FERTILIZER PRICE JUMPS TO EGP2,800 PER TON Source: A Mal, March 24, 2008
Fertilizer prices jumped 75% from the beginning of 2008 to EGP2,800 per ton. The state-owned Bank for Development and Agricultural Credit is the sole distributor of fertilizers under a decree issued by the Minister of Agriculture late last year. Buying fertilizer from the bank is an arduous process that pushes the farmers to buy it from the black market at a higher price, said the head of the fertilizers division at the Federation of the Chamber of Commerce, Mohamed Al Kheshen. The government, seeking to liberalize domestic fertilizer prices, increased its price by 90% on March 2nd to EGP1,500 per ton. The current international price is EGP2,530. The recent increase in the fertilizer prices will likely lead to further increases in food prices this year. Food prices inflation was running at 16.8% in the first two months of this year.
GOVERNMENT TO PRIVATIZE UNITED BANK Source: Al-Alam al-Yom, Zawya, March 24, 2008
The government will sell the United Bank (AmCham Member) (link here), either to a strategic investor or through a public offering, said the bank’s managing director Tarek Helmy. United Bank, which is fully owned by the Central Bank of Egypt (CBE) (link here), was formed in June 2006 from the merger of United Bank of Egypt, Islamic International Bank for Investment and Development and Nile Bank. The sale is expected to take place after the bank has completed its current restructuring.
GOVERNMENT TO INCREASE SPENDING BY EGP68 BILLION IN FY2008/09 Source: Al-Ahram, March 23, 2008
The government plans to increase spending by EGP68 billion to EGP313 billion (USD57 billion) in FY2008/09 from EGP244 billion in FY2007/08, which ends on June 30. Of the total increase, EGP13 billion has been allocated for wage increases of government employees, raising total wages to EGP73 billion, a 22% Y-o-Y increase. The government expects revenue to increase to EGP232.4 billion in FY2008/09 from EGP187.2 billion.
The government earlier announced that it plans to increase food subsidies by 18% in FY2008/09 to EGP17 billion, of which EGP2.5 billion will be for subsidized houses and EGP708 million for agricultural subsidies. The subsidy increases are designed to lower the burden on consumers as inflation soars. Average monthly Y-o-Y inflation rose to 9.6% in 2007 from 7.6% in 2006 and 4.9% in 2005 mainly due to supply shocks (reductions in subsidies) and higher imported energy and food prices. Inflation regained momentum in the January (10.5% Y-o-Y) and February (12.1% Y-o-Y) after having slowed in 2H2007.
GOVERNMENT'S SALES TAX REVENUE RISES 30% Y-O-Y IN 10 M FY 2007/08 Source: Al-Ahram, March 17, 2008
Collections from sales tax increased to EGP23.2 billion (USD4.2 billion) in the first 10 months of FY2007/08, which began July 1st, said the Head of the Tax Authority, Ashraf Al Arabi. This represents an annual increase of 30%, up from 10% in FY2005/06 and 15% in FY2006/07. The increase, the largest in many years, reflects the economy’s strong performance, he added.
The government faces pressure to increase spending on subsidies and wages as it fights inflation, which climbed to 12.1% in February. It increased food subsidies by EGP4.7 billion and fuel subsidies by EGP19.6 billion in the current fiscal year. The government also plans wage increases for state employees and additional increases in subsidies.
JORDAN’S AL-TAJAMOUAT GROUP TO SET UP TEXTILES ZONE IN TENTH OF RAMADAN CITY Source: Al Mal, March 16, 2008
Jordan’s Specialized Investment Compounds Co., part of Al-Tajamouat Group, will begin setting up a one million square meter industrial zone specialized in textile industries, Egypt’s Industrial Development Authority (IDA) (link here) chairman Amr Assal said. Al-Tajamouat signed an agreement with IDA in December, received the land in February and will start execution in June, added Assal. The Jordanian company will invest about USD350 million in the zone, which is expected to attract investments worth USD850 million and create 100,000 new jobs.
DANISH FLSMIDTH WINS $95 MLN CONTRACT IN EGYPT Source: Reuters, March 18, 2008
Danish engineering group FLSmidth (link here) won a contract worth 450 million Danish crowns (link here) ($95.4 million) for a new cement plant in Egypt. The contract is for machinery at a 5,000 tonnes-per-day plant to be built near Ain Soukhna in the Suez province. FLSmidth said it would supply the largest cement mill installed in Egypt. The equipment will be shipped in 2010.
ARAB REAL ESTATE TO DEVELOP 34 MILLION SQ.M. OF LAND IN EGYPT Source: Noozz Editorial, March 16,2008
Arab Real Estate Development Company (ARED) will begin housing projects on 34 million sqm in Egypt , board member Tamer Erfan said. ARED has land plots in New Cairo, Sheikh Zayed, Marsa Alam, Sharm el-Sheikh and the North Coast . ARED is to soon finalize its first housing project in Cairo that will comprise 219 villas, said Erfan. ARED was incorporated in mid-2005 with a paid-in capital of EGP270. It is owned 48% by a Saudi family and 38.5% by Egypt ’s Al Ahly Real Estate Development Company (AmCham Member).
SUEZ STEEL AWARDS EUR260 MILLION STEEL MILL CONTRACT TO ITALY 'S DANIELI Source: Nooz, March 23, 2008
Egypt 's Suez Steel Co. has awarded Italian foundry equipment maker Danieli & Compagnia Officine Meccaniche a EUR260 million contract to build a mini steel mill. The integrated mill will produce 2 million tons of steel a year and will be built in 30 months. The overall investment in the Egyptian complex will be EUR550 million.
EGYPT'S ORASCOM Development WILL RELOCATE TO SWITZERLAND Source: Wall Street Journal, March 26, 2008
Egyptian tycoon Samih Sawiris said he will relocate and list his family-owned hotel and tourism company in Switzerland to gain better access to capital markets to fund the company's expansion. Mr. Sawiris announced plans to move the headquarters of Orascom Hotels & Development (OHD) (link here) to the Alpine country from Cairo and list the newly created Orascom Development Holding AG on the Swiss Stock Exchange (link here).
Based in Altdorf, Switzerland, the new entity will become the holding company for Mr. Sawiris's Egyptian real-estate group, which has a market capitalization of $3.5 billion. The new holding may seek a capital increase prior to the listing, which is set for May 7. As part of the move, Mr. Sawiris said Orascom Development Holding will offer one new share in exchange for 10 shares of Orascom Hotels & Development. Already, 76% of Orascom Hotels & Development shareholders have backed Mr. Sawiris's plan, under which the company will maintain secondary listings in Cairo and Alexandria Stock Exchanges (link here).
Mr. Sawiris said the company was on the lookout for another resort project in Europe. Orascom Hotels & Development became well-known in Switzerland last year when it got the green light to build a resort in Andermatt, in central Switzerland. The complex will include several hotels, 50 villas and a golf course.
CAIRO LAUNCHES OIL AND GAS LICENSING ROUND FOR UPPER EGYPT Source: MEED, March 25, 2008
State-owned Ganoub el-Wadi Petroleum Company (Ganope) (link here) has launched an oil and gas licensing round covering acreage in the south of the country. The round covers 12 blocks, in the Gulf of Sinai, the Red Sea and the Eastern and Western deserts. Interested companies can purchase data on the blocks from 1 April. Mohamed Ezat Sakr, vice-chairman for exploration and production at Ganope, said that a bid round would be launched by the end of the month. Ganope plans a further four licensing rounds for the period 2009-2012, Sakr said.
BP, RWE AND SHELL TO SPEND $950 MILLION IN EGYPT Source: Bloomberg, March 19, 2008
BP Plc (AmCham member) (link here), RWE AG (link here) and Royal Dutch Shell Plc (AmCham member) (link here) agreed to spend $950 million on oil and gas exploration off Egypt as the nation seeks to ramp up output amid record energy prices, the Egyptian Petroleum Ministry said. BP and RWE will explore together in two deep-water areas north of Alexandria and promised to spend $800 million on drilling and surveying. Shell will spend at least $45 million on exploration north of Damietta, the ministry said. The three companies will pay the government bonuses totaling $105 million on signing the agreement, it said.
EGYPT AND RUSSIA SET TO INK NUCLEAR DEAL Source: SteelGuru, March 30, 2008
H.E. President Hosni Mubarak met with Russian leaders to close a deal allowing Moscow to join a tender for Egypt's first civilian nuclear power station. Mr Mubarak said that after difficult negotiations he is ready for the nuclear cooperation agreement.
The nuclear cooperation accord will allow Russia to bid in an international tender for a USD 1.5 to USD 1.8 billion reactor projects on Egypt's Mediterranean coast, first stage in Cairo's program to reduce energy reliance on gas and oil reserves.
EFG-HERMES AND BANQUE AUDI DISCUSS POSSIBLE COMBINATION Source: EFG-Hermes, March 19, 2008
EFG-Hermes Holding S.A.E. (AmCham member) (link here) and Lebanon’s Banque Audi SAL (AmCham member) (link here)are discussing the “combination” of their two institutions.The discussions “are at a very preliminary stage”, no agreement has been reached and any agreement would require approval from both shareholders and regulators, including the Central Bank of Lebanon (link here), Banque Audi said. If the two institutions were combined, it could “generate signficant commercial and financial synergies”, it added. EFG-Hermes currently owns 28.4% of Banque Audi. Banque Audi as of December 2007 had assets of USD17.2 billion, shareholders equity of USD1.8 billion and net profit after minority interest of USD201 million, while EFG-Hermes had assets of USD2.4 billion, shareholders equity of USD1.7 billion and net profit after minority interest of USD233 million.
CAYAN AND DORRA TO INVEST USD547 MILLION IN TWO REAL ESTATE PROJECTS IN EGYPT Source: Bloomberg, March 18, 2008
UAE-based developer Cayan Investment and Development (link here) and Egypt-based Dorra Group will invest at least EGP3 billion in two joint real estate projects west of Cairo. The companies will build an office tower near the Cairo-Alexandria desert road and a residential compound in Sheikh Zayed town, Dorra Group Chairman Hassan Dorra said.
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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