Egypt unveils USD 53 bn Gaza reconstruction plan

Wednesday, 5 Mar 2025

Egypt unveils USD 53 bn Gaza reconstruction plan

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Today at a glance

Diplomacy

Egypt puts forward USD 53 bn, five-year Gaza reconstruction plan.

Economy

Non-oil private sector stays in expansion territory for second consecutive month.

Economy

Foreign reserves inch up USD 129 mn in February to USD 47.4 bn.

What We're Tracking Today

Pharma sales continue to pick up in 2025.

Also on our Radar

Who’s behind the country’s first PIPE fund?

PLANET FINANCE

Global gov’t borrowing to hit record USD 12.3 tn in 2025 -S&P Global.

HARDHAT

A deep dive into plans to establish a unified Arab electricity market.

What We're Tracking Today

Chinese companies are looking at Egypt amid US trade tension

Good morning, all. We have a diplomacy-heavy issue for you this morning as we dive into Egypt’s USD 53 bn plan to reconstruct Gaza unveiled during yesterday’s emergency Arab League summit.

So, when do we eat? Maghrib prayers are at 5:57pm in the capital, and you’ll have until 4:49am tomorrow to hydrate and caffeinate ahead of fajr.

PSA-

WEATHER- Cairo is in for a rainy day, with a high of 20°C and a low of 12°C, according to our favorite weather app. The Egyptian Meteorological Authority is predicting light to moderate rain with a chance of thunder alongside dusty winds.

It’s as cold and rainy in Alexandria, with a high of 19°C and a low of 11°C.

** DID YOU KNOW that we now cover Saudi Arabia and the UAE?

** Were you forwarded this email? Tap or click here to get your own copy delivered every weekday before 7am Cairo time — without charge.

WATCH THIS SPACE-

China eyes Egypt as export hub amid US trade tensions: Chinese companies are expected to invest USD 2-3 bn in moving production to Egypt, particularly the Suez Canal Economic Zone (SCZone), as the Asian country looks to maintain export access to global markets amid trade pressures from the US, deputy head of the China committee in the Egyptian Businessmen’s Association Mostafa Ibrahim told Al Arabiya.

Some 20-30 Chinese companies are considering expansion into the local market this year, Ibrahim added. Most of these companies focus on high-export industries like readymade garments, textiles, home appliances, and technology. Nearly two-thirds of the investments are expected to flow into areas near Suez, while the remaining third will go to inner industrial zones, Ibrahim added.

ICYMI- US President Donald Trump earlier this week signed off on doubling tariffs on Chinese imports to 20%, with the directive going into force yesterday.

The rationale: Chinese companies are increasingly expanding manufacturing to Egypt to leverage its freetrade agreements with the US and Europe, which could allow them to bypass tariffs as they look to maintain exports to these markets. Egypt’s low-cost labor and large consumer market are also fueling the push.

DATA POINT-

Pharma sales continue to pick up in 2025, increasing 54.7% y-o-y in value in the first month of the year to hit EGP 21.5 bn, reports Souq Al Dawaa, citing unnamed industry insiders. Sales volume was a modest 6.5% y-o-y increase.

The sector ended 2024 on a high note, recording a 42% y-o-y increase in sales value despite a 3% y-o-y dip in sales attributed to the FX crisis affecting production lines. The increase came in the second half of the year when the Egyptian Drug Authority approved several price hikes in response to calls from local pharma companies that the prices should reflect new FX rates following the float of the EGP in March.

MARKET WATCH-

OPEC+ to press ahead with oil output hike next month: OPEC+ decided to proceed with an earlier decision to gradually increase oil production from April in a move that will see it unwind long-standing output cuts, it said in a statement. The oil cartel will phase out 2.2 mn bbl / d of production cuts until September 2026 under a plan it drew up back in December after delaying plans to roll back the supply cuts several times. The hike is the first by the coalition since 2022.

The announcement sent oil prices tumbling: Brent crude fell 0.7% to USD 71.12 a barrel on Tuesday, it hit a session low of USD 69.75, its lowest since September, and compounding losses triggered by the introduction of US tariffs on China, Canada, and Mexico a day earlier.

THE BIG STORY ABROAD-

Trump is once again dominating the international front pages: US President Donald Trump’s address to Congress — his first since returning to office — saw him outline his administration’s agenda, defend new tariffs, and address the Ukraine-Russia conflict and US policy in the Middle East. (Bloomberg | CNN | AP | The Guardian | Wall Street Journal | Reuters)

AND IN THE BUSINESS PAGES- Markets continued to digest the latest Trump tariffs throughout trading yesterday until US Commerce Secretary Howard Kutnick suggested the US could ease tariffs on Mexico and Canada, with an announcement coming as soon as today. The news triggered a late-session rally that helped pull the Nasdaq up after it briefly dipped into correction territory — it closed down 0.4%. The S&P 500 closed down 1.2%, while the Dow Jones fell 1.6%. (Reuters | Bloomberg)

The (potential) relief comes after a series of retaliations: Trump’s tariffs — 25% on Canada and Mexico, plus a fresh hike on Chinese goods — sent stocks tumbling as all three countries hit back. Canada hit back with 25% tariffs on USD 30 bn worth of US imports, with plans to extend the levies to another USD 125 bn worth of goods in 20 days. China also responded by slapping 10-15% tariffs on USD 21 bn of US agricultural products while imposing export and investment restrictions on 25 American firms.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: We take a deep dive into the plans to establish a unified Arab electricity market.

Tags:

China What We're Tracking Today

Ramadan Kareem from Somabay.

Wishing you a month filled with serenity, peacefulness, and joy with your loved ones.

Diplomacy

Egypt puts forward USD 53 bn, five-year Gaza reconstruction plan

Egypt’s USD 53 bn Gaza reconstruction plan receives Arab backing: Arab leaders endorsed Egypt’s USD 53 bn reconstruction plan for Gaza during yesterday’s emergency Arab League summit held in Cairo. Egypt and a handful of its Arab neighbours spent a month formulating the plan as a counter to US President Donald Trump’s plan to displace Gaza’s citizens against the backdrop of a faltering ceasefire agreement.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

The plan at a glance: Under the five-year plan — outlined in a 112-page document — some 400k housing units, an airport, a commercial port, beach hotels, and a technology hub will be constructed, Al Qahera News wrote. It will include urban areas that utilize renewable energy, renovated agricultural lands, and industrial zones. The reconstruction process will happen across two phases — the USD 20 bn first phase will take two years to complete and the second USD 30 bn phase will be done in two and a half years.

A USD 3 bn “recovery phase” will precede the reconstruction process, during which rubble and unexploded weapons will be removed and temporary housing will be provided. That phase will also include the restoration of partially damaged residential buildings.

Who will be taking charge? A non-factional Palestinian committee will oversee the Strip for a transitional six-month period. Meanwhile, Egypt and Jordan will help train security forces in Gaza and the proposal of having a UN-backed international peacekeeping mission on ground remains under consideration.

What committee? “Egypt has worked, in cooperation with our Palestinian brothers, to form an administrative committee of independent Palestinian professionals and technocrats to manage Gaza,” President Abdel Fattah El Sisi said yesterday in his opening address (watch, runtime: 5:44:15). The Gaza Administration Committee will oversee relief operations and Gaza’s affairs on a temporary basis, laying the groundwork for the return of Palestinian Authority control, the president noted.

Gazans will stay on their land throughout: Temporary housing will be made available for the people of Gaza throughout the reconstruction process, according to the plan.

It all hinges on the three-phase ceasefire agreement unfolding as planned: Egypt’s plan calls on the international community to support the efforts of Egypt, Qatar, and the US to ensure the ceasefire agreement holds. The crumbling of the agreement would hinder the reconstruction process.

The future of the agreement is up in the air: Earlier this week, Israel started blocking all humanitarian aid from entering the Gaza strip in a bid to pressure Hamas into accepting changes to the already agreed on ceasefire agreement.

Another ceasefire agreement? The Egyptian plan proposes a medium-term ceasefire agreement between Israel and Hamas, which would mark a transitional period during which the two sides would build trust and eventually put an end to all unilateral actions.

Who’s paying? A special fund will be set up for the reconstruction of Gaza, El Sisi said, calling on the leaders in attendance, as well as the regional and international communities, to contribute to it.

Wasting no time: Cairo will host a Gaza reconstruction conference in April in partnership with the Palestinian state and the United Nations.

What we got out of the summit: Arab leaders shared a a 23-point joint statement following the summit, where they backed Egypt’s plan and pledged to provide the needed financial and political support needed, rejected the forced displacement of Palestinians, and called for the necessity of parties respecting the three-phase ceasefire agreement

The UN is on board: “I welcome and strongly endorse the Arab-led initiative to mobilise support for Gaza’s reconstruction, clearly expressed in this summit … the UN stands ready to fully cooperate in this endeavour,” UN secretary general António Guterres, said.

ISRAEL, WASHINGTON, AND HAMAS’ REACTIONS-

Israel’s Foreign Ministry deemed the proposal ineffective, noting it “failed to address” what happened on 7 October, in a statement on X. The statement voiced its support for Trump’s vision, necessitating the displacement of some 2 mn Palestinians.

On the other hand, Hamas welcomed the proposal, considering it a “step forward” for a unified Arab support for the Palestinian cause, Reuters reports. The group also called for providing the necessary means to ensure the plan’s success and urged Arab leaders to push Israel to commit to its ceasefire agreement.

And from the Oval Office: “While the President stands by his bold vision for a post-war Gaza, he welcomes input from our Arab partners in the region. It's clear his proposals have driven the region to come to the table rather than allow this issue to devolve into further crisis,” White House National Security Council spokesman Brian Hughes said, reiterating that Hamas cannot remain in power.

ON THE SIDELINES OF THE SUMMIT- El Sisi held one-on-one meetings with EU Council President Antonio Costa, Yemen’s Presidential Leadership Council Chair Rashad Al Alimi, Lebanon’s President Joseph Aoun, Palestinian President Mahmoud Abbas, Iraq’s President Abdul Latif Rashid, and Syria’s President Ahmed El Sharaa.

ALSO ON GAZA-

Providing medical care to Gazans topped the agenda of a meeting between an EU delegation and Health Minister Khaled Abdel Ghaffar, which saw the two sides review Egyptian hospitals' ability to receive Palestinians and further cooperation with the bloc to better provide medical attention. Gaza reconstruction plans also took center stage, with the meeting discussing how to rehabilitate the enclave’s healthcare system that has been systemically destroyed by Israel — the majority of Gaza’s hospitals are either shut or destroyed and over 1k health workers have been killed in airstrikes, ground incursions, and shelling targeting medical facilities and ambulances. How to address the psychological harm that the two mn population, nearly half of which are children, has suffered from the 15-month onslaught was also covered.

Tags:

Abdel Fattah El Sisi DIPLOMACY Gaza Middle East politics

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Economy

Egypt’s non-oil private sector stays in expansion territory for second consecutive month

Egypt’s non-oil business activity continued to see expansion for the second month running — but at a slower pace — “marking the first back-to-back improvement in business conditions in over four years,” according to S&P Global’s latest Purchasing Managers Index report (pdf). Egypt’s headline figure dipped to 50.1 in February from a 50-month-high of 50.7 in January, which marked the second time the country's non-oil activity has hit the expansion territory since November 2020.

A solid start to the year: “Coupled with January's upturn, the data reflects the best opening two months of the year in the survey's history,” S&P Global Senior Economist David Owen said.

Input cost pressures “remained relatively soft” compared to what was seen in 2024, which indicates that “inflation is likely to continue its downward trend, in the near-term at least,” Owen said. While some respondents cited increased cost pressures to a stronger USD, this was partly offset by a decline in staff costs. However, cost pressures were more felt in the manufacturing and construction sectors. Meanwhile, selling prices rose at a gradual rate in February, as businesses looked to “limit the pass-through of higher cost burdens to clients.”

Employment decreased for the third time in four months, as businesses faced challenges in retaining staff and hiring more workers, representing another “mixed” outing for the employment market.

Overall business sentiment in Egypt remains subdued: Firms’ expectations for overall business activity over the next 12 months dropped to their lowest since last November, with just 5% of businesses surveyed showing positivity towards future output trends. “Economic and geopolitical risks continue to loom large, contributing to another month of subdued expectations for the year ahead,” according to Owen.

New orders levels: The continued growth in new orders was mainly driven by “recovery of market conditions and client demand” — however, the slowdown from January came as a result of a decline in manufacturing orders representing a “mild drag on overall performance.”

“We can’t call it the beginning of a trend just yet,” HC Securities’ Heba Monir told EnterpriseAM. “It doesn’t mean we’ve emerged from the bottleneck, but it does indicate that firms have been performing well despite higher costs of raw materials and input prices. The improvement is generally coming from higher consumer spending, which could both be driven by softening inflationary pressures and seasonal factors — but for the number to sustainably stay past the 50.0 mark, it would have to come through interest rate cuts and a recovery in consumer spending,” Monir said.

ELSEWHERE IN THE REGION-

Saudi Arabia’s PMI fell to 58.4 in February dipping down from the over decade-high reading of 60.5 in January as new business growth cooled slightly.
Kuwait’s PMI fell to 51.6 in February, down from 53.4 in January, still holding above the 50.0 mark for healthy growth.

Tags:

economy PMI S&P

Economy

Egypt’s foreign reserves inch up USD 129 mn in February to USD 47.4 bn

Net foreign reserves rose to USD 47.4 bn at the end of February 2025, marking a USD 129 mn increase from January, according to data from the Central Bank of Egypt. Net foreign reserves continued to increase m-o-m for the 30th consecutive month.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

Here’s the breakdown, according to CBE data (pdf):

FX reserves fell by USD 297 mn to 35.5 bn in February, down from 35.8 bn in January
Gold reserves increased USD 435 mn to USD 11.9 bn, up from USD 11.4 bn
Special drawing rights fell USD 10 mn to USD 21 mn, down from USD 31 mn

Egypt’s net foreign reserves have increased by USD 12.1 bn since the government announced the USD 35 bn Ras El Hekma agreement that coincided with the float of the EGP and FX liquidity returning to the official banking system, paving the way for more international funds. In February 2024 — the month immediately before the float — foreign reserves stood at USD 35.3 bn.

Tags:

Central Bank of Egypt economy foreign reserves

Also on our Radar

Who’s behind the country’s first PIPE fund?

FINTECH-

E-finance backs the country’s first PIPE fund: State-owned fintech giant E-finance contributed EGP 250 mn to the country’s first onshore private investment in public equity (PIPE) fund that was officially launched this week by CI Capital and Compass Capital — dubbed the C3 Capital Fund 1 — it said in a statement (pdf). The fund completed its first close after securing a total of EGP 1.8 bn in commitments — more than half of its EGP 3 bn target it is expected to reach by the final close — from institutional investors, family offices, and high-net-worth individuals. Backers also include Banque Misr, CIB, Suez Canal Bank, Misr Life Ins., and Midbank.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

REMEMBER- The fund is targeting 10-33% stakes in undervalued EGX-listed firms to secure board seats and drive short- to medium-term growth. The fund plans to invest some EGP 1-1.5 bn in 4-6 EGX-listed companies this year, fund CEO Ahmed Hussein told Zaywa.

M&A-

FRA extends AXA’s deadline for Delta Ins. takeover offer: The Financial Regulatory Authority (FRA) has granted AXA Egypt a 60-day extension to submit a mandatory offer for its planned takeover of Delta Ins., according to an FRA disclosure (pdf). The original offer period was due to expire yesterday.

REMEMBER- In December of last year, the company registered its interest to buy up to 100% of the Egypt Kuwait Holding (EKH) subsidiary at an estimated EGP 5 bn valuation with plans to merge Delta Ins. into its Egypt operations. Meanwhile, Delta received a competing bid from Morocco’s Wafa Assurance proposing to acquire up to 100% of the company at the same estimated valuation.

MANUFACTURING-

Hyundai Rotem, NERIC to roll out new metro trains soon: South Korean railway equipment manufacturer Hyundai Rotem and the National Egyptian Railway Industries Company (NERIC) will kick off the production of 40 metro trains for lines 2 and 3 of the Cairo Metro by mid-2025, Asharq Business reports, citing sources it says are in the know. The consortium plans to deliver the first seven trains in 2026, with a two-year warranty and eight years of maintenance for the trains.

We knew this was coming: Hyundai Rotem and NERIC signed a USD 656 mn agreement back in 2022 to locally produce 40 trains with 320 carriages for Cairo’s metro lines, with an initial MoU signed a year prior, as part of the government’s plan to localize the railcar manufacturing industry.

EVS-

Local manufacturer Engineering Industrial Group (INDE) plans to begin producing electric cargo tricycles this year, a company official told Al Mal. The company aims to produce at least 2k tricycles — with a local component ratio of over 65% — annually for the local market and export, before doubling production at a later stage. INDE has reportedly already begun promoting the model in African markets and is set to upgrade its production lines to accommodate its manufacture, expanding beyond its current production of fuel-powered tricycles.

SMEs-

EBRD launches SME support program with the central bank, EBank: The European Bank for Reconstruction and Development (EBRD) introduced the SME National Champions Program in collaboration with the Central Bank of Egypt, Export Development Bank (EBank), and other local financial institutions, according to a statement from the lender. The program has the stated aim to “accelerate the growth of high-potential SMEs” by offering training, mentoring, and networking. The initiative will also lean on EBank’s Export Club program to help the companies expand into new markets.

Tags:

ALSO ON OUR RADAR AXA Egypt capital markets Central Bank of Egypt CI Capital e-finance EBRD EVs Export Development Bank of Egypt Hyundai Rotem insurance Manufacturing non-banking financial services SMEs transport

PLANET FINANCE

Global gov’t borrowing to hit record USD 12.3 tn in 2025 -S&P Global

Global government borrowing is on track to hit a record USD 12.3 tn in 2025, driven by rising defense spending, higher debt-servicing costs, and ongoing fiscal pressures, S&P Global forecasts. Total sovereign debt stock is expected to reach USD 76.9 tn, with global debt levels at 70.2% of GDP — slightly below pandemic highs but still elevated at a time when economies are forced to reckon with “crisis after crisis,” the Financial Times quotes Roberto Sifon-Arevalo, global head of sovereigns at S&P, as saying.

Top borrowers: The US is set to issue nearly USD 4.9 tn in long-term debt this year, driven by “wide fiscal deficits, high interest spending, and substantial debt refinancing requirements.” While the USD’s reserve currency status gives the country “significant flexibility” to manage its debt, S&P’s Roberto Sifon-Arevalo warned that rising borrowing costs are making that harder. It “was fine and sustainable… before the pandemic, now it presents a much bigger problem,” he said.

China, the second-largest borrower, is increasing issuance by over USD 370 bn to USD 2.1 tn to support its struggling economy. Outside the G7 and China, global borrowing is expected to remain broadly stable, S&P said.

Investor concerns are growing, with bond giant Pimco planning to cut exposure to long-dated US debt over “debt sustainability questions,” while b’naire investor Ray Dalio has warned the UK could fall into a “debt death spiral” as borrowing outpaces confidence.

Bigger fiscal risks: As debt-servicing costs climb, governments face increasing constraints on infrastructure and social spending, fueling a global shift toward more fiscally conservative political movements, Sifon-Arevalo is quoted as saying.

ALSO WORTH KNOWING ON PLANET FINANCE-

Saudi Aramco cut its 4Q 2024 dividend — the world’s biggest dividend — to SAR 80.1 bn (USD 21.4 bn), a 31% y-o-y cut and well below the analyst expectation of a stable payout of SAR 116.5 bn (USD 31.1 bn), according to a disclosure to Tadawul. This includes a SAR 79.3 bn (USD 21.14 bn) base dividend, up 4.2%, and a performance-linked dividend of just SAR 0.82 bn (USD 0.22 bn), down 98%.

Aramco will slash its 2025 dividend to SAR 320.4 bn (USD 85.4 bn), from USD 124 bn, citing financial strain from high payouts and weak oil prices, Bloomberg reports.

The dividend cut comes as Saudi Arabia looks to recalibrate spending as it faces rising bills for gigaprojects like Neom. The Kingdom’s budget deficit is expected to widen 4% of GDP from 2.8% in 2024, Reuters quotes Abu Dhabi Commercial Bank Chief Economist Monica Malik as saying.

Market reax: Saudi Aramco’s shares dipped 2% on the news to SAR 26.85, their lowest since August 2024. Aramco’s market value stands at USD 1.74 tn, making it the world’s sixth-most valuable company, behind Apple, Microsoft, Nvidia, Amazon, and Google parent firm Alphabet.

MARKETS THIS MORNING-

Asian markets are mostly in the green this morning, after China set its GDP growth forecast at 5%. Mainland China’s CSI 3000 Index rose 0.1%, while Hong Kong’s Hang Seng is up 0.3%. On the other hand, Japan’s Nikkei and Topix are both down in early trading. Over on Wall Street, futures rose slightly after another day of losses, with the Nasdaq inching dangerously close to correction territory.

EGX30	30,763	-0.7% (YTD: +3.4%)
USD (CBE)	Buy 50.58	Sell 50.72
USD (CIB)	Buy 50.58	Sell 50.68
Interest rates (CBE)	27.25% deposit	28.25% lending
Tadawul	11,932	-1.6% (YTD: -0.9%)
ADX	9,591	+0.3% (YTD: +1.8%)
DFM	5,355	+0.5% (YTD: +3.8%)
S&P 500	5,778	-1.2% (YTD: -1.8%)
FTSE 100	8,759	-1.3% (YTD: +7.2%)
Euro Stoxx 50	5,387	-2.8% (YTD: +10.0%)
Brent crude	USD 71.12	-0.7%
Natural gas (Nymex)	USD 4.31	+4.5%
Gold	USD 2,928	+0.9%
BTC	USD 87,656	+1.1% (YTD: -6.3%)

THE CLOSING BELL-

The EGX30 fell 0.7% at yesterday’s close on turnover of EGP 3.1 bn (11.6% below the 90-day average). Local investors were the sole net buyers. The index is up 3.4% YTD.

In the green: Rameda (+2.6%), Orascom Development Egypt (+2.0%), and Orascom Construction (+1.9%).

In the red: Beltone Holding (-4.2%), Ibnsina Pharma (-1.9%), and Egypt Kuwait Holding (-1.9%).

CORPORATE ACTIONS-

Qatar National Bank will distribute a dividend of EGP 1.5 per share for its 2024 earnings starting 20 March, according to an EGX disclosure (pdf).

Tags:

debt Financial Markets Planet Finance S&P Global

HARDHAT

A deep dive into plans to establish a unified Arab electricity market

Efforts to integrate electricity markets across the Arab world are gaining traction through the Pan-Arab Electricity Market (PAEM), a decades-in-the-making initiative that aims to facilitate regional power trade and improve energy security. Backed by the Arab League, the World Bank, and the Arab Fund for Economic and Social Development, PAEM seeks to unlock shared economic and financial benefits by connecting national grids and establishing a formalized regional electricity market.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

PAEM aims to solve a real regional issue: The push to establish a regional electricity market comes amid growing fiscal pressures and structural challenges in the energy sector. Historically, many Arab countries — especially Egypt — have heavily subsidized electricity, straining public finances and limiting the capacity for new investments. The pandemic and subsequent oil price collapse further exacerbated funding constraints, delaying power generation projects across the region.

As governments face tighter budgets, PAEM offers an alternative path — leveraging electricity trade as a means of improving grid efficiency, attracting private investment, and ensuring energy security.

How it will work: Plans for a unified Arab electricity market aim to connect and harmonize the energy systems of 22 Arab countries by 2038, with phased implementation starting in 2025. The market is expected to operate on a commercial mechanism, enabling energy exchange by utilizing surplus electricity from member states. It also could draw on the Gulf electricity interconnection project as a model.

WHERE THE PROJECT STANDS-

The project is gaining momentum: The Arab League inked key agreements for the mechanisms and framework for the common Arab electricity market during the Arab Ministerial Council for Electricity held in Egypt in December. And here at home, the Egyptian cabinet approved a draft presidential decree last week to establish the Arab common electricity market and the Arab common electricity market agreement.

Who’s on board? The countries that signed the agreement include the UAE, Saudi Arabia, Kuwait, Palestine, Syria, Egypt, Qatar, Libya, Sudan, Yemen, Morocco, and Jordan.

The PAEM transition follows a structured roadmap laid out in a 2017 MoU signed by 16 Arab countries. The initiative is being developed in several phases, with a focus on establishing key governance, institutional, and regulatory frameworks to enable cross-border electricity trading, according to the PAEM website.

The plan calls for slow but steady implementation: International experience has shown that regional energy markets require time to mature, with gradual progress toward fully independent regional institutions. In the initial stages, PAEM’s governing bodies will operate under the Arab League and partner organizations before eventually evolving into standalone regulatory entities. The long-term goal is to create a fully interconnected and synchronized Arab electricity network by 2038, enabling seamless cross-border energy trade with multiple buyers and sellers.

The foundation stage has already been completed: A preparatory stage focusing on establishing governance and institutional frameworks was already completed, setting the groundwork for formal electricity trade at the sub-regional level. This phase laid the legal and regulatory foundation for cross-border electricity exchanges and established the necessary institutional mechanisms to oversee market operations.

Moving forward, PAEM will progress through two additional transitional stages before reaching its ultimate goal of a fully liberalized electricity market with wholesale and retail competition across the Arab world. The final phase — expected to be completed by 2038 — will see the full synchronization of electricity networks across Arab countries, a balancing market, and day-ahead spot markets that allow for seamless and competitive energy trading across borders.

PAEM OFFERS SIGNIFICANT SAVINGS RELATIVE TO INVESTMENT-

A game-changer for energy security and cost savings: PAEM is not just about connecting national grids; it presents a massive economic window for participating countries by unlocking bns of USD in cost savings and investment potential. A World Bank study (pdf) analyzing various policy and market scenarios found that regional electricity trade would reduce the need for new power generation investments, lower system costs, and optimize energy resources across borders.

Power sharing can reduce the need for unnecessary power plants: By leveraging existing surplus electricity and pooling reserves, PAEM could significantly cut down the region’s need for new power generation capacity. The World Bank study found that regional electricity trade could eliminate the need for up to 63 GW in new generation capacity by 2035. This would allow governments to postpone or even avoid costly investments in additional power plants, directing resources toward modernizing infrastructure and expanding grid efficiency instead.

A multi-bn-USD cost-saving chance: One of the biggest advantages of PAEM is its potential to bring down the overall cost of electricity across the region. The study found that in a scenario in which gas prices are liberalized, carbon caps are introduced, and regional grid interconnections come into full effect, costs could decline by up to USD 196 bn — a 13% reduction compared to a scenario without electricity trade. Even conservative estimates suggest that regional integration would cut costs by at least USD 107 bn, primarily through fuel savings and optimized generation capacity. Indeed, increasing cross-border transmission projects through investments of just USD 7.5 bn could save USD 35 bn in system costs — meaning that every USD 1 spent on regional grid expansion would generate nearly USD 4.7 in savings.

More renewables, lower emissions: PAEM will also be instrumental in scaling up renewable energy across the region. With more interconnected grids, countries can trade surplus renewable energy, ensuring a more stable and efficient use of solar and wind power. The study found that by 2035, the share of renewables in total installed capacity could increase to somewhere between 14.5-32.7% — up from just 1.4% in 2018 — under certain policy frameworks. At the same time, electricity trade could help reduce carbon emissions by allowing gas-dependent economies to transition toward cleaner energy sources.

Cross-border transmission infrastructure investments are the next step: While electricity trade already occurs via bilateral agreements, unlocking the full economic benefits of PAEM will require major investments in transmission infrastructure. The World Bank study identified 25 priority projects, including expansions to existing interconnectors and the construction of 18.5 GW of new cross-border capacity. Five of these twenty-five projects include electricity lines linking Egypt to Saudi Arabia, Libya, Jordan, Sudan, and the Gaza Strip.

CHALLENGES-

Roadblocks on the path to full integration: While PAEM presents a major economic window, the region faces significant hurdles before it can fully realize the benefits of cross-border electricity trade. Despite existing interconnection capacity, only 2% of electricity produced in the MENA region is currently traded — a stark contrast to the potential savings and efficiency gains PAEM could unlock. Several structural, regulatory, and financial barriers continue to limit trade volumes and slow progress.

Uncompetitive pricing models are holding trade back: One of the biggest roadblocks to expanding electricity trade is the lack of a standardized pricing framework. Many Arab countries — including Egypt — still heavily subsidize electricity production, leading to distorted market prices that make regional electricity trading financially unviable. As a result, most cross-border electricity exchanges in the region occur in-kind — meaning electricity is traded for electricity rather than cash, and mainly in cases of emergency. To resolve this, countries will need to gradually phase out domestic fuel subsidies and adopt a commercial pricing model for electricity trade, according to the World Bank. An interim solution could be to apply international fuel prices to cross-border transactions, even as subsidies remain for domestic consumption. However, for PAEM to fully unlock its potential, governments must expedite the shift toward market-based pricing mechanisms.

Financing the infrastructure gap: Another key challenge is financing the massive investment ticket for improving and adding new cross-border transmission infrastructure. While some interconnections already exist, many are underutilized — operating at just 5-7% capacity on average. Expanding and modernizing transmission networks will be crucial to ensuring a reliable and efficient electricity trade system, which requires significant investments.

Weak institutional and regulatory frameworks: The success of PAEM also hinges on strong regional institutions that can coordinate policies, set clear trade regulations, and enforce technical standards. However, a lack of harmonized regulations remains a major challenge. Each country operates under its own market structure and regulatory framework, making it difficult to establish a unified electricity trading mechanism.

Your top infrastructure stories for the week:

Alshams for Contracting eyes investments in Iraq: Egypt’s Alshams for Contracting is planning USD 120 mn worth of projects in Iraq, with some of the projects under study including a 100-bed hospital and a 1k-unit residential complex.
Saudi’s CBoard expands its construction materials footprint in Egypt: CBoard, a member of Saudi construction materials manufacturer conglomerate Beam, inaugurated the USD 40 mn expansion of a cement board and wall manufacturing facility in the Sokhna Industrial Zone.

Tags:

energy Hardhat renewables

CALENDAR

MARCH

1-10 March (Saturday-Monday): Egypt will open electronic applications for 2.2k industrial land plots across 22 governorates

10 March (Monday): Capmas expected to release inflation data for February.

10 March (Monday): The IMF’s Executive Board will meet to discuss Egypt.

Arla Foods’ deadline for Domty acquisition offer.

Operation of phase one of the Amotope wind farm.

Alwaad Investment to inaugurate a new cold beverage plant with an annual production capacity of 14.5 mn units.

Al Ahly Sabbour to finalize preparations for its EGX listing, offering 20-25% of its shares, with an advisor to be tapped in early 2025.

March-April 2025: The government plans to start collecting taxes on capital gains from EGX transactions.

APRIL

7-9 April (Monday-Wednesday): Narrative PR Summit launches 9th edition, Red Sea

7-10 April (Monday-Thursday): EFG Hermes One on One conference, Dubai, UAE

10 April (Thursday): Capmas expected to release inflation data for March.

17 April (Thursday): Monetary Policy Committee’s second meeting.

28-30 April (Monday-Wednesday): FDC Regional Digital Industry Summit will launch cybersecurity index.

Business-to-business forum of Egyptian and Moroccan companies to promote bilateral trade, Cairo, Egypt.

The Suez Canal Container Terminal will begin trial operations for its expanded East Port Said facilities.

Government begins talks with EU on the second tranche of the of the EUR 5 bn concessional loans package

Saxony Delegation visit to Egypt.

Egypt to launch trial operations of the first phase of its USD 1.8 bn Egypt-Saudi electricity interconnection project, ahead of schedule

Tahya Misr 1 container terminal to begin operations, adding 3.5 mn container capacity to the port.

MAY

10 May (Saturday): Capmas expected to publish inflation data for April.

1 May-10 July (Thursday-Tuesday): 500 Global's Scale Up Program, Cairo

18-20 May (Sunday-Tuesday): First Arab International Exhibition for Sustainable Development.

22 May (Thursday): Monetary Policy Committee’s third meeting.

Egyptian Exporters Association (Expolink) exhibition, Italy

French rolling stock manufacturer Alstom will submit technical and financial bids for Cairo Metro Line 6

JUNE

10 June (Tuesday): Capmas expected to publish inflation data for May.

June 2025: MPs approveextension of tax dispute resolution window until 30 June 2025, with potential for further extension

June 2025: Nissan and Honda finalise talks about possible merger to create the world’s third largest automobile company by sales.

June 2025: Coficab to complete its USD 88 mn automotive cable and electrical factory in Tenth of Ramadan City

JULY

10 July 2025 (Thursday): Monetary Policy Committee’s fourth meeting.

15-16 July 2025 (Tuesday-Wednesday): Egypt Mining Forum.

July 2025: The first operational trail of Egypt-KSA electricity interconnection line.

July 2025: Etihad Airways to launch twice-weekly flights to Alamein

July 2025: Israel to begin increasing gas exports to Egypt from Chevron’s offshore Tamar field

AUGUST

28 August 2025 (Thursday): Monetary Policy Committee’s fifth meeting.

August 2025: Tourism Development Authority to waive late payment penalties for land purchases if full installments are paid

SEPTEMBER

September 2025: Egypt Education Platform (EEP) to launch two new schools in Alexandria and Somabay

September 2025: Egypt Otsuka’s nutritional products factory in Tenth of Ramadan to begin operations, with exports to Gulf countries expected by January 2026

OCTOBER

2 October 2025 (Thursday): Monetary Policy Committee’s sixth meeting.

NOVEMBER

20 November 2025 (Thursday): Monetary Policy Committee’s seventh meeting.

DECEMBER

1-4 December: Egypt Defence Expo (EDEX), Egypt International Exhibition Centre.

25 December: (Thursday): Monetary Policy Committee’s eighth meeting.

December: Taqa Arabia and Voltalia to complete studies for repowering the 545-MW Zafarana wind farm with 1.1 GW of wind and 2.1 GW of solar power

EVENTS WITH NO SET DATE

Early 2025: ADQ to break ground on the development of Ras El Hekma

Early 2025: Al Ismaelia to begin working on two new hotels and hotel apartments in Downtown Cairo.

Early 2025: The Communications Ministry will unveil the second edition of its national AI strategy in early 2025

Early 2025: The Suez Canal Authority to launch an IPO for the Canal Company for Mooring and Lights (CCML) on the EGX.

Early 2025: Orange Egypt to launch 5G services, with EGP 10 bn planned for network upgrades.

Early 2025: BP to begin drilling at the King Mariout Offshore concession.

Early 2025: Jinbei Royal Egypt to begin local assembly of 3k Jinbei vehicles, including the country’s first electric cargo van and microbus

1Q 2025: The Egyptian-Italian business forum

1Q 2025: Investment Minister Hassan El Khatib to visit Italy

1Q 2025: Eipico’s biopharma plant to begin operations

1Q 2025: Finance Ministry to launch public consultations on its tax policy document

1Q 2025: Egypt to sign trade agreements with Bahrain and UAE to slash customs clearance times

1Q 2025: Government to launch EUR 271 mn green industry program to cut emissions

1Q 2025: Egypt-Azerbaijan joint committee to meet to bolster trade and investment ties

1Q 2025: Turkish Automotive Manufacturers Association and Turkish Contractors Association to visit Egypt following an invitation from the Investment Minister

1Q 2025: One of four companies, including Abu Qir Fertilizers, Mopco, Egyptian Petrochemicals Holding Company, and a Saudi-affiliated firm, to be selected for the USD 450 mn redevelopment of Delta Fertilizers

1Q 2025: GV Auto to begin local production of FAW Group’s cheapest EV model.

1Q 2025: Alkan Auto to launch BAIC subsidiary Arcfox’s EVs to the market.

1Q 2025: Dynamic Distribution to launch a new competitively-priced Fiat model in Egypt.

1Q 2025: BP to drill two USD 160 mn exploratory gas wells in the West Delta.

1Q 2025: Port Said for Engineering Works to begin construction on a USD 80 mn aluminum foil factory in the SCZone, targeting initial production of 60k tons annually.

1Q 2025: Pearl Polyurethane Systems to start production at its EGP 100 mn polyurethane factory in the Sokhna Industrial Zone.

1Q 2025: Sumitomo Electric to officially open its EUR 22 mn cable factory in Tenth of Ramadan, with production set to begin next month.

1Q 2025: Construction of the USD 600 mn natural gas treatment plant in the Western Desert’s Meleiha concession to wrap up, followed by a pilot run.

1Q 2025: El Araby Group and Sharp to break ground on a USD 50 mn fridge and freezer manufacturing plant in the Quweisna zone.

1Q 2025: Hangzhou Henneway Travel Goods to begin production at its USD 50 mn factory in the West Qantara Industrial Zone

1Q 2025: BP to drill two USD 160 mn exploratory gas wells in the West Delta

Mid-2025: EGX launches sustainability index.

2Q 2025: Financial Regulatory Authority (FRA) to introduce derivatives on the EGX

2Q 2025: Safaga Terminal 2 to start operations

2Q 2025: Hassan Allam to build infrastructure for AD Ports' Noatum terminal at Safaga

2Q 2025: EgyptSat Auto to start production at its EV factory in Tenth of Ramadan City

1H 2025: EGX launches a sharia-compliant sustainability index.

1H 2025: Digital Financial Identity Company will launch an electronic bank account opening service

1H 2025: The Egyptian-US Investment Forum.

1H 2025: The Egyptian Mineral Resources Authority will relaunch a global tender for gold exploration through Shalateen Mineral Resources company.

1H 2025: Internal Trade Development Authority (ITDA) to establishfour logistics zones with EGP 18-20 bn investments

1H 2025: Natco to launch Chinese firm Neta Auto’s EV models.

1H 2025: OCI Global to complete the sale of its entire methanol business to Methanex for USD 2.05 bn.

1H 2025: Egypt and the UAE to begin construction of a USD 3 bn petroleum logistics zone at Al Hamra Port

1H 2025: HoldiPharma to list 25-30% stakes in Misr Pharma and Chemical Industries Development (CID) on the EGX

1H 2025: Korra Energi to list up to 20% stake on the EGX

1H 2025: Smart Villages Development and Management Company plans to list 30-35% of its shares on the EGX

1H 2025: Halliburton to bring three gas wells online as part of the Burullus project.

1H 2025: Chevron to begin gas production from the offshore Nargis gas field, initially producing 600 mn cf.

1H 2025: Nile Recycling to launch USD 20 mn PET recycling facility in Ain Sokhna, targeting an annual capacity of 22k tons and reducing carbon emissions by 40k tons

3Q 2025: Nasr Automotive begins locally manufacturing passenger cars.

3Q 2025: AMEA Power to bring 500 MW Amunet wind farm online in Ras Ghareb

4Q 2025: Abou Ghaly Motors to introduce the Subaru Solterra to the market

4Q 2025: Two new projects in food manufacturing and home textiles to begin operations in the Qantara West Industrial Zone

2H 2025: National Printing Company to make its EGX debut after delayed IPO plans

2H 2025: Tabarak Holding to list 30% of its shares on the EGX

2H 2025: Turkish apparel company Denim Rise to open a garment manufacturing facility

2H 2024: Hi-Tech Apparel to break ground on a USD 20 mn sportswear factory in the SCZone

2H 2025: Eni to drill two new wells in the Zohr field with USD 160 mn in investments

Mid-2025: The Administrative Capital for Urban Developments to roll out the second phase of offering industrial plots to investors

Mid-2025: SN Automotive to launch three locally assembled models — one electric and two gasoline-powered — in Egypt

Mid-2025: Suez’s USD 1.8 bn coal and diesel production complex, developed by Enppi and Petrojet, to be completed

Mid-2025: Wataneya and Safi to debut on the EGX

End of 2025: The Egypt Digital Industrial Platform will expand to include additional services for manufacturers, including the issuance of licenses, building permits, and industrial records

End of 2025: An unnamed Chinese company and the state-owned Arab Organization for Industrialization (AOI) to begin production at a USD 360 mn tire factory in the SCZone.

End of 2025: A consortium including Redcon Properties and Al Baraka Bank to launch a local real estate investment fund with over EGP 1 bn in initial investments

Late 2025: Baron Hotels to open a new hotel in Sharm El Sheikh and debut its first international property in Zanzibar with 150 luxury suites

2025: The InterAcademy Partnership assembly

2025: Nile Basin States Summit, Cairo, Egypt

2025: Release of the government’s Startup Charter document

2025: Nafeza to integrate air cargo into its digital customs platform, further streamlining trade logistics

2025: Africa50 completes 42.9% stake acquisition in Raya Data Centers for USD 15 mn to fund construction of a USD 35 mn Tier III data center.

2025: MM Group for Industry and International Trade is set to launch 16 new Tata vehicle models locally.

2025: China to issue USD 411 bn in special treasury bonds

2025: El Attal Holding to list 30-35% of its shares on the EGX

2025: The Administrative Capital for Urban Development (ACUD) to launch its EGX debut, offering 5-10% of its shares.**

2025: Basata Holding for Financial Investments to offer 25% stake on the EGX as part of a plan to double its capital to EGP 1.4 bn.**

2025: Hilton Cairo Nile Maadi to open early in the year, alongside debuts of Tapestry Collection and Curio Collection by Hilton.

2025: Palm Hills and Marriott to launch The Ritz-Carlton Residences in West Cairo, featuring 150 branded units across 45 acres

2025: Jaz Hotel Group to set up two new hotels in North Coast, two in Hurghada, and two in Marsa Alam

2025: Sunrise Resorts & Cruises to add 4k hotel rooms to its hotels capacity.

2025: Egyptian Petrochemicals Holding Company (ECHEM) to complete studies and kick off production of Egypt’s first sustainable aviation fuels (SAFs).

2025: Polaris Parks to begin development of the industrial park in New October City

2025: EgyptAlum to launch a USD 100 mn foil production line with a 50k-ton annual capacity

2025: Honor to begin operations at its proposed smartphone manufacturing facility in Egypt, with an initial investment of USD 10 mn

2025: Indorama and Phosphate Misr to begin implementation of the USD 400-500 mn phosphate fertilizers plant in Ain Sokhna

FY 2025-26: Egypt to issue its first EGP-denominated sovereign sukuk to finance public investments outside the general budget

FY 2025-26: The government to begin introducing cash-based subsidies on a trial basis in select areas of the country

2025-2027: EUR 4 bn in concessional loans to follow as part of a EUR 7.4 bn package

2026

Baron Hotels to launch two hotels in Egypt with 950 rooms, followed by another with 750 rooms.

May 2026: End of extension for developers on 15% interest rates for land installment payments

2027

20 January-7 February: Egypt to host the African Games

EVENTS WITH NO SET DATE

2027: Egypt to host EBRD’s annual meetings for 2027.

End of 2027: Trial operations at the Dabaa nuclear power plant expected to take place

September 2028: First unit of the Dabaa nuclear power plant begins operations

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