Good morning, friends. We have another brisk issue for you this morning as we inch closer to closing out the week. Privatization and M&A lead the news well this morning — sources told us that the next phase of the privatization program will pick up steam early next year after the government rolls out its anticipated package of stock market incentives, meanwhile on the M&A front, Orascom Construction and OCI Global will merge to form an infrastructure giant.

IN TODAY’S ISSUE- We speak with Ahmad Amawi, the head of the Egyptian Customs Authority, to discuss the latest custom reforms and the overall trade movement in the country.

PSA-

Watch out for new phone hacking attempts: The National Telecom Regulatory Authority is warning that advanced cyberattacks are targeting smartphone users globally, including in Egypt, by exploiting newly discovered security flaws. The watchdog is urging people to update their phones and apps and enable advanced security features like lockdown mode on iPhones or enhanced protection on Android. It also called on people to not click suspicious links or messages, use secure browsers and ad blockers, and enable two-factor authentication on important accounts.

WEATHER- Cairo is in for a rainy day, with the Egyptian Meteorological Authority forecasting a light to moderate chance of rainfall. As for the weather, the capital is looking at a high of 21°C and a low of 12°C, according to our favorite weather app.

It’s not as cold in Alexandria, with a high of 20°C and a low of 14°C. The city is in for heavy rains and thunderstorms.

WATCH THIS SPACE-

#1- Could our USD 35 bn gas export agreement with Israel finally see the light? Israel has reportedly reached a final agreement with the Leviathan partners regarding our gas export pact, following all-night negotiations between the partners and the Israeli Energy Ministry, according to Israeli outlet Globes. Israeli Prime Minister Benjamin Netanyahu is expected to greenlight the agreement within days, Globes reports.

Under the agreement terms, the partners will commit to a specified price and prioritize deliveries to the Israeli market in the event of supply disruptions at other gas fields, Globes said.

What this means: Israeli flows could continue to be unpredictable as supplies from Leviathan and other fields have been halted multiple times over the past period due to operational pauses, maintenance, and military strikes, meaning exports to Egypt can be interrupted with little notice whenever Israel diverts gas back to its domestic grid.

Under US pressure: Netanyahu pushed to finalize the agreement ahead of his meeting with US President Donald Trump on 29 December as Washington has been closely involved in resolving the months-long deadlock, Globes said. This also came as the US administration has signaled support for Chevron, which has a 39.66% operating stake in Leviathan.

The future of the agreement has been uncertain for a while now: We reported earlier this week that the agreement will remain in limbo for another month after the Leviathan partners pushed their deadline to obtain an export permit from Israel’s Energy Ministry to 31 December. Israel hit a pause on it in November “until its interests are secured and a fair price for the Israeli [gas] market is agreed upon,” shortly after Netanyahu froze the agreement amid rising Israeli-Egyptian tensions.

#2- It seems like a tourism investment push is in the making, with the investment, tourism, and housing ministries set to form a working group to develop an investment plan, according to a statement from the Investment Ministry. The plan will support efforts to double tourist footfall to 30 mn annually by 2030 and then “double this number during the following years” — which is by far the most ambitious tourism target we’ve heard to date.

Clarity for investors eyeing the sector is key, according to Investment Minister Hassan El Khatib, who laid out a plan to list all the investments across the country and even the targeted number of hotel rooms per region and city. The tourism investment map will tie in — and presumably be a part of — the ministry’s in-the-works investment map platform for the country.

Diversity of investments on offer is also important, with El Khatib pointing to the need for different investment models to suit the wants and requirements of different investors. The minister also mentioned the need to develop prior approvals for projects on offer to streamline the process, provide golden licenses, and facilitate incentives already in place by law. Tourism Minister Sherif Fathy and Housing Minister Sherif El Sherbiny also highlighted the importance of fixing fees for certain periods to provide certainty for foreign investors to develop clear feasibility studies.

#3- The Central Bank of Egypt has directed local banks to use vessel tracking systems before issuing letters of credit in a bid to prevent violations or exposure to international sanctions, unnamed sources in the banking sector told EnterpriseAM. The ship tracking system within customs platform Nafeza allows banks to verify vessel identity and routes and issue alerts for potential red flags such as entering banned ports, disabling GPS, or ship-to-ship transfers.

HAPPENING TODAY-

#1- Most expect inflation to accelerate in November’s data due out later today — the question is by how much. State statistics agency Capmas is expected to release inflation data for last month in only a matter of hours, and it seems almost unavoidable that headline inflation will be up for the second straight month. The country’s last monthly reading showed annual headline urban inflation rising by 0.8 percentage points to 12.5% y-o-y, largely on the back of higher fuel and food and beverage prices.

Headline inflation is expected to inch up 0.6 percentage points to 13.1% y-o-y, according to a poll of 14 analysts by Reuters, with tobacco, alcohol, and transportation costs being pointed to as the main culprits. Core inflation is also expected to increase 0.3 percentage points to 12.4% y-o-y from a smaller survey for four analysts.

The extent of the increase will be closely watched as an indicator for future interest rate decisions, with the central bank’s Monetary Policy Committee set to meet on 25 December. Assuming inflation doesn’t ratchet up a lot more than expected, the smart money is on the bank moving to cut rates at its last meeting of the year.

#2- It’s the last day of European Bank for Reconstruction and Development First Vice President Greg Guyett’s three-day visit to the country, where he and his accompanying delegation are meeting with private sector players and senior state officials.

What went down yesterday? The Madbouly government inked six agreements and MoUs with the EBRD to strengthen cooperation in investment, energy, and sustainable development, according to a cabinet statement. The agreements include a EUR 165 mn loan to enhance the country’s electricity grid, a EUR 35 mn investment grant, and a EUR 2 mn technical cooperation grant to upgrade the electricity network, alongside MoUs to promote investment, boost private sector participation in sustainable development, and expand renewable energy infrastructure.

DATA POINT-

The Madbouly government is looking to invest USD 60 bn to add some 23 GW of electricity by 2030, mostly from renewables, Asharq Business reports, citing Investment Minister Hassan El Khatib as saying at a conference in Riyadh. Egypt will need to add a further 45 GW — 90% of which will be renewable — by 2040 to keep up with population growth, El Khatib said.

Saying goodbye to older gas-fired units? The government is working with development finance institutions on a program to retire older gas-fired units and replace them with renewables, a move that would help curb the country’s natural gas import bill, Asharq said, citing El Khatib.

Grid constraints remain the biggest bottleneck: Egypt will need some USD 45 bn of investments in distribution infrastructure to integrate new clean capacity, since major wind farms are concentrated along the Red Sea coast and are far from the conventional grid, added El Khatib.

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THE BIG STORY ABROAD-

Trump clears path for Nvidia chip sales to China: The Trump administration will allow Nvidia to sell its advanced H200 AI chips to approved customers in China, easing export restrictions imposed during the Biden administration. Under the new deal, the US government will take a 25% cut of proceeds — up from 15% in a prior agreement — with similar arrangements expected for AMD and Intel. The decision follows months of lobbying by Nvidia CEO Jensen Huang, who pledged USD 500 bn in US AI investments. The move has drawn criticism from lawmakers, who warned it could aid China’s military and surveillance capabilities. (Guardian | Reuters | CNBC | New York Times | Bloomberg | BBC)

AND IN BUSINESS NEWS- The European Commission has launched an investigation into whether Google uses content from websites and YouTube videos to power its AI-generated summaries and other tools without compensating creators or offering opt-outs, the commission said in a statement. Regulators are also examining if Google’s AI Mode reduces traffic to publishers’ sites. The investigation follows complaints from media groups and campaigners who say Google’s AI Overviews divert readers and threaten journalism revenues. (BBC | CNBC | Reuters | Guardian)

PLUS- Investors brace for a divided Fed: Markets expect the US Federal Reserve to cut interest rates by 25 bps today to a 3.50-3.75% range, but analysts warn of deep divisions within the policy committee — possibly the most dissent seen in years, Reuters reports. As many as five of the 12 voting members could oppose the move, raising concerns about growing politicization under President Trump, who has pushed for lower rates ahead of next year’s midterms.

ALSO MAKING HEADLINES- Ukraine and its European allies are preparing a revised peace proposal to end the war with Russia that includes a 20-point framework, security guarantees, and a reconstruction plan, which will soon be presented to Washington. (Reuters | BBC | CNBC | Guardian)

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: EnterpriseAM’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 look at how district cooling is becoming an important part of urban planning as Egypt eyes savings and sustainability gains.