Egypt’s petroleum sector returns to growth for the first time since 2023

Good morning, folks. We’ve got some good news on the privatization front and a veteran’s read on recent legislative reforms in today’s issue.

The first batch of temporarily listed state companies is expected to begin trading in 4Q — the clearest timeline we’ve seen yet from the State-Owned Companies Unit. Officials also celebrated the new EGX ticker for four government companies, including the three familiar names from the petroleum sector: Enppi, Petroleum Marine Services, and Egyptian Linear Alkyl Benzene Company (Elab).

Don’t miss our Coffee with former FRA and GAFI chairman and former Deputy Prime Minister for Economic Development Ziad Bahaa-Eldin as he returns to private practice at Adsero – Ragy Soliman & Partners this week. He shares his thoughts on where Egypt’s legislative reform agenda is headed and where the macro picture stands as the Strait of Hormuz crisis continues to ripple through the global economy.

On the investment front: Singapore-based Indorama is closing in on a USD 348 mn debt package from the IFC and EBRD for a greenfield phosphate fertilizer complex in Ain Sokhna. Two multi-laterals, one facility, and a USD 525 mn total project cost.

***

ARE YOU MORE OF A LISTENER?Morning Drive is a 10-minute summary of today’s issue crafted for you to enjoy with your morning coffee, while getting the kids ready for school, or driving through the morning rush. And if you like it, tell your friends to tell their friends. They can find us on Apple, Spotify, or wherever they get their podcasts.

***

Petroleum sector turns corner

The petroleum sector returned to growth for the first time since 1Q 2023/24, expanding 0.7% in 3Q FY 2025/26 on higher domestic production of crude oil, condensates, and LPG, according to a cabinet statement.

Why it matters: The reading confirms that upstream production gains are feeding through to broader economic activity — a significant shift after more than two years of sector contraction. The government has moved on several fronts to reverse the decline, including repaying USD 6.1 bn in arrears to partners, introducing a flexible R-Factor profit-sharing mechanism, and launching new drilling campaigns to unlock a USD 1.3 bn exploration push targeting 101 wells this year.

A hard deadline for Al Hamra

The Oil Ministry expects to wrap up the USD 457 mn expansion of Wepco’s Al Hamra Petroleum Port in New Alamein by December, the Arabic press reports, citing an unnamed government official. The project, developed by state-owned Wepco in partnership with the UAE’s Fujairah, will more than double crude storage capacity to 5.3 mn barrels, up from the current 2.5 mn barrels.

Fresh details: The expansion involves USD 122 mn in development across the port’s northern section and USD 335 mn for the southern section — which will house a two-phase, 130k-ton petroleum product storage and loading complex. The government aims to lift Al Hamra’s storage capacity to 20 mn barrels of crude oil and 400k tonnes of products by 2030.

IN CONTEXT- A new pipeline linking the Midor refinery to Al Hamra in 2H this year will close a two-way loop, letting Egypt import crude, refine it domestically, and re-export higher-value products. Fujairah started working on its USD 3 bn oil logistics zone at Al Hamra Port last October, following three agreements the Oil Ministry signed with the Emirate of Fujairah.

Faster streaming

The country’s four mobile operators will receive new frequencies starting next month under the USD 3.5 bn spectrum agreement signed earlier this year, the Arabic press reports, citing an unnamed government official. Telecom Egypt, Vodafone Egypt, Orange Egypt, and e& Egypt will receive 410 MHz of additional spectrum.

Why it matters: The allocation doubles the total spectrum allocated to local operators since mobile services launched three decades ago. With the country’s subscriber base topping 122 mn lines by November last year, networks need extra room to absorb growing data consumption and stabilize service quality. It also gives operators the capacity to turn the USD 150 mn 5G licenses they purchased in 2024 into usable infrastructure.

REMEMBER- The four operators signed the USD 3.5 bn spectrum agreement back in February, which was billed as the largest in Egypt’s telecom sector. They paid USD 500 mn in 1Q 2026 and are due to pay another USD 300 mn in 1Q 2027. The remaining USD 2.7 bn will be settled in annual USD-denominated installments through 2030.

GO DEEPER– We examined how spectrum scarcity, tower economics, and infrastructure-sharing rules have held back growth for telecom infrastructure in Hardhat last year.

Ready to reset?

The government plans to launch its new customs tariff in July, a senior government official tells EnterpriseAM. The new schedule is meant to remove tariff distortions that have left some production inputs facing higher duties than finished goods. The Finance Ministry is sending legislative amendments to three customs laws to the House of Representatives to enable the facilitation package.

What changes: Under the new structure, production inputs would sit in the lowest bracket — 2-5% — while finished goods reach as high as 60%, with brackets in between calibrated by the imported product’s importance. New tariff categories are expected to fall 10-30%. The reset is expected to benefit home appliances, garments, chemicals, EVs, automotive glass, and sheet metal. A schedule also introduces a new chapter with 5% and 10% brackets for auto-assembly components used in both simple and deep assembly to support local manufacturing and attract investment. The exact cuts and priority items are still under study.

REMEMBER- Government officials told us earlier this year that the Finance Ministry was weighing requests from around 80 companies to revise tariffs on 150 production inputs, with input duties potentially falling 10-30% to an effective 2-5% and some finished-goods tariffs rising as high as 60%. That package also included customs-facilitation measures: cutting clearance times, allowing installment payment of customs duties, accepting cash and non-cash guarantees, and reforming temporary admission rules.

Why it matters:The government is targeting a rise in industry’s share of GDP from 14% to 20% by 2030, as well as an increase in industrial jobs from 3.5 mn to 7 mn.

Buy the basket, short the stock

The bourse is reviewing four requests to establish investment funds that track EGX equity indices, Al Borsa reports, citing EGX chairman Omar Radwan. The move signals that a fresh wave of passive money is about to hit the market, although the exact size of the new funds and the specific benchmarks they will track remain under wraps.

Why it matters: The push for new index-tracking products comes as retail liquidity surges on the exchange. The EGX issued some 300k new investor codes by mid-May, according to Radwan, and index funds offer a diversified, lower-risk vehicle to channel this incoming wave of retail money.

The applications would add to a lineup of 11 approved index-tracking funds, with mandates spanning the EGX30, EGX33 Shariah, EGX35-LV, EGX70, and EGX100 indices. These are managed by Beltone, EFG Hermes, CI Asset Management, Azimut, and NI Capital.

Another brick in the derivatives wall: More companies could soon join the single-stock futures market beyond CIB and TMG, with the EGX and Financial Regulatory Authority working to qualify more brokerages and financial institutions to trade futures contracts, Radwan says, without providing a timeline or naming the next stocks in line. The EGX is also working to roll out short selling, alongside plans to introduce market-makers and liquidity providers.

ICYMI- Short selling, which allows investors to take a bearish position against stocks, has been in the works forsome time now. Former EGX boss Islam Azzam told us earlier this year that it would deepen liquidity, likening it to margin trading as a neutral price-discovery tool.

Take it away

The government has launched a campaign to reclaim unutilized land plots and industrial units from non-serious investors, according to a statement from the Industry Ministry. The campaign — led by the Industrial Development Authority — aims to curb land hoarding and speculation as well as boost industrial momentum, initially targeting 10th of Ramadan and Badr City, before expanding to the rest of Egypt.

Hoarding land triggered a five-fold price hike: Land speculation led to a shortage of serviced lands provided by the authority, driving up the official prices of industrial lands in 10th of Ramadan City from around EGP 6k up to EGP 30k per meter on the broker market, several sources had told EnterpriseAM.

PSA-

WEATHER- The heatwave lingers in Cairo today, with the capital looking at a high of 36°C and a low of 25°C, according to our favorite weather app.

It’s a bit cooler in Alexandria, with a high of 31°C and a low of 23°C.

The big story abroad

The US and Iran have reportedly agreed (once again) to cease strikes, following a spate of attacks over the weekend, with the two sides planning to resume talks in Doha tomorrow to resolve their dispute over the Strait of Hormuz. Hostilities reportedly reignited over contradicting interpretations of the MoU signed by both sides earlier this month to secure an interim peace.

Meanwhile, sovereign funds may be getting bolder: One-third of sovereign funds surveyed by US investment management firm Invesco say they plan to double down on riskier, unlisted assets like private credit, private equity, and infrastructure this year — around one-fifth want to reduce exposure to stocks. The trend dovetails into the AI-led paradigm shift in investment, as lenders pivot from concentrated stock markets to wagering on data centers and associated energy sources.

But… is private credit on a stable path? Major private credit players like Blue Owl, KKR, and Elliot Investment Management are pumping USD bns into buy now, pay later (BNPL) models, providing a major windfall to platforms like PayPal. While the credit sector continues to swell on the back of BNPL, auto, and student loans, it has been seen by some as incentivizing a dangerous uptick in consumer debt — not unlike the levels seen before the 2008 mortgage crisis.

Is defense heading towards mass production? Because standard US munitions are both costly and slow to manufacture, some defense contractors are developing modular workshops to rapidly produce affordable missiles during wartime. Defense group Co-Aspire has designed missiles that can be built with off-the-shelf parts in a bid to capitalize on major order requests from big US spenders, the Pentagon and US Air Force.

*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed.

In today’s issue: We look at how Egypt is tracking its brain-drain problem with a post-graduate census to find out whether its talent has entered the research economy, is underemployed, or moved abroad.