Tabdreed’s CapitalMed plans go kaput on FX crisis: UAE-based district cooling firm Tabreed has terminated its contract with Egyptians forHealthcareServices (EHCS) for the latter’s CapitalMed medical complex in Badr City as the FX crisis rendered the project “financially unsustainable,” CEO Khalid Al Marzooqi told Asharq Business. While the investment costs were in USD, its return was pegged in EGP, he explained.

Background: Tabreed landed an EGP 1.6 bn contract to design, build, and operate a heatingand cooling plant for CapitalMed back in September 2022 — a few months after it entered the local market with a contract to provide cooling services for Marakez’s D5M shopping center in East Cairo.

How did EGP volatility impact the contract? Tabreed had asked EHCS to modify the watertariff rate set in the contract in response to the steeper-than-expected currency devaluation, but the latter declined the request, prompting the Emirati firm to withdraw from the project, Asharq reported, citing a source it says is in the know.

Remember: The EGP has shed almost half of its value against the greenback after a series ofdevaluations since March 2022. The central bank has kept the EGP exchange rate fixed at 30.96 to the USD since March 2023, but it currently trades on the parallel market at over 56 to the USD.

Moving forward:While Tabreed’s Chief Financial Officer Adel Al Wahedi said in July that thecompany was “slowing down” plans for additional investment in the country as it waits for a stable outlook on the EGP, Al Marzouqi told Asharq that Tabreed is “still committed to investing in the Egyptian market.”

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