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The Transport Ministry is sending the Administrative Capital for Urban Development (ACUD) an EGP 1 bn bill to help offset the costs of extending the light rail transit (LRT) system into the new capital, according to a government document seen by EnterpriseAM. The demand is split between an EGP 300 mn betterment fee, stemming from the increase in land value adjacent to the LRT’s third phase extension, and a second EGP 700 mn fee for advertising rights inside LRT stations.
Why it matters: The move could signal that other developers may soon have to chip in for infrastructure works that boost their land value. By demanding betterment fees, the state is attempting to claw back some of the benefits created by public investment. For developers, the prospect of having to cough up as areas are built up may push them to rethink the calculus of land banking or the speed at which they need to complete projects.
The ministry also plans to let local developers building on both sides of the LRT sell in USD, which the document presents as a move to bolster receivables for ACUD.
AND- The LRT will also be funded by a CNY 1.5 bn loan (c.USD 213 mn) from the Export-Import Bank of China, which carries a 2% annual interest rate and a 20-year tenor, including a five-year grace period, according to the document. The Finance Ministry is guaranteeing the facility, with Egypt covering all related taxes, customs duties, and VAT.
Two additional facilities have been arranged to cover part of the National Authority for Tunnels’ obligations to China’s AVIC under their commercial contracts for the supply and construction of the third phase. A USD 42 mn loan, priced at 3.75%, will finance 10.7% of the construction contract’s value, while a separate USD 90 mn facility, with an interest rate of 2.75%, will cover 22.9% of the machinery supply contract’s obligations.
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