Government hikes energy prices: The government raised energy prices by as much as 55% for fuel products and 100% for cooking gas, Prime Minister Sherif Ismail announced on Thursday (watch, runtime 14:40). “We took part of the value of the subsidies allocated to energy to use it for other subsidies that are important for limited-income and poor individuals,” said Ismail. The hike — third for fuel products since July 2014 — comes following a slew of measures enacted before the Eid break meant to strengthen the social safety net, including raises to pensions and ration card allocations. Fuel prices as of last Thursday are as follows:

• 95 octane petrol at the pumps will now cost EGP 6.60 per liter, up by 5.6% from EGP 6.25;
• 92 octane petrol rose by 43% to EGP 5.00 per liter from EGP 3.50 per liter;
• 80 octane petrol increased by 55% to EGP 3.65 per liter from EGP 2.35;
• Diesel fuel will also sell for EGP 3.65 per liter, up from EGP 2.35 before;
• Kerosene as well rose to EGP 3.65 per liter from EGP 2.35;
• Cooking gas cylinders doubled in price to reach EGP 30;
• Gas cylinders for commercial use also doubled in price to reach EGP 60;
• Compressed natural gas for automobiles rose by 25% to EGP 2 per cubic meter from EGP 1.60;
• Natural gas for households increased to between EGP 1 per cubic meter and EGP 2.25 depending on one’s consumption tier;
• Cement factories will also be paying a paying a higher price of EGP 3.5k per tonne of fuel oil (mazot) compared to EGP 2.5k previously.

The price of natural gas to industry will remain unchanged, according to a report from the Cabinet Information and Decision Support Center (IDSC). The report also states bus, metro, and railway tickets, will not rise, according to Al Shorouk.

Impact of the hike: Inflation, already at around 31.1%, is expected to accelerate 4-5% after this latest reduction of fuel subsidies, said the Prime Minister,according to Bloomberg. According to a CAPMAS report (pdf), transportation costs will rise 5-15%. The governorates of Giza andMarsa Matrouh have already allowed taxi fares to officially increase, while drivers in Cairo and elsewhere have been unilaterally raising prices.

Reactions to the price the hikes coming from the IMF were positive. “The fuel price increases, together with the higher social spending already announced, will help the budget while protecting the poor,” Chris Jarvis, the IMF’s mission chief to Egypt, told Bloomberg.

The private sector appears to have taken the move in stride, with the FEI noting that the move will have a marginal effect costs in most industries, but are vital to economic reform efforts, according to Al Mal. Naguib Sawiris was of the same mind, telling Lamees Al Hadidi on last night’s Hona Al Asema that it was a “brave move.” “The government is getting all the painful measures done” this fiscal year, said Arqaam Capital’s Reham El Desoki. “That’s probably the government’s strategy: ‘Now, the worst is probably behind us,’”she tells Bloomberg.

The House hasn’t taken well to the news: Rep. Mostafa Bakry submitted a request to House Speaker Ali Abdel Aal to discuss the decision on Monday and to summon Sherif Ismail and the petroleum and finance ministers, according to Al Mal. Rep. Mortada El Araby announced he will submit his resignation on Tuesday in protest.

The private sector will adjust pricing as a result of fuel price rises at the same time as the value-added tax rises to 14% from 13%. Cuts to fuel subsidies will make it 3% more expensive to produce food, said an official at the Federation of Egyptian Industries’ (FEI) food industries division. Auto parts will rise 5-7% in price, Al Mal quotes an industry official as saying, and ride-hailing services Uber and Careem are also studying price increases.

But companies (food producers in particular) should tread lightly: The Supply Ministry will be issuing new directives that outline “more severe punishments” for those who engage in price gouging, Supply Minister Ali El Moselhy said after a cabinet meeting on Saturday, Al Shorouk reports. Meanwhile, the Health Ministry has denied the cost of meds will increase after reports claimed the cost of 5k products will rise, according to the newspaper.

The first draft of the executive regulations to the Investment Act is out: After weeks of closed-door sessions, a draft of theInvestment Act’s executive regulations is out (which you can view in full here courtesy of AMAY). The 108-page document outlines the state’s investment-promotion framework for everything from manufacturing to healthcare. The regulations also clarify which companies or investments are eligible for incentives. Among the document’s highlights:

• Projects eligible for the incentive program must begin production or break ground within the first three years of the executive regulations coming into effect;
• 50% of manufacturing inputs and raw materials must be sourced locally in order for an investment to be eligible;
• 20% of total output has to be exported for an investment to qualify;
• Incentives may also be granted based on the level of corporate social responsibility activities;
• Foreign investors are guaranteed the right and ability to repatriate profits and earnings;
• Foreign labor must not exceed 10% of the total workforce, except during exceptional circumstances which would allow for a cap of 20% if a General Authority for Freezones Zones and Investment (GAFI) assessment committee concurs that the higher level is required.

As for private freezones, the GAFI will only allow for the establishment of new private freezones if it decides that existing state-run zones won’t serve the same purpose. Additionally, companies established in private freezones must have a capital of no less than USD 10 mn. Companies in private freezones must also employ at least 500 workers and export at least 80% of their total output. Want to produce alcoholic beverages, weapons and ammunition, fuel, fertilizers, or any other energy-intensive product in a private freezone? Forget it -- they’re all on the list of proscribed activities. GAFI will also be forming a committee to draft a comprehensive development plan for the areas, Al Mal reported.

Meanwhile, the Investment Ministry will be working on new digital services for the one-stop shop service centers created under the act, meant to serve as a one-stop-shop for all related matters. E-payments platform Fawry has signed on to provide electronic payment solutions that will allow investors to automatically transfer fees, according to AMAY.

The incentives could help Egypt reach its goal of attracting USD 8.7 bn in foreign direct investment in 2017, Investment Minister Sahar Nasr said, Al Mal reports. Total investments will increase to EGP 482 bn by end of 2017, compared with EGP 290 bn in 2014, Nasr added.

EAEF’s James Harmon talks up Egypt’s “right macro fundamentals” to US Congress: Egypt’s economy currently has the “right macroeconomic fundamentals” to attract foreign direct investment, said Egyptian-American Enterprise Fund (EAEF) Chairman James Harmon in a glowing report on Egypt’s economic recovery to the US House of Representatives’ Committee on Foreign Affairs. “This creates a multiplier effect and helps bolster the government’s economic reform agenda,” he added. Harmon praised the passing of the Investment Act and the Ismail cabinet’s approval of the Bankruptcy Act, according to a statement put out by the Investment and International Cooperation Ministry. Harmon’s report did not shy from naming concerns which might hinder this recovery, the prime culprits being Egypt’s “underdeveloped” private sector. “[Egypt] suffers from gaps in financing, infrastructure and talent which curbs its ability to expand and grow the economy, which would result in underserved markets, high unemployment rates and low financial inclusion,” he added in the report.

Ratings agency Fitch has affirmed Egypt's Long-Term Foreign- and Local-Currency Issuer Default Ratings at B with a stable outlook. The main factors that Fitch says, individually or collectively, could lead to a positive action are: Continued progress on fiscal consolidation leading to declining government debt/GDP, sustained stronger economic growth supported by reforms to the business environment leading to increased investment and employment, and further strengthening of international reserves following a sustained narrowing of the current account deficit and higher net foreign direct investments. The rating assumes the political environment will be more stable than in 2011-13 “although sporadic, and at times serious, attacks on security forces are assumed to continue and underlying political and social tensions will remain.”

Meanwhile, Moody’s said Egyptian banks will benefit from the improved tourism prospects, in an emailed report. “The increase in tourism is positive for Egyptian banks because it enhances the repayment capacity of borrowers directly and indirectly linked to tourism. Set to benefit the most from the increase is CIB “because it has the largest exposure to the sector.”

Compromise on the automotive directive at hand? We might yet live to see the automotive directive issued in the near future as talks between the Trade and Industry Ministry and the legislation’s detractors appear to be progressing, according to statements by Egyptian Automobile Manufacturers Association (EAMA) head Hussein Moustafa to Youm7. He (being one of those detractors) implied a draft which appeals to both importers, who are against the legislation, and manufacturers to be ironed out “soon.” No details were provided on compromises reached. The bill — which offers incentives to encourage local assemblers to move further up the value chain into manufacturing — has been in a deadlock for several months due to opposition from car importers and the EU. But the Trade and Industry Ministry has been engaged in a little shuttle diplomacy (pun not intended) to salvage the legislation, forming a committee to look into breaking the deadlock.

Ride-hailing Apps Bill to include provisions for micro-buses? The Investment Ministry has reportedly requested withdrawing the Ride-hailing Apps bill currently before the House of Representatives to include provisions which would presumably allow hailing micro-buses on demand, according to Al Masry Al Youm which is citing the ministry. While we applaud efforts to expand the growth of ride-sharing apps, why anyone would want to hail the Tazmanian Devil of the roads is beyond us. Untamed wildlife — especially those that shoot smoke in your face — are best kept in their natural habitat (in this case, the endangered species list).

Export Development Authority rolls out five-year strategy: The Trade and Industry Ministry’s Export Development Authority (EDA) has completed its new export promotion strategy for 2017-2023, Minister Tarek Kabil said on Tuesday, Al Shorouk reported. The strategy relies on streamlining export procedures, putting in place an authority to ensure the quality of exported products, increasing Egypt’s participation in international expos, and offering technical assistance programs to exporters. The EDA has also prepared a study on the performance of Egypt’s agricultural exports over the past three years to help exporters improve their operations, according to EDA head Sherine El Shorbagy. The agriculture and trade ministries had previously saidthey are planning to impose internationally quality standards after Saudi Arabia and other GCC countries banning imports of Egyptian strawberries and peppers.

Hyundai Rotem lands EUR 350 mn contract to supply metro cars: The National Authority for Tunnels signed a c.EUR 350 mn agreement with Hyundai Rotem to supply 32 air-conditioned cars for the Cairo Metro lines Three and Four on Thursday 22 June, according to a statement from the Ismail cabinet. 30% of the order will be assembled and manufactured domestically, said Transportation Minister Hisham Arafat. The order makes up half of the 64 cars the government plans to get for the new metro lines, Arafat added. The agreement follows a USD 575 mn contract with General Electric to supply 100 locomotives.

Meanwhile, the National Railway Authority (NRA) is in talks with potential suppliers to manufacture 1,000 train cars instead of the previously agreed-upon 700, sources from the authority tell Al Borsa. The move is part of the NRA’s plan to supplement its train car fleet with 300 new locomotives over the next five years. Minister Arafat had previously said that it was deliberating two rival bids from Italy and Hungary for the 700 cars, and that Italian companies offered to supply the train cars 30% cheaper than the nearest offer. The NRA expects to complete its negotiations before year-end.

EFG Hermes has topped the securities brokerage league tables during 2Q17, with a whopping 59.6% market share of transactions, according to Al Borsa. HC Brokerage jumped to second place with a reported 22.5% market share, followed by Beltone at 4% and Mediterranean for Brokerage at 3.2%.

Hisham Talaat Moustafa released and back at the helm: former MP and chairman of Talaat Moustafa Group’s (TMG) real estate arm Hisham Talaat Moustafa was released as part of the pardons President Abdel Fattah El Sisi issued over ahead of the Eid break, TMG has already reinstated Mostafa as CEO and Managing Director, according to a regulatory filing to the bourse. Moustafa had been convicted of murdering Lebanese singer Suzanne Tamim. Bloomberg also has the story.

President Abdel Fattah El Sisi appointed on Thursday new heads to three judicial bodies, marking the first appointments by presidential decree after the controversial amendments to the Judicial Authorities Act were passed in April, Al Masry Al Youm reports. The swearing-in ceremony for Magdy Aboulela as President of the Court of Cassation (the nation’s highest appeals court), Rashida Fathallah as Chairman of the Administrative Prosecution Authority, and Hussein Abdo Hamza as Chairman of the State Lawsuits Authority took place yesterday. Under the amendments, El Sisi also has the power to appoint the head of the Council of State, but the current council head has yet to complete his term.

The Ismail cabinet approved draft legislation giving individual government agencies powers to reclaim and seize their respective unlawfully occupied land. The law will also set about regulations for the seizures process, whose costs will be borne by those occupying the land. The move is part of a nationwide crackdown on unlicensed developments on state-owned land. Other key decisions taken by the cabinet over the break include:

• Approved amendments to the Nuclear Activities Act which would delineate responsibility for any Homer Simpson-type nuclear catastrophe;
• Gave its preliminary approval of a draft law setting up CCTV cameras in public spaces;
• Sanctioned the establishment of a special economic zone for the Golden Triangle region;
• Set new water utility fees on developments;
• Granted a six-month extension on all contracts with the private sector signed between 1 March and 31 December 2016, making eligible for compensation under the Contractors’ Compensation Act, which the Housing Minister says will be issued within days, according to Al Masry Al Youm;
• Approved a presidential decree extending the nationwide state of emergency.

Abraaj Group is reportedly planning an IPO of South African food and personal care maker Libstar, which may value the firm at as much as USD 1 bn, according to Bloomberg. Abraaj has reportedly tapped JPMorgan Chase & Co. and Standard Bank to manage the IPO which it hopes would raise USD 300 mn. There is also talk of plans to list shares of Libstar in the London Stock Exchange, though no confirmation has come down from Abraaj on the IPO. The emerging markets private equity firm had acquired Libstar three years ago.