Fresh whispers from the privatization program

Wednesday, 8 Nov 2023

Fresh whispers from the privatization program

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Today at a glance

Energy

ACWA and Hassan Allam to start construction of 1.1 GW wind farm early 2024.

LEGISLATION WATCH

Privatization, green hydrogen, the labor law: The Madbouly government is talking up its legislative agenda.

Economy

US interest hikes are wreaking havoc in emerging markets, and we’re unlikely to be immune.

What We're Tracking Today

ADQ might have an EgyptAlum acquisition in its sights.

What We're Tracking Today

Is a strategic stake sale in Heliopolis Housing back on the table?

WAR WATCH

Fighting in Gaza City as Israel widens ground offensive; CIA head in Egypt.

What We're Tracking Today

Saudi Arabia is still open to normalizing ties with the Israelis, says investment minister.

What We're Tracking Today

Oil prices fall to three-month lows on fears of China slowdown, US rates.

PLANET FINANCE

Saudi Aramco, Fertiglobe report lower earnings following bumper 2022.

HARDHAT

Your comprehensive guide to the one mn agreements coming out of TransMEA this week.

What We're Tracking Today

Your Uber commute is now going to cost you a little more following fuel price hikes

Good morning, friends. We start off this morning with whispers from state privatization program — and readers will want to pay close attention to the Madbouly government’s legislative priorities, which include not just incentives for green hydrogen, but also a reboot of the controversial labor act.

^^ We have the rundown on all of this and more here in What We’re Tracking Today and in the news well, below.

FROM THE RUMOR MILL-

#1- ADQ might have an EgyptAlum acquisition in its sights: Abu Dhabi’s wealth fund ADQ is reportedly mulling over acquiring up to a 30% stake in EGX-listed Egypt Aluminum (EgyptAlum) from the Holding Company for Metallurgical Industries, writes Al Mal, citing sources it says have knowledge of the matter. Metallurgical Industries is EgyptAlum’s largest shareholder with a 89.8% stake and has been trying to sell off shares in many of its companies and launch IPOs to raise money for the state’s privatization program.

ADQ might have competition: Although ADQ has not made an official offer, according to a bourse disclosure (pdf) by EgyptAlum, other Gulf entities and specifically Qatar are interested in grabbing a part of the company, the local outlet quotes its source as saying.

#2- Is a strategic stake sale in Heliopolis Housing back on the table? The government is considering selling a stake in Heliopolis Housing and Development and has hired NI Capital to offer a valuation ahead of a potential sale, Al Borsa reported yesterday, citing sources it said were close to the matter. Local and Gulf investors have lodged interest in the company, which the government reportedly considers one of the easiest state-owned firms to exit.

Remember: HHD tried to bring a strategic investor on board in 2020 but failed to find a buyer.

WATCH THIS SPACE- AD Ports looks set to take over management of Safaga Port: The final contracts for the 30-year concession agreement handing Abu Dhabi Ports the reins on the construction, management, and operation of the multipurpose Red Sea Safaga Port will be signed “within weeks,” Saif Al Mazrouei, the group’s ports chief, told Al Arabiya yesterday.

Background: Under the initial agreement signed in March, the Emirati port developer will invest up to USD 200 mn to establish the terminal, which is expected to be operational in 2Q 2025.

PSA-Your Uber commute is now going to cost you a little more: Ride-hailing service app Uber has raised its prices by 10% in Cairo and Alexandria on the back of fuel price hikes on Friday, Al Mal reports, citing messages sent to the company’s drivers informing them of the change.

Nobody likes price hikes, but Uber drivers shouldn’t have to foot the bill alone: Like the rest of us, drivers working for ride hailing apps are now spending 14% more on gasoline to fill up their tank after Friday’s hike and those that use compressed natural gas are facing a 22% uptick in their fuel bill. Ride-sharing app Careem also raised prices by 10% for the same reason on the day of the fuel price hike, according to Al Mal.

HAPPENING TODAY-

#1- Maait in Turkey Finance Minister Mohamed Maait is in Istanbul today to attend the Turkish-Arab Economic Forum.

#2- TransMEA 2023 wraps up at the Egypt International Exhibition Center: The four-day transport, logistics and infrastructure conference brings together thousands of industry leaders, experts and policymakers to discuss developments in the sector. We’ve got full coverage of yesterday’s events in this morning’s news well below.

HAPPENING TOMORROW-

#1- Inflation figures are out: Capmas and the Central Bank of Egypt will publish inflation data for October on Thursday, 9 November.

#2- The National Elections Authority will announce the final list of presidential candidates on Thursday, 9 November. The current list includes:

President Abdel Fattah El Sisi
Hazem Omar (Republican People’s Party)
Abdel Sanad Yamama (Al Wafd)
Farid Zahran (Egyptian Social Democratic Party)

Remember: The nation goes to the polls on 10-12 December. Egyptian expats will vote 10 days earlier on 1-3 December.

#3- It’s Egypts turn to host the Intra-African Trade Fair: Businesspeople and policy makers from across the continent are touching down in Cairo for the Intra-African Trade Fair that is kicking off at the Egypt International Exhibition Center complex tomorrow and will run until Wednesday.

HAPPENING NEXT WEEK-

#1- The Arab League is getting together on Saturday for an emergency meeting in Riyadh called for by Palestinian President Mahmoud Abbas. The league’s main goal at the moment is to establish a ceasefire in Gaza, Palestinian presidential advisor Mahmoud Al Habbash previously told AWP.

#2- Followed a day after by the Organization of Islamic Cooperation on Sunday for an extraordinary Islamic in the Saudi capital to “discuss the brutal Israeli aggression against the Palestinian people.” it said in a statement.

Saudi Arabia is still open to normalizing ties with the Israelis: That’s according to Investment Minister Khalid Al Falih, who said at a Bloomberg event in Singapore this morning that the issue “remains on the table” despite the war.

But: An agreement will be “contingent on a pathway to a peaceful resolution of the Palestinian question,” he said.

IT’S A BIG MORNING IN US POLITICS as Democrats take home clear wins in Kentucky and Ohio — two closely watched Republican-leaning states — just as Joe Biden gets ready to kick is 2024 election campaign into high gear. The Dems are also on the verge of holding the Senate in Virginia in what pundits suggest would be a further blow to Republicans. You can follow the blow-by-blow with live blogs at the Washington Post or the New York Times or check out wall-to-wall coverage on the homepages of Axios and Politico.

WATCH THIS SPACE- China is reportedly angling for a military base in Omanand Washington is really not happy, Bloomberg reports.

HELP GAZA-

Want to support relief efforts in Gaza, but don’t know how? We’ve got you. More than 1 mn people in Gaza have been thrown from their homes and every human being there lacks access to food, water, and fuel amid the most intense bombardment any population has endured this century.

The folks at Talabat are processing donations for a range of Gaza relief appeals by charities including the Egyptian Food Bank and Misr El Kheir. Pay in EGP using your credit card.

Or check out our list of charities to which you can make direct donations via bank deposit and / or Fawry.

MARKET WATCH-

Oil prices dip to three-month lows: Crude prices fell more than4% yesterday, with Brent crude prices dipping to just USD 81.61 a barrel, marking its lowest price since July.

The why: The oil market was responding to the release of weak trade data from China and renewed doubts about whether the Federal Reserve has finished raising interest rates, according to Bloomberg.

*** 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: Breaking down the agreements signed at TransMEA 2023

Tags:

energy Fuel prices ride-hailing transport Uber What We're Tracking Today

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Energy

ACWA and Hassan Allam to start construction of 1.1 GW wind farm early 2024

ACWA Power and Hassan Allam are going to start building the region’s largest wind farm in 2024: The partners expect to break ground on the USD 1.5 bn, 1.1 GW wind farm in the Gulf of Suez — the largest of its kind in the Middle East — early next year, Al Mal reported, citing officials at ACWA. It will take three years to build the farm in two phases, the daily reports.

Remember: ACWA Power and Hassan Allam Holding signed a 25-year power purchaseagreement with the Egyptian Electricity Transmission Company (EETC) last year to develop the project under a build-own-operate framework.

Where’s the money coming from? Some 70-75% of the funding will come through loans and the remainder will be self-financed by the investors, according to local media reported in November. The project is expected to reach financial close by 4Q 2024.

The farm is getting the attention of investors: The European Bank for Reconstruction and Development (EBRD) is eyeing a potential investment in the Suez facility, Harry Boyd-Carpenter, the EBRD’s managing director for climate strategy and delivery, previously told Enterprise. The Sovereign Fund of Egypt expressed last year interest in potentially acquiring a 10% stake.

The Madbouly government wants to make a massive investment in wind: Masdar signed a land allocation agreement with the Electricity Ministry earlier this year for a planned 10-GW mega wind farm. That farm and a separate 10 GW facility being built by Masdar / Infinity / Hassan Allam will each be the world’s largest wind farms when complete. In parallel, Scatec is looking to build a 5 GW wind farm.

ACWA is already a significant player in Egypt’s renewable sector: The company’s 200 MW Kom Ombo solar power plant last April got USD 114 mn in backing from a consortium of international lenders led by the EBRD. The company also has minority stakes in three plants in Benban and an upcoming project with the EETC to convert an electricity plant in Luxor to renewable energy.

ICYMI- We have big renewables ambitions: Egypt over the summer ramped up its renewables target to 42% of the country’s energy mix by 2030 instead of 2035 and upgraded its emissions reduction goal to 80 mn tons by 2030 from a previous goal of 70 mn tons. The government is aiming to produce 42% of its energy from renewable sources by 2030 and 60% by 2040.

Tags:

ACWA Power energy renewables windpower

WAR WATCH

Fighting in Gaza City as Israel widens ground offensive; CIA head in Egypt

In a new phase of the war, Israeli ground forces entered Gaza City last night in what the Israeli Defense Forces are portraying as a ‘targeted operation’ aimed at destroying Hamas’ tunnels, eliminating ammo dumps, and killing its senior commanders.

There are signs the fighting is intense: Israeli Defence Minister Yoav Gallant claimed that Israeli troops had advanced into “the heart” of the city where they believe Hamas’ leader in Gaza, Yahya Sinwar, is still located. The spokesperson for Hamas’ military wing, Abu Ubaida, said that its forces had destroyed 15 Israeli military vehicles on the outskirts of the city, including at the Shati Camp where intense fighting has been taking place. Israeli Prime Minister Benjamin Netanyahu said that the IDF had killed “thousands of terrorists.” Neither of the sides’ claims have been verified and neither has disclosed casualty figures.

YESTERDAY IN NUMBERS-

10,328: The number of Gazans who have been killed since 7 October. (Al Arabiya)
4,237: The number of children who have died in Gaza over the past 32 days. (Al Arabiya)
93: The number of trucks carrying aid crossed the border from Egypt into Gaza yesterday. (Palestinian Red Crescent)
569: The number of trucks that have entered Gaza since 7 October. Gaza received 500 trucks every day prior to the war. (Palestinian Red Crescent)
19: The number of Palestinians who entered Egypt yesterday to receive medical treatment. (Reuters)
500+: The number of foreign nationals and dual citizens that were evacuated from Gaza yesterday into Egypt, including the first Canadians to cross. (Reuters | Globe and Mail)
500k+: The number of Palestinians in north Gaza that are “on the brink of starvation” due to Israel’s siege. (ActionAid)

THE AID EFFORT- The UAE is setting up a field hospital in Gaza | France is in talks with Egyptian authorities to set up a military medical facility | Jordan airdropped medical aid to Gaza | Turkey has permission to sail two ships loaded with field hospitals and medical supplies into port in Egypt.

DIPLO-Washington is still pushing for a breakthrough on Israeli hostages: CIA Director William Burns has been in Israel and Egypt this week as part of a tour of regional capitals reportedly to secure the release of more of Hamas’ 240+ hostages. Burns was in Cairo yesterday for talks with President Abdel Fattah El Sisi, a day after a visit to Tel Aviv. A readout from Ittihadiya gave little away, noting only that the two sides discussed the need for a humanitarian ceasefire.

El Sisi held a phone conversation with French President Emmanuel Macron | Foreign Minister Sameh Shoukry talked with his Irish, Norwegian and Cypriot counterparts | Shoukry met the UN human rights commissioner Volker Turk | G7 diplomats are meeting in Japan to discuss the conflict | Russia: Israel nuke comment raises “ huge number of questions.”

FRICTION IN THE SPECIAL RELATIONSHIP? Differences between the US and Israel about the prosecution of the war have been aired in public this week, with the two sides evidently not on the same page about the need for a pause in the fighting and Netanyahu’s proposal to reoccupy Gaza after the conflict.

Three-day pause vs one-hour pause: Axios reported yesterday that Biden had pressed Netanyahu to agree to a three-day pause to allow the release of hostages, a proposal that was publicly shot down by the Israeli PM in a televised interview just hours later.
Reoccupying Gaza: The Biden administration has also gone public with its opposition to Netanyahu’s assertion that Israel will “indefinitely” control Gaza’s security post-war. “The president still believes that a reoccupation of Gaza by Israeli forces is not good. It’s not good for Israel, not good for the Israeli people,” White House spokesperson John Kirby told CNN yesterday.

US: *shrugs shoulders*. The reaction to the disagreements from Biden administration officials and the US press has been to cast Washington as a powerless actor unable to influence Israeli decision-making. A number of articles, including in the New York Times, the Washington Post, and Reuters, have discussed the “limits of US leverage” and the “few options” available to effect the war. “They’re watching a train wreck, and they can’t do anything about it, and the trains are speeding up,” one source told the Post. “The train wreck is in Gaza, but the explosion is in the region.”

Limited leverage? The US curbing the huge arms transfers to Israel, withholding some of its USD 3.8 bn in annual military aid, and refusing to exercise its UN Security Council veto might focus some minds in Tel Aviv.

Tags:

Abdel Fattah El Sisi DIPLOMACY Egypt-France relations Egypt-US relations Emmanuel Macron Israel Israel-Palestine conflict Middle East politics Palestine

LEGISLATION WATCH

Privatization, green hydrogen, labor law code feature prominently as Madbouly government talks up its legislative agenda

A busy legislative cycle with 58 ‘priority’ draft laws: The Madbouly cabinet reviewed yesterday some 58 draft laws on its priority list ahead of submitting them to the parliament at a future date, according to a cabinet statement.

Unsurprisingly, the state’s privatization program got a shout-out: Draft laws to help facilitate privatization and the sale of state assets to investors under the state ownership policy document got a mention from Parliamentary Affairs Minister Alaa El Din Fouad. With an ambitious plan in place to raise USD 5 bn from October 2023 to June 2024 and a projected USD 29 bn in debt repayments due in 2024, we’re not surprised it got a special mention. Proposed amendments to expand the jurisdiction of the economic courts bill so they can settle final higher-value appeals also got some attention.

The Madbouly government is still keen on its green hydrogen ambitions: Draft laws to grant incentives to green hydrogen investors, such as tax breaks under a new green hydrogen law, are also on cabinet’s priority list. That makes good sense: green hydrogen projects don’t just mean green energy, they means a whole lot of FDI. General Authority for Investment and Freezones (GAFI) head Hossam Heiba recently said that our green energy sector in Egypt is expected to receive more than USD 50 bn over the coming 10 years.

WATCH THIS SPACE- The draft labor law is also still on the priority list. The government pulled the bill from the House of Representatives earlier this year to redraft it after backlash from the business community, which said the original version was lopsided in favor of workers. Prior to the redraft, the bill would have introduced new labor rights, including legislating mandatory annual raises, caps on working hours, and longer maternity leave and notice periods, among other things. Labor unions have also had sharp criticism of the previous version of the bill.

Home owners and developers who have violated the building code may be allowed to reconcile with the state under a new act that is also on cabinet’s priority list, according to Fouad. The proposed act would replace a 2019 law designed to legalize informal buildings and to prevent structures built next to the Nile from being legalized.

Draft laws to protect you on the road and at work are also priorities: Fouad also mentioned the draft traffic law to toughen penalties for traffic violations.

Tags:

building code green hydrogen Legislation Watch state privatization program Unified Building Code

Automotive

Will a new digital platform and electric car incentives boost the auto industry?

The Madbouly government wants to give auto assembly and car part manufacturing a boost: Prime Minister Moustafa Madbouly met with the Supreme Council for the Automotive Industry to discuss ongoing efforts to promote the domestic assembly of vehicles and manufacturing of car parts as part of the National Automotive Industry Development Program that was launched in 2022, according to a Cabinet statement yesterday.

A localized and digitally connected auto industry: The meeting approved the launch of a new digital platform that will connect local car part suppliers, manufacturers, and assemblers to promote the localization of the industry. The platform that is “ready to launch” will be managed by the state-owned fintech player e-Finance and launched in 12 weeks, according to Cabinet spokesperson Sameh El Khasin, who was quoted in the statement.

More electric car manufacturing incentives are on their way, and they might already be working: Madoubly pushed for planned incentives to promote electric car manufacturing to be sped up and put into action and for limits to fossil fuel-powered auto imports to support both our localization efforts and climate change goals. Existing EV incentives might also already be working, as Al Nasr Automotive is close to signing another contract with a Chinese company and a local partner for the production of electric vehicles and that production lines are being modernized in preparation, a source from the Public Enterprises Ministry told Enterprise yesterday.

LNG-powered buses with 60% local components are also on their way: Buses made with 60% local components that run on LNG are also on their way and a few have already rolled off the production line, our source at the Public Enterprises Ministry told us. The Transport Ministry is currently negotiating with the currently unknown company to incorporate the vehicles into its fleet, our source added.

Tags:

automotive El Nasr Automotive EVs Local assembly Moustafa Madbouly renewables

Economy

US interest hikes are wreaking havoc in emerging markets — Egypt is unlikely to be immune

EMs are facing a “nightmare” from US interest rate hikes: An enduring period of interest rake hikes from across the pond is fuelling a “silent debt crisis” among many developing countries saddled with high foreign-currency debt piles, World Bank deputy chief economist Ayhan Khose warned in an interview with the Financial Times yesterday.

More countries are feeling the pinch: The sovereign debt of almost one quarter of emerging and developing countries is now trading at distressed levels (i.e. 10 percentage points or more higher than rates on US government bonds), the World Bank said. In 2019, the proportion of EMs with distressed debt was less than 5%.

Where it started: Higher global interest rates plus a stronger USD over the past 18 months have made debt more expensive for developing economies to pay off, contributing to a sharp sell-off in emerging-market bonds. Even though central bank rates are close to reaching their peak, investors have continued to remain on the sidelines on expectations that they will have to stay higher for longer, stymying the prospects of recovery for the asset class.

We’re among the most vulnerable: Egypt has the highest interest bill as a percentage of GDP globally and one of the world’s highest gross government debt-to-GDP ratios, leading Bloomberg to list us as the second-most vulnerable country in the world to a debt crisis. Rising rates and the fallout from the war in Ukraine has heaped pressure on Egyptian bonds, with yields on Egyptian 10-year bonds surging 75% since the beginning of 2022. The bonds are now trading almost 2,150 bps above US 10-years.

Tags:

economy emerging markets Financial Markets

LAST NIGHT’S TALK SHOWS

Pundits take over Egypt’s night-time talk shows to pontificate about Gaza

Political experts take over the airwaves: From Israeli studies professor Mohamed Aboud and the Arab League’s Hossam Zaki to former foreign minister Nabil Fahmy, everyone had something to say about the situation in Gaza.

The experts weigh in on the situation in Gaza: Israel has had a plan to get rid of the over 2 mn Palestinians in Gaza and to push displaced Palestinains into Sinai for years, former foreign minister Nabil Fahmy told Masa’a DMC (watch, runtime: 7:31), referencing a plan that Egypt has publicly objected to many times throughout recent decades. Professor of Israeli studies Mohamed Aboud touched on the same topic on Ala Maso’uleety, and told viewers that Israel is trying to persuade Egypt into taking in Gazans by offering to invest large sums in the economy and offering to solve our water crisis using Israeli technology. (watch, runtime: 3:08).

The Arab League is meeting on Saturday: Arab foreign ministers are getting together tomorrow ahead of the Arab League’s emergency meeting scheduled for Saturday, Arab League Assistant Secretary-General Hossam Zaki told El Hadidi (watch, runtime: 17:33). “The final decision will have the basic outline of the Arab political stance regarding the war in Gaza, which will cover issues like the need for a ceasefire and the need to prevent the displacement of Gazans,” he added. The meeting comes after host country Saudi Arabia postponed the fifth edition of the Arab-African Summit initially scheduled for Saturday and it will be followed by an extraordinary Islamic Summit hosted by the Organization of Islamic Cooperation.

Could Israel’s ownership of nuclear weapons come up in the meeting? “We need the Arab League to make moves to push Israel to join the Treaty on the Prohibition of Nuclear Weapons,” Ala Maso’uleety’s Ahmed Moussa said (watch, runtime: 7:53). His comments come following an Israeli minister’s threat to wipe out Gaza with nuclear weapons. Arab League head Ahmed Aboul Gheit has sent letters to the UN, its Security Council, and the Chinese government, in which he expressed his concern regarding the Israeli minister’s comments and the country’s ownership of nuclear weapons.

Sisi x CIA: President Abdel Fattah El Sisi met yesterday with CIA Director William Burns, who stopped in Egypt during his regional tour focused on the situation in Gaza and the release of the roughly 200 people behind held hostage. We have the details in this morning's War Watch, above. “According to my personal analysis, this meeting will change the US stance,” Moussa said (watch, runtime: 7:43). Al Hayah Al Youm (watch, runtime: 1:31) also had coverage.

Speaking of the US: US President Joe Biden has been pushing the Israeli government to commit to a three-day truce, a move that was shrugged off by Prime Minister Benjamin Netanyahu, said Egyptian Center for Strategic Studies head Khaled Okasha on Yahduth Fi Masr. “The three-day tactical truce proposed comes with the aim of Hamas releasing 10-15 hostages and compiling a database of the hostages being held,” Okasha explained to host Sherif Amer (watch, runtime: 5:39).

Tags:

Abdel Fattah El Sisi Israel-Palestine conflict LAST NIGHT’S TALK SHOWS Middle East politics

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Also on our Radar

Debt news from Tatweer Misr + Raya. Plus: Expat car-for-FX initiative registers 100k in first week, Tantawy on trial

DEBT-

#1- AAIB extends EGP 3.5 bn facility to Tatweer Misr: Real estate developer Tatweer Misr is taking out an EGP 3.5 bn facility from the Arab African International Bank (AAIB), it said in a press release. The developer will use the funds to accelerate the construction of its Il Monte Galala project in Ain Sokhna and Bloomfields in Mostakbal City.

Advisors: AAIB is lead arranger, coverage guarantor, facilitation agent, and guarantee agent. Matouk Bassiouny & Hennawy is acting as AAIB’s legal advisor and Sarie El Din and Partners is Tatweer Misr’s legal advisor on the transaction.

#2- Raya wants in talk for finance: Raya Holding’s IT arm Raya Information Technology is currently in talks for facilities to support new tech solutions and IT infrastructure projects, it said in an EGX disclosure (pdf).

FX WATCH-

Relaunched expat car-for-FX initiative clocks in 100k registrations in first week:Around 100k Egyptians residing abroad have registered to take part in the expat car-for-FX initiative in only one week since its launch, the Finance Ministry said in a statement on Tuesday. The car-for-FX initiative allows Egyptians living abroad to import cars tax-free, provided that they deposit the equivalent of saved duties and taxes in a five-year FX certificate of deposit.

High hopes: The current iteration of the program could generate up to USD 1.1 bn in hard currency receipts, Parliamentary Affairs Minister Alaaeddin Fouad said in October.

POLITICS-

Tantawy is going on trial: Former Egyptian presidential candidate Ahmed Al Tantawy, alongside 22 of his campaign staff, will stand trial on 28 November for asking supporters to print out their own endorsement forms and hand them in instead of using the election authority’s official forms, according to the AFP. Tantawy’s charge of circulating electoral documents without the necessary legal authorization, according to the newswire, comes a month after he dropped out of the presidential race last month after falling short of the 25k minimum needed to run.

Tags:

ALSO ON OUR RADAR Arab African International Bank Bonds debt debt watch Election 2023 foreign exchange National Elections Authority Raya Holding Raya Information Technology Tatweer Misr

PLANET FINANCE

Saudi Aramco, Fertiglobe report lower earnings following bumper 2022

Saudi Aramco’s 3Q earnings drop on the back of production cuts and falling oil prices: Saudi oil giant Saudi Aramco posted a 23% y-o-y drop in its 3Q earnings, according to an earnings release (pdf) yesterday. Net income fell to USD 32.6 bn in the quarter, down from USD 42.4 bn in the same period last year. The oil company that is 90% owned by the Saudi government and 8% owned by the country’s Public Investment Fund (PIF) pointed towards the “impact of lower crude oil prices and volumes sold,” which is widely understood to stem from the country’s voluntary cuts to production and a particularly good year for oil in 2022.

But investor payouts are still a go: Despite its contraction in earnings, Aramco paid dividends worth USD 29.4 bn to its shareholders, Bloomberg reported. As the majority shareholder, the Saudi government relies on dividends from the country’s largest company for many of its mega projects and propping up the state budget.

Speaking of falling prices: Brent crude closed4.2% down yesterday at only USD 81.61 a barrel partly on the back of a market correction from when fears that Israel’s war on Gaza would escalate into a regional conflict shook the markets and sent oil prices climbing.

Fertiglobe earnings return to pre-Ukraine war levels: Earnings at MENA fertilizers firm Fertiglobe continued to normalize following a bumper 2022 in 3Q 2023, which saw revenues fall 60% from a year earlier due to lower prices, according to its latest earnings release (pdf). The company reported USD 525 mn in revenues for the July-September quarter, down sharply from 3Q 2022 when the company raked in USD 1.3 bn due to soaring prices. Fertiglobe saw a similarly large pullback in net income, falling 86% to USD 41 mn.

Remember: Global prices of fertilizers spiked at the onset of the war in the Ukraine, owing to Russia — the world’s largest supplier of fertilizers — facing global sanctions.

EGX30	23,393	+1.5% (YTD: +60.2%)
USD (CBE)	Buy 30.83	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	19.25% deposit	20.25% lending
Tadawul	10,946	0.0% (YTD: +4.5%)
ADX	9,551	0.0% (YTD: -6.5%)
DFM	3,990	+0.8% (YTD: +19.6%)
S&P 500	4,378	+0.3% (YTD: +14.0%)
FTSE 100	7,410	-0.1% (YTD: -0.6%)
Euro Stoxx 50	4,153	-0.1% (YTD: +9.5%)
Brent crude	USD 81.61	-4.2%
Natural gas (Nymex)	USD 3.14	-3.8%
Gold	USD 1,973.50	-0.8%
BTC	USD 35,546.41	+1.5% (YTD: +115.6%)

THE CLOSING BELL-

The EGX30 rose 1.5% at yesterday’s close on turnover of EGP 4.3 bn (74.4% above the 90-day average). Regional investors were net sellers. The index is up 60.2% YTD.

In the green: MOPCO (+7.3%), Credit Agricole (+6.5%) and CIRA (+6.3%).

In the red: E-Finance (-4.9%), Juhayna (-2.5%) and TMG Holding (-2.4%).

Tags:

Abu Dhabi Investment Authority Aramco emerging markets Fertiglobe fertilizers Financial Markets oil and gas Planet Finance

HARDHAT

Egypt awards contracts for logistics zones, dry port + inks agreements to give our transport sector a boost

Breaking down the agreements signed at TransMEA 2023: Egypt signed multiple agreements with local and international firms on the third day of the ongoing TransMEA 2023 transport expo in Cairo that aim to boost our maritime, logistics and land transport sectors, according to several statements (here, here, here and here). We also inked more agreements to localize manufacturing for our transport sector.

One caveat: Most of the agreements are in the early stages, with economic feasibility studies still ongoing, meaning the exact values of the contracts and how they’ll be financed is still unclear. There’s a chance that some of these may not leave the drawing board.

#1- LOGISTICS

IDG snags Kom Abu Radi dry port contract: Samcrete Group subsidiary Industrial Development Group (IDG) inked an MoU to establish, manage and operate a dry port in Kom Abu Radi, which will serve the area’s fertilizer, cement, and electronics factories, as well as Supply Ministry-affiliated bulk commodity silos. The port will also be connected by railway line to the main railway network.

What’s next: The company will conduct an economic feasibility study in the next four months, after which it will submit a financial bid, and another more detailed technical proposal in 10 months, it said in a statement (pdf).

Orchid + Libyan-Egyptian consortium to operate two new logistics zones:Orchid Kuwaiti Egyptian Company inked an MoU to set up, operate and manage a logistics zone in the Sixth October Industrial Zone, with a period of four months slated for the economic and feasibility studies, after which the company will submit a financial bid, the statement said. A Libyan-Egyptian consortium comprising Al Raeid Engineering Consultants and Al Saed Company also inked an agreement to establish, operate and manage a 400-feddan logistics zone in Al Salloum city on the Libyan border, for which the consortium will conduct a feasibility study in two months.

#2- MARITIME

The Transport Ministry also oversaw a number of agreements signed to help strengthen Egypt’s maritime sector, including a new Egypt-Italy ro-ro line, as well as cooperation agreements for technical capacity building and port management.

A boost for our state-owned maritime firms: Cyprus-based Columbia Shipmanagement and Egypt-based Pan Marine Group inked an MoU that will see the companies work on developing Egypt’s state-owned maritime firms by employing a new cohort of 1.5k workers and financing the construction and acquisition of new vessels, the statement said.

Egypt-Italy shipping line: Egypt also inked an agreement with ship operator DFDS Mediterranean for a weekly ro-ro shipping line for perishables between Egypt’s Damietta Port and Trieste port in Italy to boost trade between the countries. The two countries’ customs authorities also inked an agreement to help facilitate shipping processes for the shipping line, the statement said.

ALSO- The Alexandria Port and the Chinese port of Guangzhou are also partnering up to exchange expertise in port management and smart, green ports.

WATCH THIS SPACE- Omani logistics firm Asyad is eyeing investments in SCZone: Omani state-owned logistics provider Asyad is interested in cooperating on maritime and logistics projects within the Suez Canal Economic Zone, a delegation from the company said on the sidelines of the event.

#3- LAND TRANSPORT

Unified transport card + app coming our way: Italian IT firm Almavivaand Transport Information Technology(TransIT) signed an MoU to implement a unified, cross-platform transport card that can be used for the metro, the light rail transit (LRT), public and private transport buses, the monorail, and the bus rapid transit (BRT) system. The Transport Ministry is also planning to develop an app for various transport services, including public transport, bike sharing and taxis, that allows users to book rides in advance.

Auto loans for land freight players: The National Bank of Egypt signed an agreement to finance car and auto parts purchases for Land Transport Authority-licensed transport companies.

PLUS- Freight brokers could get licenses online: The ministry inked an agreement to issue licenses for land freight brokers online, the statement said, without disclosing details.

AND- The third day saw more agreements to localize transport infrastructure: The National Egyptian Railway Industries Company (NERIC), a joint-venture between the state and the private sector, signed two framework agreements to localize manufacturing during the event.

#1- BRT: NERIC inked an MoU with Chinese companies Hunan CRRC Intelligent Transport Technology, Zhuzhou CRRC Times Electric, and Norinco International Cooperation to localize the manufacturing of rapid transit systems;

#2- Railway equipment: NERIC also inked an agreement with Hungarian firm Ganz Motor and its agent in Egypt, Tahawy Rail, to localize the manufacturing of Ganz spark plugs for railways.

ICYMI: The ministry also inked a slew of agreements on the second day of TransMEA with Chinese, European, and local companies to localize manufacturing in the transport sector and complete key state transport projects like the light-rail transit (LRT), high speed rail (HSR), and the metro expansion. The details:

LIGHT RAIL- The Aviation Industry Corporation of China (AVIC) and China Railway Major Bridge Engineering Group Co. inked a framework agreement to design and construct the 16-km fourth phase of Cairo’s LRT project that will extend the route into Tenth of Ramadan City. AVIC — the main contractor for the LRT project — also signed an MoU for the fifth phase of the project that will reach into the new capital as well as an MoU for an light electric train that will link Al Rehab to the new capital.

HIGH SPEED RAIL- Egypt-focused contractor El Didi Group and the Chinese Railway Group Limited (CREC) inked an MoU for a planned 250-km long high-speed rail line between Port Said and Abu Qir. In addition, a number of local and international companies signed contracts to design, supply, and install the electromechanical systems for the 1.8k km national high-speed rail project, where Orascom Construction, Elsewedy Electric and Arab Contractors secured the contract for the first line running between Ain Sokhna and Marsa Matrouh. Meanwhile, Siemens Mobility, Orascom Construction, and Arab Contractors were tasked with installing the systems for the second Sixth of October-Aswan line and the third Hurghada-Luxor line.

METRO-Orascom Construction inked a contract to build the civil works for the stretch of Metro Line 4 between Giza and Fustat. In addition, a contract was signed with Spain’s Typsa Group to provide consulting services ahead of conducting preliminary studies to extend Metro Line 1 (Helwan to New El Marg) to Shibin El Qanater. Meanwhile, Spain’s Construcciones y Auxiliar de Ferrocarriles (CAF) inked two MoUs: one to extend a previous maintenance and upgrade agreement for 23 trains at Metro Line 1 and the other to implement a similar agreement for 39 trains at Metro Line 2 (El Mounib through Shubra El Kheima).

ALSO- The Egyptian Railway Authority inked a terms and conditions agreement with the Egyptian National Railway Industries Company (NERIC) to assemble 500 rolling stock, along with their maintenance and spare parts, over the span of 15 years. NERIC also linked up with Spain’s CBS Group through its subsidiary GTS to set up a local manufacturing plant for signaling devices.

Your top infrastructure stories for the week:

Gas has started flowing in East Damanhour: German oil giant Wintershall Dea has started gas production at its East Damanhour onshore concession.
Tunnels authority wants more financing for Cairo Metro Line 4: The National Tunnels Authority (NTA) is looking to secure an EGP 17 bn loan from a consortium of local banks to fund the construction of the Cairo Metro Line 4.
Orascom Real Estate (ORE) has secured EGP 6 bn loanto fast-track construction at its O West project in Six October.

Tags:

Hardhat logistics Manufacturing Samcrete Supply Ministry transport

CALENDAR

NOVEMBER

8 November (Wednesday): Turkish-Arab Economic Forum 2023, Istanbul.

9-15 November (Thursday-Wednesday): Intra-African Trade Fair, Cairo.

12 November (Sunday): House of Representatives to reconvene.

12 November (Sunday): Deadline for technical and financial offers for Misr Aluminium Company rehabilitation project (extended from 12 October)

14-15 November (Tuesday-Wednesday): Destination Africa, Royal Maxim Palace Kempinski Hotel.

14-15 November (Tuesday-Wednesday): Egypt VC Summit, Conrad Hotel.

15 November (Wednesday): Deadline for MTO to buyback Dice Sports and Casual Wear’s 46.9% Stake.

15-24 November (Wednesday-Friday): Cairo International Film Festival, Cairo.

19-22 November (Sunday-Wednesday): Cairo ICT, Egypt International Exhibition Center.

22 November (Wednesday): Deadline to apply to FRA for credit rating license.

22 November (Wednesday): The EGY-GCC Business Forum opening session.

23 November (Thursday): Worldview Education Fair, Cairo. (Register here)

30 November-12 December (Thursday-Tuesday): COP28, Dubai.

Signposted to happen some time in November:

Bidding deadline for 5 gold mine concessions in the Eastern Desert (TBC).

DECEMBER

1-3 December (Friday-Sunday): Egyptian expats vote in the presidential election.

4-7 December (Monday-Thursday): Egypt Defence Expo, Egypt International Exhibition Center.

9-15 December (Saturday-Friday) :The Engineering Export Council of Egypt’strade mission to Saudi Arabia.

10-11 December (Sunday-Monday): eGlobe Expo, St. Regis Almasa Hotel, Cairo.

10-12 December (Sunday-Tuesday): Voting in presidential election takes place in Egypt.

12-13 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

12-14 December (Tuesday-Thursday): Food Africa Expo, Egypt International Exhibition Center.

20 December (Wednesday): End of sugar export ban.

21 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

Signposted to happen sometime in December:

Gov’t expects to finalize sale of a stake in military-owned bottled drinks company Safi
Gov’t expects to finalize stake sale for military-owned fuel retailer Wataniya.
Gov’t expects to finalize sale of Zafarana wind farm
Kenyan trade conference in Egypt.

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

2H 2023: Egyptian government expected to sign agreements with a consultant for the EuroAfrica electricity interconnector.

2H 2023: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan expected to hold a summit.

3Q 2023: E-Finance to launch in Saudi Arabia.

4Q 2023: EGX to launch its new futures exchange.

4Q 2023: EGX to launch a shariah-compliant index.

End of 2023: A Developments’ first phase of the Lazoghly development completed.

2024: Standard Chartered Bank to open a branch in Egypt.

25 February 2024 (Sunday): Deadline for bidders for oil and gas expansion in the 23 new regions.

Q1 2024: Opening of the new developed Pyramids Plateau in Giza.

June 2024: Gov’t expects to finalize sale of Beni Suef combined-cycle power plant.

1H 2024: Gov’t expects to finalize sale of four water desalination plants.

2H 2024: Gov’t to launch the Cairo Ring Road BRT buses.

End of 2024: The launch of the high-speed train line linking Ain Sokhna with Al Alamein City.

November 2024: Egypt to host the 12th session of the World Urban Forum (WUF12).

2Q 2025: Safaga Terminal 2 to start operations.

2024

JANUARY

7 January (Sunday): Coptic Christmas.

17 January (Wednesday): A delegation of Egyptian companies to visit Istanbul.

25 January (Thursday): Revolution day.

FEBRUARY

11 February (Sunday): The deadline to apply for the Chicago Booth Executive Program

APRIL

9 April (Tuesday): Eid El Fitr (TBC).

25 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC).

MAY

1 May (Wednesday): National holiday in observance of Labor Day (TBC).

5 May (Sunday): Coptic Easter.

6 May (Monday): Sham El Nessim (TBC).

29 May (Wednesday): Chicago Booth Executive Program

JUNE

15-19 June (Saturday-Wednesday): Eid El Adha (TBC).

30 June (Sunday): June 30 Revolution Day.

JULY

7 July (Sunday): National holiday in observance of Islamic New Year (TBC).

23 July (Tuesday): Revolution Day.

SEPTEMBER

2-5 September (Monday-Thursday): Egypt International Airshow, El Alamein International Airport.

15 September (Sunday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER

6 October (Sunday): Armed Forces Day.

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