it’s something that we feel we
need to grow,” moftah said.
if al ahram doesn’t find a suitable target, the company will
likely resort to a special dividend to return cash to shareholders,
moftah said.
al ahram has already invested in organic growth by expanding and
adding capacity. the company has said it expects to begin producing
500,000 hectoliters a year at a greenfield facility outside cairo
by the end of the year, which with the nile brewery acquisition
will raise the company’s annual capacity to about 2 million
hectoliters.
al ahram, which was privatized via a strategic-investor transaction
in 1997, controls about 90 percent of egypt’s market for alcoholic
beer. the company reported earnings of £e 87 million, or a
diluted £e 18.02 per share, for the fiscal year ended june
30, up from £e 68 million, or a diluted £e 13.78 per
share, the year before.
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