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Good morning, folks, and a happy hump day to you all. We’ve got a bit of everything for you today in this morning’s issue, with enough legislation, competition, M&A, manufacturing, and investment news to fill up several issues. There’s a lot to cover today, so let’s jump right in.
PSA-
WEATHER- Temperatures will continue to inch up in Cairo today, with a high of 24°C and a low of 13°C, according to our favorite weather app.
It’s a tad cooler in Alexandria, with a high of 22°C and a low of 10°C.
It’s expected to be a foggy start to the day throughout most parts of the country, so as always stay safe on the roads.
** DID YOU KNOW that we now cover Saudi Arabia and the UAE?
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WATCH THIS SPACE-
#1- The government is working to replace the numerous non-tax financial burdens and fees imposed by state entities with an additional income tax, Investment Minister Hassan Al Khatib said, according to a ministry statement. Unifying and simplifying the often confusing world of non-tax financial burdens also comes in line with the state’s directive to tax income and not revenue.
The Finance Ministry, General Authority for Free Zones, and the Industrial Development Authority will collect the new tax and redistribute the fees to relevant authorities, according to El Khatib, who added that the government is planning to propose a draft bill for this new tax.
Remember: A senior government source told EnterpriseAM last year that a committee had been formed to look into reducing the long list of taxes, customs, and fees imposed on goods and services. The move was said to be aimed at boosting local industry, increasing exports, attracting new investments, and curbing inflation by eliminating double taxation and redundant fees that see some goods taxed at up to 45%.
#2- Gov’t, EU talks on the next tranche of the EUR 7.4 bn package in April: The Madbouly government will engage in negotiations with the European Union in April over the second tranche from its EUR 5 bn package of concessional loans, International Cooperation Minister Rania Al Mashat told Asharq Business. The second tranche — set to come in at EU 4 bn — is part of a wider EUR 7.4 bn package from the EU announced in March. The first EUR 1 bn tranche arrived in the state coffer at the end of last year.
#3- Engie-led consortium aims to build a 1 GW wind project by 2028: A local-international consortium of France’s Engie, Orascom Construction, Japan’s Toyota Tsusho, and Eurus Energy is looking to build a 1 GW wind project in Egypt, with the companies aiming to finalize the project’s contracts next year in order to build it by 2028, Bloomberg quotes Engie’s managing director for renewables in the Middle East and North Africa Francois Xavier Boul as saying.
The consortium has been busy as of late: The same recently put online 306 MW of a 650MW wind farm in Ras Ghareb, with the entire project expected to be up and running and connected to the national grid by 3Q 2025. The project is set to be the largest operational wind farm in the region once it is fully operational and have the capacity to reduce carbon emissions by 1.3 mn tons every year and provide power to over 1 mn homes once fully complete.
** Our renewables ambitions — and the hurdles they face — recently caught the attention of the international press. We’ve got the lowdown in our Egypt in the News section in the news well below.
#4- China's largest tire maker is planning to expand its Egypt operations, with China National Tire and Rubber Company looking to expand into passenger vehicle tire manufacturing in Egypt through its wholly-owned subsidiary Prometeon Tyre Egypt, according to a cabinet statement. The government has made available a 180k sqm plot — located near the company’s existing Ameriya factory — to establish a passenger car tire factory and agreed with the Chinese company to double its existing production capacity of heavy transport tires.
#5- A new renewables target? The government is now planning to up renewables’ contribution to the energy mix to 65% by 2040, according to comments by Electricity Minister Mahmoud Esmat. The new figure is a five percentage point increase on the government’s last announced target, which only came to light in November. In the shorter term, the country is hoping to increase the renewables mix to 42% by 2030.
Over the next year, Egypt’s renewable energy capacity is expected to reach 10 GW by the end of 2025, sourced from solar, wind, and hydropower, and integrated into the national grid, Esmat added. This will then expand to 12 GW by end of 2026 and 20 GW by end of 2029, he continued
FROM THE DEBT MARKETS-
The average yield on two-year fixed coupon t-bonds fell 2.03 percentage points to 23.46% during the Central Bank of Egypt’s latest issuance that raised EGP 21.6 bn in the heavily oversubscribed issuance, according to data from the central bank. Three-year bonds fell 0.68% percentage points to an average yield of 22.58%.
IN THE HOUSE-
The 540-article draft Criminal Procedures Law is once again at the top of agenda at the house today, with MPs set to discuss and vote on another 40 articles.
An amendment to delay a tax on agricultural land by a year will also be put to MPs, with the year-long postponement starting 31 July 2024 designed to ease financial burdens on farmers and encourage them to up production.
Lawmakers will discuss greenlighting the Finance Ministry to guarantee EgyptAlum’s financial commitments for a power purchasing agreement with Scatec, that will see the state-owned entity buy energy from the Norwegian renewables player’s 1 GW solar power plant in the works.
A EUR 135 mn grant from the European Investment Bank to fund the Environment Ministry’s Sustainable Green Industry project will also be voted on, which will support the greening of the country industrial sector by implementing climate change and environmental sustainability measures.
MPs also discussed and passed 142 articles of the draft Criminal Procedures Law yesterday, including a controversial legislation on pretrial detention. Under the articles, the accused can be held in pretrial detention for four months for misdemeanors, 12 months for felonies, and 18 months for crimes that could lead to life imprisonment or the death penalty.
Proponents of the legislation point to the new safeguards against the extension of pretrial detention, but the legislation does not explicitly prevent individuals being successively put in pretrial detention for new accusations.
A presidential decree to expand the proposed Russian industrial zone in the Suez Canal Economic Zone also got lawmakers’ approval, with the planned area now to stretch 500k sqm. The decree also lets Russian projects in the zone sell up to 100% of output in the local market and provides safeguards that any infrastructure or buildings won’t be nationalized or confiscated at a later date.
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THE BIG STORY ABROAD-
Gaza ceasefire breakthrough? Israel-Hamas ceasefire talks in Doha are nearing fruition, officials involved with the talks say, with US President Joe Biden saying they are “on the brink” of a breakthrough. A draft agreement for the exchange of prisoners and the gradual withdrawal of Israeli troops from Gaza was presented to both sides yesterday, with another round of talks taking place today in Doha. Officials from both sides have confirmed that talks are progressing well. (Bloomberg | Reuters | FT | Semafor)
The goal is now to reach an agreement before US president-elect Donald Trump’s inauguration next week, officials said. Vice President-elect JD Vance said he hopes an agreement could be struck toward the final days of Biden’s administration.
Meanwhile, the US’ new AI export caps are getting plenty of attention. The US imposed export controls on chips used for AI, giving 20 close allies access to chips and restricting access to 120 countries, including China, Iran, and Russia.
The semiconductor industry is not happy with the new export control regime, and neither is the EU. The European Commission said it is “concerned” about the new measures, while industry leaders like Nvidia criticized the move as potentially harmful to “America’s global competitiveness.” (FT | Reuters | WSJ)
Also getting attention:
- Los Angeles is bracing for “hurricane-level” winds threatening to trigger more wildfires, with a red flag warning out on three areas across Los Angeles and Ventura. (NYT | Reuters | FT)
- International Court of Justice President Nawaf Salam was appointed Lebanon’s new prime minister after securing the majority of votes from the parliament, in another blow to Hezbollah, which was backing caretaker PM Najib Mikati to stay in the role. (FT | Reuters)
*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.
In today’s issue: We dive into the components of Egypt’s First Biennial Transparency Report, which brings to light progress in implementing nationally determined contributions to cut down on emissions.
