Auto parts manufacturers said to be in talks with Renault, Volkswagen to make and export parts to regional assembly facilities: Local auto parts producers are in talks with European car makers, including Renault and Volkswagen, to begin making and exporting parts for production and assembly facilities across the region, Egyptian Auto Feeders Association Development Director Ihab Aboul Enein tells Al Mal. VW has already tapped three Egyptian manufacturers — IDACO, MOBICA, and El Teriak Industrial Group — and talks are ongoing with Renault. A delegation from the French multinational group was in town last week to meet with its local distributor, Egyptian International Motors (EIM), to explore the possibility of assembling cars in Egypt.

Meanwhile, El Assal for Auto Parts will invest EGP 50 mn this year in a local production facility that will make a range of mechanical parts for Kia and Mitsubishi cars, Chairman Mahmoud El Assal also tells the newspaper. The company should finish feasibility and technical studies next month, he says. Kia Motors had signed an agreement with Egyptian International Trading & Agencies last week that will see them invest EGP 4.2 bn over the next five years in a new local assembly line, which Trade and Industry Minister Tarek Kabil said was part of a wave of positive news to the industry as the government pushes ahead with issuing the Automotive Directive some time this year. The bill, which means to encourage assemblers to move further up the value chain into manufacturing, has faced several delays due to the clashing interests of various auto industry players (mainly assemblers and importers). Most recently, the government had been trying to push the minimum local component requirements in the bill.

In related news, the local partner for China’s BYD, Al Amal, said it plans to assemble 600 cars of the company’s S5 model between now and the end of 2018. The first batch of locally assembled vehicles will be made available to distributors by the end of the month, an unnamed company executive tells Al Mal.

LEGISLATION WATCH- Ismail Cabinet acting fast to legalize Uber, Careem: The Ismail Cabinet referred the Ride-Hailing Apps Act to the House of Representatives for review and approval yesterday after having received the final draft from Maglis El Dawla, Al Shorouk reports. This comes one day after the Administrative Court issued a ruling suspending the licenses of ride-hailing apps Uber and Careem. The ruling also banned the two apps and suspended their use of private cars. Taxi drivers had filed a lawsuit last year to shut down the platforms’ operations based on the claim that they were illegally using private cars as taxis and were not legally registered as transportation companies.

White cabs would be included in Uber, Careem fleets: As we noted previously, the draft law reportedly includes provisions that would require these companies to ensure that half of their fleet be made up of white taxis within six months of the law’s issuance. The law would also impose a licensing pricing scheme that favors taxi drivers. All of that is good news for bellowing taxi drivers, less so for those of us who want smoke-free, A/C-included rides from people who aren’t polluting the interior of the car with non-stop babble.

The government is waiting for an official order from the Administrative Court before suspending the licenses of the ride-hailing apps, said Cabinet spokesperson Ashraf Sultan, according to Al Masry Al Youm. If the ruling becomes final, presumably after the appeals process, the government will act immediately to enforce it, he added.

Gov’t mea culpa? Sultan appears to take responsibility for the confusion, saying the government had not issued regulations for ride-hailing apps, something it is keen to rectify now.

The foreign press is continuing to frame the story as part of the global conflict between Uber and local taxi drivers. Bloomberg’s Tarek El-Tablawy and Tamim Elyan tell it as it is, pointing out that taxi drivers are the authors of their own misfortunes, with their not-so-customer friendly approach and refusal to run on meters.

FRA considering new EGX listing regulations that would raise the minimum requirement for free float: The Financial Regulatory Authority (FRA) is considering amending EGX listing regulations to raise the minimum requirement for the number of shares that need to be in free float, Deputy Head Khaled El Nashar said yesterday, Al Mal reports. The proposed amendments would force companies that are already listed to increase their free float to 10% of total shares, up from 5%. Meanwhile, those looking to IPO might have to choose between two options: The first will be to list at least 20-25% of their shares, up from 10% currently; and the second would entail listing a number of shares equivalent to 0.005% of the total freefloat capital in the EGX. El Nashar said that listed companies would be given a fair window to comply with the new regulations, which are still under study, without specifying the time frame.

Egypt, Cyprus moving ahead with plans for LNG import agreement: Cairo and Nicosia appear to be moving ahead in their plans to connect Cyprus’ Aphrodite gas field to one of Egypt’s two liquefaction plants in Idku and Damietta. Cypriot Energy Minister Giorgos Lakkotrypis said yesterday that Turkish “provocations” would not deter his country from pressing ahead with plans for East-Med gas exploration, particularly since it could set a precedent for delivering gas from the region to Europe, the Associated Press reports. Officials from Cyprus and Egypt have made “significant progress” on setting the terms of their agreement for a connecting pipeline and are expecting to hear the EU’s response on their preliminary framework within a few weeks. “We remain committed to both the Egyptian government and also our partners both here in Cyprus and in Egypt to try to find a conclusion in what is a very difficult equation, considering the outside conditions in the market, both in terms of international prices of oil but also in terms of the rather hostile nature of development of the Aphrodite field because of the technical circumstances in the depth of the water,” Lakkotrypis said.

What’s happening with CFLD’s USD 13.4 bn new capital contracts? Talks with China Fortune Land Development Company (CFLD) and the government over the contract to develop 14k feddans in phase one of the new administrative capital appear to be at a critical juncture. The city developer sent its final proposal for the project to the government this month, and Egyptian officials say they are currently studying the offer. “All I can say is that we are in the last stage of negotiations and hoping that this will be settled soon,” Allen Ma, president of CFLD Egypt, told Bloomberg.

Government officials appear to hint at the possibility of further delay: “This is a huge project,” Assistant Housing Minister Khaled Abbas said. “We should take our time to study the project well and ensure it will benefit the country.” Talks on CFLD’s component of the new capital have been plagued by constant delays. MoUs for the project were signed back in 2016, and the last we heard of the project was that contracts would be signed by last December.

Haggling over how sales revenue from the development would be shared appear to be the reason why the talks have dragged on, according to Bloomberg. Investment Minister Sahar Nasr had said last year that the government will retain 60% of revenues from CFLD’s projects.

Then there’s the matter of the inconsistent stated value of the investment. CFLD has said last year that it would invest USD 4 bn in the coming four years on the project. But a copy of the proposal obtained by Bloomberg shows that CFLD commits to bringing in FDI worth USD 2 bn in the first five years. The scope of the project was supposed to see the company invest USD 20 bn over 25 years. Talk of that soon disappeared in the press and all we’ve heard for a year now is USD 13.4 bn over 10 years.

Don’t be confused: The CFLD contact is separate from China State Construction Engineering Company (CSEC)’s contract to build the skyscraper district of the new capital, which is at the heart of the new capital’s 1.71 mn sqm central business district. Prime Minister Sherif Ismail broke ground on the district this week; CSEC will spend some USD 3 bn building the district, with USD 2.55 bn in financing coming from Chinese banks and the balance from Egypt’s Housing Ministry.

M&A WATCH- Hassan Allam Holding has reportedly acquired 60% of the Power Generation Engineering and Services Company (PGESCo) for EGP 421 mn, BPE Partners Chairman Hazem Barakat tells Al Mal. The company acquired the stake from existing shareholders including CIB (20%), Saud Consultants (20%), BPE Power (15%) and BPE Partners (5%). Matouk Bassiouny was tapped by Hassan Allam to advise on the transaction, while White and Case LLP advised the shareholders, according to Barakat. The Electricity Ministry is said to hold a 40% stake in PGESCo.

INVESTMENT WATCH- Ibnsina Pharma is looking to invest EGP 150-200 mn over the next five years to increase its market share to 26% from a current 19.3%, Managing Director Omar Abdel Gawad tells Al Mal. The new funds would bring the company’s total investments to EGP 700 mn, a target it had announced at the time of its initial public offering last year. Ibnsina plans to grow its distribution network, adding new government contracts (which earned the company EGP 1 bn in 2017), and growing its portfolio through ongoing talks with international med manufacturers, Abdel Gawad adds. The news comes one day after Ibnsina announced signing contract with Novo Nordisk to distribute over 20 SKUs of its diabetes care, haemophilia and growth disorders products in Egypt.

The Alexandria Mineral Oils Company (AMOC) is still considering options to finance its USD 500 mn oil refinery project, according to a statement to EGX. The company denied reports it has already reached an agreement with international finance institutions, as reported by the Daily News Egypt earlier this week, saying it is still in the feasibility study stage.

Gov’t shores up social protections in the new budget ahead of subsidy cuts in July: In the run up to get the FY2018-19 budget, which would include subsidy cuts, the Ismail Cabinet is getting the message across that it is shoring up the social safety net. Public sector employees will receive a wage increase in the coming period, Prime Minister Sherif Ismail tells Al Masry Al Youm. He also announced that a large number of citizens will be joining the Takaful and Karama social welfare programs. Furthermore, next year’s budget includes increase spending on commodity subsidies for the lowest income citizens. He added that these would be explained further when the government presents the new budget to the House of Representatives, which be around 31 March. The new budget targets a GDP growth of 5.8% and a deficit of 8.4% of GDP.

The UK could reconsider its ban on flights to Sharm El Sheikh if Russia was to lift its restrictions, TTG reports. The report notes that it is “widely accepted” now after the investment made in improving security at the Sharm El Sheikh airport that “it is now considered safe by the Department for Transport (DfT) and the Foreign Office (FCO).” Jonathan Lord MP, co-chairman of the all-party parliamentary group (APPG) had said that “the Egypt APPG still supports strongly the resumption of flights from the UK to Sharm, as outlined in the Commons debate.”

Meanwhile, Egypt’s tour operators have begun preparing tailored travel packages for Russian tourists ahead of the scheduled resumption of direct flights with Russia, Al Shorouk reports. The packages will include trips to Sharm El Sheikh, Hurghada, Luxor, and Aswan, as well as guided tours in Cairo (we’re assuming at attractive, discounted prices). EgyptAir had announced that it will begin operating three weekly flights to Russia as of 12 April. Russian airline Aeroflot, which is set to resume flights as of 11 April, has said it would offer daily flights from 12 June to 2 July to accommodate football fans heading to the World Cup.

Alex Port-led consortium to build USD 450-500 mn multipurpose station: The Alexandria Port Authority (APA) is forming a JV with the Suez Canal Economic Zone (SCZone) and the Land Maritime Transport Holding Company to build a USD 450-500 mn multipurpose facility at the Alex Port, a zombie project from the 2015 Egypt Economic Development Conference that has been killed and resurrected more times than we can count. The project will be partially financed by bank loans, Land Maritime Transport Holding Company Chairman Mohamed Youssef, tells Al Mal. Negotiations with China Harbour have no officially reached a dead end after it refused to cut the project’s price tag.

In related news, Youssef said his company had received five offers to expand the Alex Container and Cargo Handling company’s platforms at the Alex Port for USD 35 mn, a project that should take 18 months to complete. A similar development project is also set to take place at the Damietta Port.

Egypt joined 44 other African countries in signing the pan-African Continental Freetrade Zone (CFTZ) agreement in Kigali yesterday. The agreement, whose main objective is “to create a single continental market for goods and services,” would promote infrastructure development among the signatory countries as well as reducing a host of customs duties between them, the Trade and Ministry said in a statement following the signing. These would be completely eliminated in later stages of the agreement, the statement added. The agreement would also reduce travel restrictions for investors and professionals in a number of strategic sectors, including energy, financial services, health, education, ICT, and agriculture, said Trade and Industry Minister Tarek Kabil. The agreement would see trade in the continent increase 22% by 2022, Kabil, who gave a speech on behalf of President Abdel Fattah El Sisi, added.

Trade ministers of the signatory countries will now have to go through another round of talks including the timeframe to implement the pact and policies on investment, competition, and trademark enforcement, Kabil said. He also urged fellow signatory to look into developing policies to help grow the burgeoning e-commerce sector.

Bilateral ties with Rwanda: On the sidelines of the event in Kigali, a Federation of Egyptian Industries delegation agreed to deepen cooperation with Rwanda’s Private Sector Federation and the Rwanda Chamber of Industry, Ahram Gate reports. The Egyptian delegation also discussed the possibility of establishing a logistics center in Rwanda for Egyptian exports including building materials, juices, and medication.

CLARIFICATION- The New Cairo British International School (NCBIS) denies a report published by Ahram Gate that it is being shutdown by the Education Ministry for not obtaining permits from the ministry. In a letter to parents, the NCBIS administration noted that it had not received a warning or any communication from the ministry. What’s more, the school—effectively a parent-owned NGO—is regulated by the Social Solidarity Ministry, not the Education Ministry. The letter notes that Schulz Academy, which was also named in the report as being among the four schools hit by the Education ministry, has similarly not heard from any ministry official. The article in state-owned Ahram Gate quotes the head of the Education Ministry’s private education department, Abir Ibrahim.