EGYPT TOPS NORTH AFRICA IN FDI INFLOWS Source: Beltone News, September 25, 2008
Egypt was ranked first among North African countries, second amongst African countries after Nigeria, and 20th worldwide, in terms of foreign direct investment (FDI) flows in the World Investment Report 2008, issued yesterday by the United Nations Conference on Trade and Development (UNCTAD) (link here). The report, tracking 141 countries, analyses the latest trends in FDI and has a special focus in 2008 on the role of transnational corporations (TNCs) in infrastructure development. FDI flowing to Egypt had risen to USD13.2 billion in FY2007/2008, from USD407 million in FY2003/2004.
EGYPT RANKS 115 IN GLOBAL CORRUPTION INDEX Source: Arab Finance, September 24, 2008
Transparency International said Egypt is one of the world's least corrupt countries, noting in its annual report for 2008 that Egypt ranked 115th and scored 2.8 points lower than its previous rank of 105 in the 2007 report. However, the report maintained that corruption still constitutes a principal obstacle to development in Egypt. Egypt is ranked 13th in corruption among Middle Eastern countries. Qatar heads the region with a score of 6.5 points, ranking 28th. It is followed by the UAE, 5.9 points; Oman, 5.5 points; Bahrain, 5.4 points; and Jordan, 5.1 points. Iraq came at the bottom of the list, 1.3 points, ranking 178th worldwide.
Countries that had the least corruption included Denmark, Sweden and New Zealand with 9.3 points apiece, followed by Singapore, with 9.2 points. In the 2008 report, Bulgaria, Norway and Britain's corruption increased while there were improvements in Oman, Qatar and Turkey. The index has ten points, with ten points indicating the least amount of corruption.
EGYPT’S LABOUR FORCE INCREASED TO 24.6 MILLION Source: Beltone News, September 16, 2008
Egypt’s labour force increased to 24.6 million at the end of June 2008, up from 23.6 million in the same period in 2007, said the Chairman of the Central Agency for Public Mobilisation and Statistics (CAPMAS) (link here). The number of males joining the workforce increased by 4.1%, compared to a 4.9% increase in females. Unemployment dropped to 8.4% versus 8.9% in the same period in 2007, with urban unemployment reaching 11.4% compared to 6.1% in rural areas. Over 90% of the unemployed individuals are in the 15 to 29 age bracket with around 86% of the unemployed having intermediate and graduate education degrees.
ELECTRICITY PRICES UPPED 5 PERCENT Source: Arab Finance, September 17, 2008
The fifth annual 5 percent increment in electricity prices will be implemented in October 2008 (payable in November) and will exclude the lowest consumption bracket, said Minister of Electricity Hassan Younis.
The increase is an implementation of a five-year plan started in 2004 to increase electricity prices by 5 percent annually. The increase might exceed 5 percent this year and will be levied on the higher household and commercial consumption brackets due to the increase in financial burdens and investments incurred by the government by LE2 billion from last year.
The increase will not include the energy-intensive industries prices, which were charged higher electricity prices two months ago. The annual increment is in line with a plan approved by the Cabinet. All previous increments did not include the low income bracket including around 4 million people, and the following consumption bracket, with the government effectively subsidizing 8 million users, added the Minister.
PUBLIC EXPENDITURE JUMPS 30% TO EGP288.7 BILLION IN FY2007/08 Source: Al-Alam al-Yom, September 21, 2008
Public expenditure jumped 30.4% Y-o-Y to EGP288.7 billion (34% of GDP) in FY2007/08, said Finance Minister Youssef Boutros-Ghali. The increase was fueled by subsidies, which increased to EGP92.3 billion, and wages, which increased to EGP62 billion.
EGYPT TO BUY STEEL UNDER GULF AND INTERNATIONAL SPECIFICATIONS Source: Al-Masry-Al-Youm, September 22, 2008
Minister of Trade and Industry Rashid Mohamed Rashid issued a decree allowing the import of steel in accordance with specifications applied in Gulf Co-operation Council (GCC) member states, international specifications "ISO 6935" or Egyptian specifications. The recent decree aims to encourage and streamline steel importation from all over the world by accepting non-Egyptian specifications. Reports sent to the ministry's Internal Trade Sector said prices of steel and steel raw materials have dropped. Prices of raw materials such as billet fell to $630 from $710 and steel price per ton declined to $590. Decline of steel and billet worldwide was reflected on the domestic market per ton. Prices fell from LE6970 and LE7750 in August to LE6150 and LE6300 this month.
GOVERNMENT TO WITHDRAW FROM FERTILIZER BUSINESS IN TWO YEARS Source: Noozz Editorial, September 16, 2008
The state-owned Principal Bank for Development and Agricultural Credit (link here), Egypt’s sole fertilizer distributor, will withdraw from the fertilizer distribution business in two years, quoted its chairman Ali Shaker as saying. Minister of Agriculture Amin Abaza was quoted last month as saying the government was working to liberalize the domestic fertilizer market and planned to eliminate fertilizer subsidies in two years, a move that would likely increase prices by 200%. On March 2, the government raised domestic fertilizers prices by 90% to EGP1,500 (USD283) per ton in an initial step in eliminating subsidies in two years. Once fertilizers prices are liberalized, the government will liberalize all agricultural products, Abaza added.
EGYPT BOURSE NAMED BEST STOCK EXCHANGE IN AFRICA Source: Beltone News, September 24, 2008
The Egyptian Stock Exchange (ESE) (link here) won an award for being the best stock exchange in Africa, after strongly competing with stock exchanges in South Africa and Nigeria. The competition was organized by the New York Stock Exchange (NYSE) (link here) in collaboration with the Africa Investor Organization (link here). The ranking was based on technical and financial criteria including trading regulations, technical and IT development and the ability to attract investments. The award reflects the international investment community’s appreciation for the ongoing efforts to develop the Egyptian Stock Exchange, especially, and the Egyptian economy, generally, announced the Chairman of the ESE, Maged Shawky. More reforms will be implemented in the short term, including the launch of a new trading system and the introduction of new tools and instruments in the market, added Shawky.
EGB PLANS TO SET UP AN SME FINANCE SUBSIDIARY Source: EFG-Hermes, September 17, 2008
Egyptian Gulf Bank (EGB) (AmCham member) (link here) is planning to set up an independent company to lend to the SME's segment. The new company’s executive structure and capital would be separate from that of the bank. EGB wants to finalize the details of the new company’s structure and shareholders by year-end.
ORASCOM CONSTRUCTION JV WINS USD150 MN AL REEM ISLAND CONTRACT Source: Thomson Financial, September 17, 2008
Orascom Construction Industries (OCI) (AmCham member) (link here) said its Abu Dhabi-based joint venture has won its first construction contract, for part of the Al Reem Island development, worth USD150 million. The joint venture, with Hydra Commercial Investments, Sorouh Real Estate PJSC (link here) and Capital Investment, won the contract from a Sorouh and Tameer Holdings Investments joint venture. The contract, which covers the piling and foundation works as well as the dewatering and excavation works for the real estate development in Abu Dhabi, is expected to be complete in 14 months.
OCI WINS CONTRACT TO HELP MAKE BOILERS FOR BABCOCK-HITACHI K.K. Source: EFG-Hermes, September 25, 2008
Orascom Construction Industries (OCI) (AmCham member) (link here) signed a Cooperation Agreement with Japan-based Babcock-Hitachi K.K. (BHK) (link here) to help manufacture “Super Critical Technology Boilers” for power projects in Egypt. Under the contract, OCI will cooperate in designing, manufacturing and erecting of the boilers for power projects in Egypt, with the potential to expand into the North Africa and Middle East. The boilers will be made in OCI’s facilities at National Steel Fabrication (NSF) and its recently acquired subsidiary IBSF, formerly known as Nasr Boiler and Pressure Vessels Company. BHK already supplies power and industrial boilers to projects in Egypt, such as the Cairo West 4x350MW power plant. The agreement gives OCI the right to become the sole manufacturer of the boilers. It increases OCI’s core competence in the power sector. OCI in collaboration with BHK will bid for the new Ain Sokhna 2x650MW power plant, the country’s first supercritical steam power plant.
LE1.7 BILLION FOR ABU QIR AND WESTERN CAIRO POWER PLANTS Source: Egypt State Information Service, September 16, 2008
Electricity Minister Hassan Younis attended the signing of three contracts at the value of LE1.72 billion for Abu Qir and Western Cairo power plants. The money will go to fixing the steam turbines and condensers and covering the comprehensive insurance costs of the 1,300 megawatt Abu-Qir steam power plant in addition to building the reservoirs of the 700-megawatt-Western Cairo steam-powered electricity generation plant.
The Abu Qir and Western Cairo projects are being implemented under the national five-year development plan for 2007-2012 that aims to meet the country's growing energy needs, the Minister said. Abu-Qir plant is composed of two steam-powered units of a combined capacity of 1,300 megawatts and that are to be fully operational during the months of April and August of 2012. The Western Cairo plant is made up of two steam-powered units that will be operational in 2010. The two plants are fuelled by natural gas. The estimated combined cost of the two plants amounts to LE 13.5 billion funded by Egypt and international partners.
EGYPT SIGNS THREE AGREEMENTS FOR OIL SEARCH Source: Daily News Egypt, September 17, 2008
Egypt signed three oil agreements with English, Italian, Malaysian and Kuwaiti companies. Under the agreements, the four companies will search for oil in Rosetta on the Mediterranean coast, off the Mediterranean shores in the west Delta and northern Al-Bardawil. The Egyptian Petroleum Minister Sameh Fahmi, who signed the agreements, said that refixing gas prices has brought Egypt around $20 billion in revenues since the year 2000. Fahmi added that Egypt's price readjustments decision helped, to a great extent, cushion the impact of soaring global oil prices on its economy and contributed to mitigating the burden on the balance of payments.
EGYPT'S GAS RESERVES HIT 76 TRILLION CUBIC FEET Source: Egypt State Information Service, September 23, 2008
"The aggregate additional revenues emanating from amending the prices of gas-exporting contracts to Egypt's interest currently amounted to $19 billion," Engineer Sameh Fahmi, the Minister of Petroleum said. The contracts have been amended with the Spanish and French corporations within the framework of the regular review of all exporting contracts, so as to be commensurate with the world changes in the energy prices. He also pointed out that the value of the aggregate natural gas reserves and condensates is estimated at approximately $40 billion according to the average prices of the Egyptian natural gas exports, and the average of the world prices of condensates. Egypt's reserves of natural gas hit 76 trillion cubic feet, said Minister of Petroleum Sameh Fahmi. Fahmi noted that natural gas accounts now for around 50 percent of Egypt's gas consumption.
1.5 MILLION RESIDENTIAL UNITS TO BE CONNECTED TO NATURAL GAS GRID Source: Al Akhbar, September 25, 2008
A short-term plan is being implemented to connect 1.5 million residential units to the national natural gas grid over the coming three years, as part of an ambitious plan to connect 5.5 million units to the grid by 2015. The plan aims at introducing the gas as a substitute to one million tonnes of butane gas consumed annually by households, being currently valued at EGP5 billion.
NEW FERTILIZER PLANT IN QENA Source: Al Alam Al Youm, September 16, 2008
The Minister of Trade and Industry witnessed the signing of an agreement yesterday, establishing the Egyptian Company for Phosphate Fertilizers in order to set up the largest complex in Egypt for the production of phosphate fertilizers and diammounium phosphate (DAP) fertilizers, with investments worth USD650 million, an authorized capital of USD1.5 billion and a paid-in capital of USD300 million in Idfu in the governorate of Qena. The company will be established in cooperation with public enterprise Egyptian companies, Egyptian private sector companies and companies from the US and Greece. The Ministry has completed an integrated study for the fertilizer industry to increase the local value added, instead of exporting the product in its raw form. Egypt currently produces around 2.8 million tonnes of phosphates annually with local companies consuming around 800,000 tonnes, while 2 million tonnes of phosphate fertilizers are produced annually with 50% exported. The complex is expected to create around 2,500 new jobs.
SOUTH VALLEY CEMENT PLANT APPROVED Source: Arab Finance, September 17, 2008
The Industrial Development Authority (link here) finally approved South Valley Cement (SVCE) project for the production of Ordinary Portland Cement (OPC), to be established in the special industrial zone of Beni Suef. The project is expected to be implemented in a maximum of three years, with a production capacity of 1.5 million ton per annum. It is worth mentioning that the company is responsible for generating its electricity requirements, amounting to 165.8 million KWH per annum. This requires 135.0 million cubic meters of natural gas annually, to be charged at the international prices.
ARCELORMITTAL ANNOUNCES USD2.5 BILLION INVESTMENT IN ALGERIAN STEEL INDUSTRY Source: EFG-Hermes, September 21, 2008
ArcelorMittal (link here), the world’s number one steel maker, will invest up to USD2.5 billion to build a new steel plant in the state of Jilel in Algeria. This investment could boost ArcelorMittal’s steel production in Algeria to 2.8 million tons a year, if approved by the government. The company may also invest to expand the production capacity of its Annaba plant to 2 million tons. ArcelorMittal will produce 1 million tons of steel in Algeria in 2008, less than the 1.2 million tons of 2007, due to production problems at its Annaba plant. Ezz Steel (AmCham member) (link here), which has already received government approval for its 3.0 million ton project, is investing approximately USD2.1 billion in Algeria. Algeria is a net importer of steel, and we expect this will continue even with additional capacity from Ezz and ArcelorMittal if infrastructure spending continues at its current fast pace.
AL ZAMIL GROUP TO DEVELOP 2.2 MILLION SQM OF INDUSTRIAL LAND IN UPPER EGYPT Source: Noozz Editorial, September 17, 2008
Saudi-based industrial developer Al Zamil Group will develop 2.2 million square meters (sqm) of industrial land in Beni Suef south of Cairo. The land will be used for metal, paper, wood processing, chemical, mining and other industries built in cooperation with Al Faiyum governorate and the Industrial Development Authority (link here). The projects will have a total investment of approximately EGP2.5 billion.
EMAAR MISR TO INVEST USD2.1 BILLION ON A NEW LUXURY REAL-ESTATE PROJECT Source: Bloomberg, Al-Alam al-Yom, September 21, 2008
Emaar Misr for Development (AmCham member) (link here), a unit of UAE’s Emaar Properties, will invest EGP12 billion (USD2.1 billion) in a luxury real estate project in Cairo, said the company’s CEO Sameh Mohtadi. The project includes five luxury residential complexes in the Zahraa Maqattam Hills area in Cairo.
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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