CENTRAL BANK OF EGYPT LEAVES POLICY RATES UNCHANGED Source: EFG Hermes, December 16, 2007
The Central Bank of Egypt’s (CBE) (link here) Monetary Policy Committee (MPC) left policy rates unchanged at its December 13 meeting. The statement pointed to a fall in headline CPI inflation to 7.5% in October and 6.8% in November, saying that the deceleration in inflation “was particularly intensified as base effects from last year’s supply shocks continue to level off”. The MPC’s statement points to “inflationary demand pressures from higher economic growth” as a continuing risk to the inflation outlook. Electricity prices for some households and industrial users rose by as much as 10% in November.
NAZIF TO ANNOUNCE THAT SUBSIDIES WILL INCREASE TO EGP70 BILLION IN FY2007/08 Source: Al Ahram, December 30, 2007
Prime Minister Ahmed Nazif is expected to announce in Parliament that the government will increase subsidies to EGP70 billion in FY2007/08 from EGP55.6 billion in FY2006/07. Increasing prices of imported food and high oil prices are main factors behind the increase. The government is also faced with mounting social pressure, with a significant segment of the population not yet having reaped the benefits of the economic growth of the past three years. Record revenue from the Suez Canal in FY2006/07, will help mitigate the subsidy’s negative effect on the budget deficit. High oil and food prices will nevertheless make it more difficult for the government to meet its medium-term fiscal deficit targets.
MINISTRY OF FINANCE TO ISSUE T-BILLS AND BONDS IN FIRST QUARTER 2008 Source: Al-Alam al-Yom, December 30, 2007
The Ministry of Finance (link here) plans to issue T-bills and bonds worth EGP57 billion in the first quarter of 2008 (third quarter FY2007/08). Of the total, EGP7 billion will be in 91-day T-bills, EGP16 billion in 182 day T-bills, EGP22 billion in 364 day T-bills and EGP12 billion in bonds with maturities from six to 10 years. The ministry in the last nine months issued bills and bonds worth EGP164 billion to cover the country's fiscal deficit, which was 7.5% of GDP in FY2006/07. The Ministry of Finance increased the average tenor of tradable government debt to 2.1 years at the end of 2006 from 126 days in 2003, it said earlier this year. It expects the average tenor to be 3.5 years by the end of the decade.
ETISALAT EGYPT TO BORROW UP TO $850MN Source: Arabian business, December 16, 2007.
Etisalat's (link here) Egyptian affiliate plans to arrange the initial tranche of as much as $1.8 billion in loans this year. Credit Agricole (Amcham Member) (link here) is talking to six banks to arrange a facility of nearly $850 million for Etisalat Egypt. The loan would be split into a 3 billion-Egyptian pound ($542 million) tranche and a $300 million tranche in US dollars.
"HSBC (Amcham Member) (link here), Barclays Capital (Amcham Member) (link here), Citigroup (link here) and Deutsche Bank (Amcham Member) (link here) are believed to be among the shortlisted banks".
Etisalat Egypt (Amcham Member) (link here) could also borrow around $2 billion next year to pay back some of the debt for the 16.7 billion-Egyptian pound licence fee it agreed to pay last year.
ALKAN AND RAYA TO BID FOR FIXED-LINE LICENSE Source: Noozz Editorial, Al-Mal, December 30, 2007.
Alkan CIT (link here), a subsidiary of Alkan Holding (AH) (Amcham Member) created from the merger of its three telecommunication arms, has formed an alliance with foreign investors to bid for Egypt's second fixed-line license, said business development officer Alaa Khalil. National Telecommunications Regulatory Authority (NTRA) (link here) plans to offer the license in early 2008. Raya Holding (Amcham Member) (link here) also plans to form an alliance to bid for the license, said chairman Medhat Khalil. The alliance will be with UK’s British Telecom (BT) (link here). Several other companies have expressed interest in bidding for the license, including Etisalat Egypt (Amcham Member), Orascom Telecom (link here) and the Egypt Post (link here). The second operator is expected to begin providing services in late 2008.
APERTO PACKETMAX SELECTED FOR FIRST WIMAX NETWORK IN NATION Source: EMedia Wire, December 18, 2007.
Aperto Networks (link here), builder of the world's most advanced WiMAX base stations and subscriber units, today announced that it has been selected by Egypt's Ministry of Interior Affairs (link here) to provide equipment for the first wireless WiMAX network. The equipment will be used to connect Egyptian police stations and offices nationwide. Barkotel (Amcham Member) (link here), a distributor based in Egypt, will provide engineering services for the deployment.
The deployment of PacketMAX solution will take place in two phases. Phase I is currently underway and will connect all major cities and towns in Northern Egypt. Phase II, planned for next year, will connect smaller towns and remaining rural regions. Both phases will involve PacketMAX base stations and subscriber units to provide integrated voice, data, and video services.
UAE GAS COMPANY DISCOVERS NEW GAS WELL IN EGYPT Source: China View, December 18, 2007
Dana Gas (link here) of the United Arab Emirates (UAE), the largest private-sector natural gas company in the Middle East, discovered a new gas well in its concessions in Egypt. The discovery, the second of its kind this year, was made at the Dabayaa-2 delineation well in Dana Gas' West Manzala Exploration Concession in the Nile Delta.
The company's subsidiary, Centurion Petroleum Corporation (link here), drilled the well to a total depth of approximately 3,000 meters and encountered gas bearing zones in both the Upper and Lower Abu Madi formations.
The gathering pipeline from Dabayaa-2 is under construction now, and the well is expected to be operational before the end of December.
Dana Gas is currently the sixth largest natural gas producer in Egypt that has doubled its total gas reserves in the last five years to over 70 trillion cubic feet.
MASHREQ BANK TO OPEN 30 NEW BRANCHES IN 3 YEARS Source: Reuters, December 17, 2007.
UAE-based Mashreq Bank (link here) will open 30 new branches in Egypt in the coming three years, 10 of them in 2008, said CEO Abdul Aziz Abdullah Al Ghurair. Mashreq Bank is interested in bidding for a majority stake in state-owned Banque du Caire, which the government plans to sell in early 2008. Banque du Caire has an estimated 215 branch and 2 million clients. Mashreq Bank was unsuccessful in its bid to buy 80% of Bank of Alexandria (Amcham Member) (link here) in October 2006.
DANISH ASSET MANAGER BANKINVEST BUYS 10% OF MINAPHARM Source: Al-Alam al-Yom, December 17, 2007.
BankInvest (link here), the Danish asset management company, bought 10% of Minapharm Pharmaceuticals (link here), a joint venture between Egyptian and US investors, for the equivalent of USD12.6 million (EGP680 per share), said Minapharm chairman Wafik Bardissi. Minapharm has a plant in Tenth of Ramadan city. BankInvest, one of the largest asset managers in the Nordic region, has USD32 billion in assets under management, USD6 billion of which are invested in emerging markets. Egypt’s HC Securities (Amcham Member) (link here) acted as Minapharm’s adviser on the sale.
NAEEM CAPITAL TO INVEST EGP1 BILLION IN REAL ESTATE Source: Al-Alam al-Yom, December 26, 2007.
Naeem Holding (link here) will establish an EGP1 billion fund for real estate investments, said its CEO Hany Tawfik. Among its planned investments is to build and rent commercial units in the smart village. The Egypt-based investment bank has also received approval to list its GDRs on the London Stock Exchange (link here) at a ratio of four local shares per GDR. In Egypt, it has signed agreements to manage the listing of several tourism companies, he added. Naeem Holding has established a unit that focuses on SMEs and hopes to register with the Capital Market Authority (link here) to manage the listing of SMEs on the stock exchange.
NBE AND BANQUE MISR SETTLE MORE THAN EGP54.4 BILLION IN NPLS Source: Al-Alam al-Yom, December 23, 2007.
State-owned National Bank of Egypt (NBE) (Amcham Member) (link here) and Banque Misr (Amcham Member) (link here), Egypt’s two biggest banks, have collectively settled more than EGP54.4 billion in non-performing loans (NPLs), of which around 80% was recovered. NBE settled EGP31.4 billion in NPLs in the last three years, said NBE chairman Hussein Abdel Aziz. Banque Misr settled EGP23 billion worth of private sector NPLs over the past four years, said its chairman Mohamed Barakat. The government has also settled EGP16 billion of debt that state companies owed to the banking sector, and it will repay a remaining EGP9 billion by end of June, mostly from the proceeds of the upcoming sale of a majority stake in Banque du Caire to a strategic investor.
GOVERNMENT APPROVES A PLAN TO BUILD 12 NEW FERTILIZER PLANTS Source: Al Alam Al Yom, December 24, 2007
The government will allow private companies to build 12 new phosphate fertilizer plants, Trade and Industry Minister Rashid Mohamed Rashid announced. The new plants will cost a combined EGP2.5 billion. A new phosphate fertilizer complex in Aswan Governorate is being studied, Rashid added.
EFIC ARRANGES TO EXPORT SULPHURIC ACID AND FERTILIZERS NEXT YEAR Source: Al Alam Al Yom, December 25, 2007
The Egyptian Financial and Industrial Company (EFIC) (link here) has arranged to export sulphuric acid and phosphate fertilizers in 2008, CEO Yehia Kotb said. The company will export 80,000 tons of sulphuric acid in January and another 50,000 tons by June from its sulphuric acid unit in Suez, which has an annual capacity of 400,000 tons. The unit began operation five days ago. EFIC also agreed to export 450,000 tons of phosphate fertilizers in 2008 and to sell 800,000 tons locally. Its ammonium sulphate plant, which has an annual capacity of 150,000 tons, has also begun operation. The company has agreed to build a new ammonium sulphate unit with an annual capacity of 150,000 tons that will begin producing in January 2009, Kotb added.
OCI’S SHAREHOLDERS APPROVE SALE OF CEMENT GROUP TO LAFARGE Source: Al-Alam al-Yom, December 30, 2007
Investors holding 84.12% of Orascom Construction Industries (OCI) (Amcham Member) (link here) shares approved in an EGM the sale of OCI’s cement group to Lafarge (link here). Lafarge has agreed to pay EUR8.8 billion (USD12.9 million) in cash for the group, with EUR6 billion to be paid in January and EUR2.8 billion in March, in addition to a divestment of USD2 million debts.
OCI-CONTRACK WINS CONTRACT TO DEVELOP 1ST PHASE OF EMAAR MISR Source: Zawya, December 30, 2007
Emaar Misr (link here) has awarded Orascom Construction Industries (OCI) (Amcham Member) – Contrack (link here) a contract to develop the first phase of its USD1.74 billion Sidi Abdel Rahman Bay project, Emaar said in a statement on the Dubai bourse website. Orascom will build villas and townhouses. Orascom was among six companies that bid for the contract, it said.
CEMENT AND STEEL PRODUCTION RISE IN 2007/08-Q1 Source: Al-Alam al-Yom, December 26, 2007
Cement production increased 4.8% Y-o-Y to 10.1 million tons in 2007/08-Q1, while sales rose 15% to 9.2 million tons, said Economic Development Minister Osman Mohamed Osman. Egypt is expected to add 18-20 million tons of cement capacity by 2011, increasing total production to 55 million tons, he added. Exports have dropped 39% to 1.1 million tons since the government imposed an export duty on cement in February. They are expected to recover as the new cement capacity comes on stream, Osman said. Steel rebar production grew 7% to 836,000 tons, while sales jumped 38%.
EU OFFERS EGYPT GRANTS TO REVAMP TRANSPORT SECTOR Source: The Hindu, December 18, 2007
The European Union Commission (link here) has offered Egypt a grant of 80 million euros (about $115 million) to support the development and restructuring of Egypt's transport sectors. Egyptian Minister of Transport, Mohamed Mansour, made the announcement after a meeting with a visiting EU Commission delegation aimed at completing consultations on revamping Egypt's transport sector.
The Egyptian government offered several priority schemes to the EU delegation, which is due back in Cairo next month to finalize details. During the EU-African Summit held in the Portuguese capital of Lisbon on December 8-9, the EU expressed its intention to help Egypt with its infrastructure schemes in the transport sector.
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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