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Wednesday, 26 Jun 2024

What We're Tracking Today
Energy
Fx Watch
A Message From Bcg
Startup Watch
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Hardhat
Calendar

Gov’t to end summer blackouts by third week of July with USD 1.2 bn energy import plan

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Today at a glance

1

Energy

Government pledges to end power cuts by third week of July with USD 1.2 bn set aside for energy imports and other initiatives.
2

FX WATCH

Banque Misr and NBE follow CIB in halving FX commissions and raising credit card limits.
3

Startup watch

Connect Money secures USD 8 mn in seed funding to expand its range of banking services in North Africa.
4

LAST NIGHT’S TALK SHOWS

Rolling blackouts remained front and center on the airwaves for the third consecutive night.
5

ALSO ON OUR RADAR

CI Capital gets the preliminary greenlight to launch an EGX33 fund.
6

ALSO ON OUR RADAR

Qalaa Holdings to pay USD 500 mn of its subsidiary Egyptian Refining Company’s debts by the end of the year.
7

PLANET FINANCE

EM just had the busiest day of the year on the bond market.
8

HARDHAT

The EU is putting aside EGP 100 bn to invest in Egypt’s drinking water infrastructure through 2030.

Wednesday, 26 Jun 2024

What We're Tracking Today
Energy
Fx Watch
A Message From Bcg
Startup Watch
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Hardhat
Calendar
1

What We're Tracking Today

The EU-Egypt Investment conference is just three days away

Good morning, friends. The local business news has been heating up throughout the week, but unfortunately not as much as the weather. Rolling blackouts are once again the main topic of conversation in the local press and on every street corner with the government responding to public frustration with a pledge to do away with blackouts over the summer months starting the third week of July.

We’ve battled through power cuts to bring you today’s issue with the latest on the power cut saga, promising news of a return to normalcy in the banking system as more banks slash FX commissions in half, the race to be the first fund tracking the EGX33, and much, much more. So without further ado, let’s jump into today’s issue.

PSA-

Private sector workers will also be getting a long weekend to mark the eleventh anniversary of the 30 June revolution, the Labour Ministry said in a statement yesterday. We heard earlier this week that the public sector will be taking the day off, but we’re still waiting for confirmation that banks and the EGX will follow suit.

WEATHER- It’s more of the same in Cairo today, with a high of 41°C and a low of 27°C, according to our favorite weather app.

Alexandria is also not looking too different to yesterday, with a high of 36°C and a low of 23°C.

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

** Want to subscribe? Tap or click here to get your own copy delivered every weekday before 7am Cairo time — without charge.

HAPPENING TODAY-

In the House today: MPs are set to vote on a USD 47 mn extension to a USD 125 mn USAID grant to back rural development. The House will also be voting on whether Egypt should join the Fund for Export Development in Africa.

ALSO- Tourism Minister Ahmed Issa will be attending a Tourism Committee meeting today to look further into the causes that led to the catastrophic death count among Egyptian pilgrims this year.

ICYMI: MPs yesterday gave preliminary approval to amendments to the law regulating the performance of economic courts, and approved a EUR 250 mn loan agreement with the Asian Infrastructure Investment Bank to turn Alexandria’s Abu Qir railway into a metro.

HAPPENING SOON-

T-minus three days until the EU-Egypt Investment Conference kicks off: EU Commission Head Ursula von der Leyen and other big hitters will be making their way to Egypt soon for the conference. In the meantime, the cabinet has been reviewing projects, contracts, and MoUs set to be inked at the conference, according to a cabinet statement. The cabinet statement pointed to sustainable infrastructure, renewable energy, health education, food security, transport, water and sanitation, and SMEs as areas to watch out for.

DEBT-

CBE pulled in EGP 1.1 tn in liquidity from local banks following the Eid break: The Central Bank of Egypt took accepted bids from 32 banks for EGP 1.1 tn in fixed-rate deposits at a rate of 27.75% during its first weekly fixed-rate auction after the Eid Al Adha break, according to data from the central bank.

CIRCLE YOUR CALENDAR-

Attention, entrepreneurs and startup owners: Banque Misr has launched the third iteration of its Teqdar startups accelerator program, where small entrepreneurs get the chance to get first-hand insights and help form experts in technical support, investment, and marketing, and potentially could get up to USD 125k in funding to grow their businesses. Startup owners looking to participate in the program have until 4 July to fill out application forms (here)

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

THE BIG STORY ABROAD-

An eclectic mix of stories is playing out across the front pages of the global business press, with coverage of the EU’s latest bid to “tame” big tech playing out alongside stories about Volkswagen, Citigroup, and the prospect of war in Asia.

The Financial Times is going all-in with its coverage of how European Union regulators are looking to bring Big Tech to heel. Earlier this week, the bloc accused Apple of breaking so-called “gatekeeper rules”, for which they’re threatening to fine the company up to 10% of its global revenues. Yesterday, they went after Microsoft with antitrust violations over Teams.

Those are just the latest charges the EU has levied against big US tech firms, and Apple is sending a message of its own: The company is delaying the rollout to users in the EU of a bunch of new features in the new iOS due out this fall — including Apple Intelligence — because of uncertainty about how the EU will view them under the Digital Markets Act.

A must read for those of you who want to go deeper: What are the battle lines between the EUand Big Tech?

MEANWHILE- Volkswagen is getting prominent front-page play in the FT, the Wall StreetJournal, and Handelsblatt after saying it will invest up to USD 5 bn in EV maker Rivian and the FT says time is running out for Jane Fraser’s turnaround bid at Citigroup.

CLOSER TO HOME:

  • The Israeli military must start drafting ultra-Orthodox Jews, the country’s supreme court has ruled. (New York Times)
  • Rioters protesting taxation in Kenya tried to storm the country’s parliament. Five have so far been killed in clashes with police. (Reuters)

JUST WHAT WE NEED: Another regional war. The Philippines’ ambassador to Washington, Jose Manuel Romualdez, has for months been beating the drum about the prospect that conflict with China over a reef in the South China Sea could in turn spark a regional war. He’s previously talked up the idea with the Japanese press, and President Ferdinand Marcos Jr. recently said in a speech that it won’t start the war — but “won’t be intimidated” by China, either. The Financial Times has since lined up its own interview with Romualdez, and it’s getting front-page play this morning.

*** 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 look at the EU’s plan to put aside EGP 100 bn to invest in Egypt’s drinking water infrastructure through 2030.

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Celebrate World Ocean Month with Somabay: Throughout this month, join us for a series of ocean awareness activities designed to engage our community in the importance of protecting our oceans and reefs. Participate in an intro to freediving, tridacna planting, community workshops, guided snorkeling tours, Kompass educational programs and workshops, ocean clean-up dives, beach cinema with ocean documentaries, and glass boat tours for coral and fish identification.

2

Energy

Egyptian government pledges to end power cuts by third week of July with USD 1.2 bn set aside for energy imports and other initiatives

The government says it has a plan to put an end to power cuts this summer: Prime Minister Mostafa Madbouly delivered a televised statement to apologize to the people and lay out a plan to end power cuts for the summer months and eventually do away with them for good yesterday. Madbouly’s interjection follows the build-up of public frustration and anger on the airwaves against the extension of load shedding by an “extra hour” on top of the already allotted two-hour outages until the end of the week that saw some areas reporting outages of five or more hours per day.

Say goodbye to power cuts by July: Madbouly penciled in the third week of July as when the country will be ready to “stop cutting electricity completely throughout the summer period.” However, Madbouly clarified that the current “one hour” extension will continue as planned until the end of the week and that power cuts will resume after the summer months until the end of year.

The government thinks part of the solution is to spend its way out of the problem: Madbouly laid out a USD 1 bn plan to import fuel to power energy plants till the end of the year, in addition to USD 180 mn to import 300 tons of mazut next week.

It’s also not just a supply-side issue: Alongside upping supply, the government wants to lessen energy demand by closing all shops and malls — with the exception of supermarkets, restaurants, and pharmacies — by 10pm. Restaurants will be allowed to run until 1am.

You at home can also play a role in getting the lights back on: Madbouly also turned to people at home to help out by rationalizing energy use.

The government is also working to spread out power cuts more fairly: President Abdel Fattah El Sisi has directed the government to fairly distribute power cuts among the nation’s populace alongside its efforts to reduce powercuts overall, and instructed the government to work to end the problem as soon as possible, an unnamed government source reportedly told Extra News prior to Madbouly’s presser.

The surprise week-long extension of additional outages this week came as a result of a gas field in a “neighboring country” being offline for a 12-hour period, Madbouly said, without specifying the country.

The notoriously energy-intensive fertilizer industry in particular has been having a rough time: High temperatures, increasing electricity consumption prices, and cuts to the regional gas supply have led Abu Qir Fertilizers to cease natural gas supplies to its plants “until improvement in the operating conditions of the network,” the company said in an EGX disclosure (pdf). Sidi Kerir Petrochemicals also announced a total shutdown of operations in its plants due to a “lack of feed gasses,” it said in a disclosure (pdf) to the bourse.

But supplies to the industry should be back to normal by the end of the week: With temperatures expected to soon start cooling, gas supplies to fertilizer factories should be back to normal levels by the end of the week, an Oil Ministry official told Enterprise.

The newly-arrived LNG regasification unit should also be up and running soon: Supply-side pressures should ease once the LNG regasification unit in the Gulf of Suez comes online within days as it will speed up the process of regasifying and pumping LNG shipments to industries and power plants, the Oil Ministry source added. Another government source confirmed that Egypt will also be welcoming mazut shipments from KSA.

Just in time: State gas firm EGAS is reportedly looking to acquire seven shipments of LNG cargoes in July, six more in August, and four more in September in a tender that closes today, in what is set to be its largest shipment of LNG in years.

The international press also got a hold of the story: Reuters | Bloomberg.

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3

FX WATCH

Banque Misr and NBE follow CIB in halving FX commissions and raising credit card limits

Banque Misr and NBE slash FX markup fees in half: Banque Misr and the National Bank of Egypt are lowering their FX markup fees to 5% from 10% and raising their FX credit card limits by 50%, Banque Misr and Federation of Egyptian Banks Chairman Mohamed El Etreby told CNBC Arabia. The new limits bring Banque Misr’s spending cap outside Egypt on its highest category of cards to the FX equivalent of EGP 300k (pdf) and the NBE’s to the FX equivalent of EGP 240k.

CIB was the first to make the move: The Commercial International Bank announced the day before that it would be lowering its FX markup fees and increasing spending limits, with the bank’s FX fee halving to 5% and monthly purchases abroad capped at the equivalent of EGP 100k-300k, up from EGP 75k-200k, depending on the type of card.

Back to normalcy? These changes may spell the beginning of a return to normalcy for the banking sector, which has been using FX restrictions to manage the country’s currency crisis since October 2022 by conserving hard currency assets. Higher spending limits and lower commission fees may also help water down rumors of a renewed USD shortage that emerged as the EGP slid in value against the greenback following the Eid Al Adha break.

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4

A MESSAGE FROM BCG

Green hydrogen offtakes critical to fulfilling European market’s sustainable energy needs and accelerating Egypt's EUR 76 bn investment deal pipeline

As the Egypt-EU Investment Conference kicks off this Saturday, the spotlight will be on Egypt's ambitious EUR 76 bn green hydrogen deal pipeline. This partnership offers a golden moment for both Egypt and the European Union to propel their sustainable energy agendas. For the EU, securing green hydrogen is crucial for achieving its climate neutrality targets and reducing reliance on fossil fuels. For Egypt, it promises economic growth, job creation, and strategic export advantages.

Egypt and the EU are already closely intertwined in trade, with the EU being Egypt's top trade partner, accounting for about 37% of Egypt’s exports and 25% of imports in 2022. The EU's demand for green hydrogen is soaring, driven by robust climate policies like the European Green Deal, the Fit for 55 package, and the EU Emissions Trading System. The REPowerEU Plan further outlines the EU's need to import 10 mn tonnes of green hydrogen by 2030 – targeted for provision from various sources to ensure resilience.

This dovetails perfectly with Egypt’s ambitions to become a regional green hydrogen hub, targeting 8% of the global market by 2040 and reaching 5.5 mn tonnes per annum of production capacity by 2030. In 2023, Egypt launched its first green hydrogen production facility in the Suez Canal Economic Zone (SCZone), with major stakeholders including Scatec, Fertiglobe, Orascom Construction, and the Sovereign Fund of Egypt involved. The hydrogen produced here will be used to create green ammonia at Fertiglobe’s ammonia plants.

Several factors give Egypt a competitive edge in this arena. Firstly, its environmental conditions are ideal for low-cost renewable energy generation, with a goal of renewables making up 42% of the energy mix by 2035. Geographically, Egypt's proximity to EU markets ensures more efficient export routes. Logistically, Egypt's ports and terminals, including those within the SCzone, and existing and refurbished gas pipelines provide the base infrastructure needed to accelerate regional hydrogen trade. Finally, the quasi-government institutional setup of the Sovereign Fund of Egypt enables it to co-invest with the local and international private sector to derisk such investments.

However, realizing this potential requires taking the leap with significant commitment on all sides. Currently, green hydrogen production costs are about three times higher than natural gas due to technology costs. These costs are expected to drop to twice that of natural gas by around 2030 and achieve cost competitiveness between 2040 and 2050. Securing off-take agreements is vital for project sustainability, as stakeholders recognize the strategic and decarbonization value of green hydrogen.

The path ahead involves overcoming cost challenges and securing these crucial offtake agreements. Yet, the foundation for a thriving green hydrogen market between Egypt and the EU is clearly being laid. This collaboration not only promises mutual economic and environmental benefits, but also positions Egypt as a pivotal player in the global green hydrogen landscape.

Get in touch with the BCG team at the conference.

Co-authors:

Bassem Fayek, Managing Director and Partner at Boston Consulting Group (BCG), Cairo

Francesco Palmieri, Managing Director & Senior Partner at BCG, Milan

Esben Hegnsholt, Managing Director and Partner at BCG, Copenhagen

Erik Rakhou, Associate Director at BCG, Green Energy, Amsterdam

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5

Startup watch

Egyptian fintech Connect Money secures USD 8 mn in seed funding to expand its range of banking services in North Africa

Connect Money lives up to its name by attracting USD 8 mn in seed funding led by local investors: Local banking services provider Connect Money has raised USD 8 mn in a seed funding round led by local fintech- and tech-focussed VCs Disruptech Ventures and Algebra Ventures, according to a statement (pdf) from the startup. Egypt-focussed private equity firm Lorax Capital Partners, OneStop Capital, and MDP also took part in the funding round.

Where are the funds going? The funds will be used to launch five new business verticals in North Africa that will be announced individually that the startup thinks will help it emerge as “the go-to platform for businesses seeking seamless banking services.”

Connect Money? Founded in 2023, Connect Money helps businesses give their customers debit and credit cards without having to build their own financial technology or get special licenses from the gov’t. They issue debit and credit cards, offer digital payment and financing tools, and connect businesses with a large network of over 20k marketplace partners. To date, 300k cards have been issued by the firm.

What investors see in the startup: “Connect Money's expertise, deep market knowledge, and cutting-edge integrated tech will greatly enhance accessibility and efficiency in financial services, benefiting the fintech-enabled ecosystem and transforming banking operations while positioning Egypt as a valuable hub for exporting embedded finance services,” said Disruptech Ventures Managing Partner Mohamed Okasha.

Want to hear more about one of its co-founders? Enterprise interviewed triple-entrepreneur Ayman Essawy for our Founder of the Week column in EnterprisePM Egypt.

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6

LAST NIGHT’S TALK SHOWS

Rolling blackouts remained front and center on the airwaves for the third consecutive night

Viewers tuned in between power cuts to hear the reactions of the nation’s talking heads to the ongoing power cuts drama, with the government’s recent apology and pledge to soon put an end to the rolling blackouts seemingly doing little to calm frustrations.

ICYMI: Prime Minister Mostafa Madbouly delivered a televised statement yesterday to apologize to the people and lay out a plan to end power cuts for the summer months by July to and eventually do away with them for good. We have a full rundown of the government’s plan to keep the light on in the news well, above.

"We shouldn't rely on a single country for our gas supplies," Sherif Amer said on Yahduth fi Masr (watch, runtime: 5:14), referencing comments by Madbouly that the surprise week-long extension of additional outages this week came as a result of a gas field in a “neighboring country” being offline for a 12-hour period, Madbouly said, without specifying the country. Ahmed Moussa presented a similar argument to Amer on Ala Mas'oulety, telling viewers that "What happened yesterday taught us an important lesson... I don’t want Egypt and its people to be at anyone's mercy" (watch, runtime: 21:12).

El Homsani called in to calm energy security concerns: Cabinet spokesperson Mohamed El Homsani joined Moussa over the phone to reiterate Madbouly’s comments that "yesterday's events were due to a technical fault at one of the wells in a country in the Eastern Mediterranean region." Homsani emphasized that "Egypt is not at anyone's mercy and can import gas and mazut from any producing country, so there's no need for concern."

"The electricity crisis won't end in 2024," former Oil Minister Osama Kamal phoned in to tell Sherif Amer (watch, runtime: 5:02 | 9:22), adding that ”we lagged behind in diversifying our energy sources, and addressing this will take at least six months." Kamal noted that while power plants have the capacity to double the country's energy needs, the load shedding crisis is due to a fuel shortage.

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7

ALSO ON OUR RADAR

CI Capital one step closer to EGX33 fund. PLUS: Zaldi Capital, Obour Land, Qalaa Holdings, Gypto Pharma, Fujifilm, EgyptAir, Knauf

FINANCIAL MARKETS-

CI Capital gets the preliminary greenlight to launch an EGX33 fund: The Financial Regulatory Authority has given CI Capital’s asset management arm CI Capital Asset Management preliminary approval to set up a fund investing in the newly-launched sharia-compliant EGX33, according to a note seen by Enterprise. The state-owned investment bank plans to open the doors for investors looking to subscribe to the fund by 3Q 2024.

The race is on to become the first fund tracking the EGX33: CI Capital Asset Management announced on the day of the index’s launch that it wants to be “the country’s first” fund investing in shariah-compliant stocks. But it has competition, with Beltone also in the running and also aiming to launch the fund in the third quarter of the year. Azimut has also signaled that it is keen to get an EGX33 fund up and running as soon as possible.

DEBT-

Qalaa Holdings to pay USD 500 mn of its subsidiary Egyptian Refining Company’s debts by the end of the year: Qalaa Holding is set to pay some USD 500 mn of the creditor banks’ dues from its subsidiary the Egyptian Refining Company, Managing Director Hisham El Khazindar told Asharq Business. The subsidiary is planning to up its production capacity by 10% by 2028, El Khazindar added.

PRIVATE EQUITY-

Zaldi sets sights on new industrial investment fund: Local asset management firm Zaldi Capital wants to partner with “a major financial institution” to launch a direct investment fund with an initial size of up to EGP 250 mn in 3Q 2024, Chairman Hatem El Banna told Al Borsa. The fund will purchase minority stakes in EGX listed and non-listed industrial companies, El Banna said.

It’s been a busy week for Zaldia: The firm also launched its Maksab - OZ fund together with fellow asset manager Alpha Asset Management with a target of USD 1 mn to be invested in fixed income instruments in different currencies. The fund’s subscription window opened this week and will run until 22 July.

FOOD-

Obour Land has a new EGP 350 mn cheese factory in the works: Dairy producer Obour Land plans to funnel EGP 350 mn into establishing a new processing factory in 2024 as it looks to increase production and double annual export revenues to USD 40 mn, the company said in an EGX disclosure (pdf). As part of these plans, Obour Land will also invest EGP 800 mn into raising the volume of its livestock to 2k dairy cattle with the aim of producing 100 tonnes of milk per day and is studying new export markets.

INVESTMENT-

GAFI talks green infrastructure investments with UK business delegation: The British Egyptian Business Forum brought together public and private sector representatives from both countries to discuss “environmentally friendly infrastructure projects, such as water management and treatment, new and renewable energy, environmentally friendly engineering industries, construction and building, and communications and information technology,” General Authority for Freezones head Hossam Heiba said, according to an authority statement. Investments from the UK to Egypt exceeded USD 2 bn in FY 2022-23, Heiba added.

HEALTHCARE-

#1- Gypto Pharma to export meds to KSA, UAE: State-owned medical city complex Gypto Pharma inked partnership agreements with a Saudi and an Emirati companies to export its pharma products to the two Gulf countries during the coming period, company CEO Amr Mamdouh told Al Arabiya. The move comes as part of Gypto Pharma’s export expansion plans into Gulf and African markets, Mamdouh added.

#2- Fujifilm wants to up its medical investments in Egypt: Fujifilm Middle East intends to expand its investments in medical diagnosis and radiology in Egypt, Al Borsa writes, citing the company’s managing director, Michio Kondo. The company will carry out its investment plans in Egypt via its Egypt head office in Cairo, which will open by the end of June, Kondo added.

AVIATION-

EgyptAir jumps up 32 places on Skytrax rankings: The country’s flag bearer EgyptAir joined the world’s top 100 airlines on the Skytrax global ranking, snapping the 88th rank in the World Airlines Awards for 2024, up from 110th last year. The state-run airlines also ranked second among Skytrax World’s Most Improved Airlines 2024 right after Saudi Arabian Airlines.

Movement in the right direction: Improving the ranking of national flag carrier was among President Abdel Fattah El Sisi’s third term targets for the aviation sector through 2030.

INVESTMENT-

Knauf to more than double its Egypt investments by 2026: Building material manufacturer Knauf plans to increase its investments in Egypt to EUR 120 mn by 2026, from EUR 50 mn currently, CEO Mohamed Abdel Rasoul told Al Borsa. The funds will go to expanding the company’s existing operations and adding new production lines to Knauf’s gypsum boards factory in Suez.

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8

PLANET FINANCE

EM just had the busiest day of the year on the bond market

Emerging markets poured into the debt market yesterday with a flurry of bond issuances, as sovereigns look to capitalize on what is “an opportunistic time” for debt markets as interest rates dip this month, Bloomberg reports. Yields on 10-year US Treasuries are down more than 10 basis points this month, with markets expecting the US Federal Reserve to start winding down its monetary tightening sooner rather than later after May figures showed US inflation beginning to cool. “Now is the calm before further external factors come into play,” Oren Barack, managing director of fixed income at New York-based Alliance Global Partners, tells the business information service.

Who’s tapping the market: Four countries — the UAE, the Dominican Republic, Indonesia, and South Korea — all tapped the market yesterday, making it “one of 2024’s busiest days.” The UAE sold USD 1.5 bn worth of eurobonds in its first sale since September, setting the spread at 60 basis points above US Treasuries amid red-hot demand, according to Bloomberg. The country had initially guided on a spread of 90 bps above Treasuries.

EM debt markets already came out the gate strong at the start of 2024, with the first four days of the year seeing USD 24.4 bn worth of issuances, making it the “busiest start to a year on record for USD- and EUR-denominated debt issuance out of developing nations,” the business information service said at the time. The momentum has been sustained in the months since, with some USD 300 bn of hard currency debt from EM sovereign and corporate issuers going to market year-to-date, rising c.30% y-o-y.

MARKETS THIS MORNING-

Asian markets are mixed in early trading this morning, with the ASX 200, Hang Seng, and Shanghai Composite all in the red and the Kospi and Nikkei both in the green. US stock futures are largely unchanged in overnight trading after the S&P 500 and Nasdaq Composite each ended three-day losing streaks yesterday. Futures point to a mixed open in Europe later this morning.

EGX30

27,264

+1.3% (YTD: +9.5%)

USD (CBE)

Buy 48.31

Sell 48.45

USD (CIB)

Buy 48.33

Sell 48.43

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

11,731

+0.3% (YTD: -2.0%)

ADX

9,002

-0.2% (YTD: -6.0%)

DFM

3,999

0.0% (YTD: -1.5%)

S&P 500

5,469

+0.4% (YTD: +14.7%)

FTSE 100

8,248

-0.4% (YTD: +6.7%)

Euro Stoxx 50

4,936

-0.3% (YTD: +9.2%)

Brent crude

USD 84.94

-1.2%

Natural gas (Nymex)

USD 2.76

-2.0%

Gold

USD 2,331.60

-0.6%

BTC

USD 61,875.30

+4.0% (YTD: +46.4%)

THE CLOSING BELL-

The EGX30 rose 1.3% at today’s close on turnover of EGP 3.5 bn (21.4% below the 90-day average). Regional investors were net sellers. The index is up 9.5% YTD.

In the green: GB Corp (+15.8%), Ezz Steel (+6.3%), and Orascom Construction (+5.6%).

In the red: Egypt Kuwait Holding -USD (-2.9%), Juhayna (-1.1%), and Sidi Kerir Petrochemicals (-1.0%).

Tags:

Our weekly deep-dive into infrastructure in Egypt.

Published every Wednesday in EnterpriseAM.

Read Hardhat
9

HARDHAT

The EU is putting aside EGP 100 bn to invest in Egypt’s drinking water infrastructure through 2030

EU to provide Egypt with EGP 100 bn in funding for our drinking water needs: The European Union is set to provide Egypt with some EGP 100 bn in funding until 2030 to finance Egypt’s drinking water needs in Upper Egypt, as part of a joint strategic and comprehensive partnership. The projects include the installation of several sewage stations, water and sewage networks, and drinking water stations in Qena, Sohag, Assiut, and Minya, according to European banking officials.

Remember: The EU signed a joint strategic and comprehensive partnership with Egypt in March that is set to grant Egypt a nearly EUR 7.4 bn package of loans, grants, and investments through 2027. Water security was among other key areas that were expected to bring in up to EUR 5 bn of investment from Europe, along with green hydrogen, industrial, digitization, agricultural, and other projects — all guaranteed by the European Fund for Sustainable Development and EU Economic Investment Plan.

Who’s doing the funding: The donor list includes a set of European development entities and financing institutions, including the German Development Bank (KfW), the French Development Agency (AFD), the European Investment Bank (EIB), and the Swiss State Secretariat for Economic Affairs (SECO), as well as EU grants, Water and Utilities Sector Manager at the EU Delegation to Egypt Ayman Ayad said.

This isn’t the first time the EU has provided aid for Egypt’s water security: The EU has been a long-term strategic partner in drinking water projects and has allocated around EUR 600 mn for Egypt’s water security since 2006, Ayad said. Water security as a key priority in Egypt’s partnership with the EU has only been solidified further with the Strategic Partnership Agreement signed last March, Ayad added.

The plan for the projects: The EU will provide EUR 303 mn (EGP 15 bn) distributed among the four governorates for projects that include drinking water and sanitation projects, as well as funding for technical support for existing drinking water and sanitation companies in the governorates, Ayad said. The current goal, he adds, is to familiarize Egyptian contractors with the tender for implementing the projects alongside the Holding Company for Water and Waste Water (HCWW) and the Housing Ministry.

The EU has been working on issuing unified procedures among European development banks for tendering their projects, which will increase the presence of Egyptian contractors in the new projects that they offer, especially considering the decline in local funding for infrastructure projects, Egyptian Federation for Construction and Building Contractors (EFCBC) head Mohamed Sami Saad told Enterprise. The EFCBC has collaborated with EU representatives in Egypt, the German Development Bank, and the HCWW to clarify all technical and contractual matters for Egyptian contracting companies, he said.

Remember: Local contractors have previously been reluctant to submit bids for projects funded by international lenders like the World Bank, European Bank for Reconstruction and Development, and the African Development Bank because they adhere to international contract standards that aren’t part of the country’s regulatory framework, Saad previously told Enterprise.

The EU has also made amendments to some contracting regulations, including allowing companies to be paid in EUR and offering construction contractors security in the face of possible price changes and exchange rate fluctuations, Saad said. These changes have long been demanded by local contractors — and the fact that they’re now being realized reinforces ties with international development and financing entities, he continued.

The projects have been divided into two categories: Projects worth less than EUR 5 mn will be bound by Egyptian tender laws, while projects exceeding that amount will be tendered according to international regulations, Ayad said. This will help anticipate and eliminate potential challenges by establishing a legal, legislative, and contractual framework to avoid problems, he added. The KfW is working on issuing one unified tendering document compatible with the European side, as it is the primary tendering entity for new drinking water projects,

There are also efforts to simplify procedures for drinking water and sanitation projects: While the majority of construction contractors in Egypt are classified as able to carry out drinking water and sanitation projects, only 400 firms actually implement them, Ayad said, chalking this up to a long list of requirements that discourage participation. Simplifying these procedures, he says, will allow for more future participation from local firms.

The success of previous water-related projects in the Delta with the EU contributed to the launch of the new phase in Upper Egypt, Consulting Engineers Salzgitter Deputy Regional Director for the MENA region Maged Reda tells us, adding that the new procedural facilitations and standards will open the door for further participation from Egyptian contractors.

Egyptian contractors can gain expertise and know-how from the projects: Egyptian contractors involved in the project will benefit from working with development partners directly instead of dealing with banks or larger firms that can carry out a project from start to finish, EFCBC member Hamdi Shehata said. This, he added, will grant contractors the chance to refine their skills by working at an international standard and seeing the requirements up close.

What’s next: This round of talks is but one of many that the EFCBC intends to hold with international development institutions, Saad tells us, with the EFCBC looking to engage in similar dialogues with the Islamic Development Bank, the Asian Investment Bank, and the African Development Bank to improve the participation of Egyptian contractors by acquainting them with the procedures and guidelines of international entities.

Your top infrastructure stories for the week:

  • SCA looks to expand side canal in east Port Said port: The Suez Canal Authority (SCA) has instructed multiple entities to look into the possibility of duplicating and expanding the side canal of the east Port Said, which serves as a side entrance to the port, Al Mal reports.
  • Egypt could soon receive the first tranche of JICA’s loan for the Cairo Metro Line 4: The Japan International Cooperation Agency (JICA) will soon disburse a USD 300 mn tranche from its USD 733 mn loan to finance the construction of the first phase of Cairo Metro Line 4.
  • AD Ports is taking over three tourism terminals: AD Ports will develop, operate, andmanage three cruise terminals in Hurghada, Safaga, and Sharm El Sheikh that will launch in 2025, after inking a concession agreement with the Red Sea Port Authority that will see AD Ports invest USD 4.7 mn over 15 years.
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CALENDAR

2024

JUNE

29-30 June (Saturday-Sunday): EU-Egypt Investment Conference.

30 June (Sunday): June 30 Revolution Day (national holiday).

JULY

2-3 July (Tuesday-Wednesday): Aswan Forum for Sustainable Peace and Development, Cairo, Egypt.

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

10-11 July (Wednesday-Thursday): The Japan-Arab Economic Forum, Tokyo.

16-17 July (Tuesday-Wednesday): The Egypt Mining Forum, Cairo, Egypt.

18 July (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

23 July (Tuesday): Revolution Day (national holiday).

AUGUST

4-5 August (Monday-Tuesday): Egypt Expat Forum.

SEPTEMBER

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

5 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

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

25-26 September (Wednesday-Thursday): The Asian Infrastructure Investment Bank’s (AIIB) 2024 annual meeting, Samarkand, Uzbekistan.

OCTOBER

6 October (Sunday): Armed Forces Day.

17 October (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

13-17 October (Sunday-Thursday): Cairo Water Week, Water and Climate: Building Resilient Communities, Cairo, Egypt.

21-27 October (Monday-Sunday): The World Bank and IMF annual meetings.

NOVEMBER

4-8 November (Monday-Friday): World Urban Forum, Cairo, Egypt.

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

26-28 November (Tuesday-Thursday): Egypt Energy Show, Cairo, Egypt.

DECEMBER

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

EVENTS WITH NO SET DATE

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.

3Q 2024: Egyptian-Armenian Joint Committee.

November 2024: Egypt to host the World Urban Forum (WUF12).

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

End of 2024: Shalateen Mining Company to launch a gold exploration tender in the Eastern Desert.

2025

EVENTS WITH NO SET DATE

2Q 2025: Safaga Terminal 2 to start operations.

2027

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

EVENTS WITH NO SET DATE

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

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