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Wednesday, 12 Apr 2023

What We're Tracking Today
Economy
Startup Watch
Debt Watch
Real Estate
Moves
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Diplomacy
Hardhat
Calendar

IMF trims Egypt’s growth forecast to 3.7%, warns inflation poses risks to global economy

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Today at a glance

1

Economy

 IMF warns of “hard landing” risk on sticky inflation, financial volatility.
2

Startup watch

 Will investors step in to save Swvl from a Nasdaq delisting?
3

Debt

 A fresh EGP 250 mn short-term note for Hermes Securities Brokerage.
4

Real estate

 Office rents set for a sharp dip on economic headwinds.
5

Moves

 Swvl CFO Youssef Salem steps down + More moves at Prime Holding.
6

Diplomacy

 FM Shoukry brings a new tune in the Med: Could Greece and Egypt both make nice with Turkey?
7

Also on our Radar

 EFG Hermes stages an exit from Oman as it refocuses on core markets.
8

PLANET FINANCE

Traders are bullish on crude after OPEC+ cuts + Crypto finds its legs.
9

HARDHAT

Project update: Where things stand with the Dabaa nuclear power plant.

Wednesday, 12 Apr 2023

What We're Tracking Today
Economy
Startup Watch
Debt Watch
Real Estate
Moves
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Diplomacy
Hardhat
Calendar
1

What We're Tracking Today

Rainclouds brewing in the global economy + over Cairo. PLUS: Japanese PM to visit Egypt + Suez Canal revenues up again in 1Q 2023

Good morning, wonderful people, and a very happy almost-THURSDAY. We don’t know if it’s the Ramadan effect or anticipation for the upcoming holidays, but this week has felt like a long one.

THE BIG STORY here at home and the BIG STORY ABROAD are one and the same this morning: The IMF is out with warnings of a “hard landing” for the global economy if high inflation sticks, forcing more monetary tightening and exacerbating financial risks. The Fund’s mostly unchanged global growth forecasts hide a darker story brewing under the surface, the lender said, as it trimmed its growth forecast for Egypt once again (FT | Reuters | Bloomberg | WSJ). We have the full story in today’s news well, below.

PSA- We could see more wet weather today. We got caught out in heavy showers in the People’s Republic of Maadi last night — and there could be more where that came from today, with the Egyptian Meteorological Authority forecasting a good chance of heavier rainfall on the North Coast and the Nile Delta, and light to moderate showers in the capital.

** SO, WHEN DO WE EAT? We’ll be breaking our fasts at 6:20pm CLT today. You have until 4:01am tomorrow morning to hydrate and grab a bite to eat.

A quick April holidays reminder:

  • Banks and the EGX will be off next Sunday, 16 April to mark Coptic Easter (the day is not a public holiday);
  • We’re all off next Monday, 17 April to mark Sham El Nessim;
  • Public sector workers are off from Thursday, 20 April until Tuesday, 25 April in observance of Sinai Liberation Day and Eid El Fitr. Expect the Manpower Ministry, central bank, and the EGX to follow up with their own announcements in the coming days.

DATA POINT- Suez Canal revenues rose 35% y-o-y in 1Q 2023 to USD 2.3 bn,Ittihadiya said yesterday. The number of ships transiting the canal increased 20% y-o-y, the statement reads. 1Q also saw a daily record number of vessels cross the canal with 107 vessels transiting on 13 March, while the March set an all-time record for monthly revenues of more than USD 830 mn.

SPEAKING OF SUEZ- Is the SCZone getting serious about industrial pollution control?The Environment Ministry has signed agreements worth c. EUR 22 mn to support industrial pollution control projects with three companies operating in the Suez Canal Economic Zone, as part of its Egyptian Pollution Abatement Programme (EPAP). Read the full story in this morning’s edition of Enterprise Climate.

Want to bid in Shalateen Mineral Resources’ brownfield gold exploration tender?You’re going to have to be a major player to qualify. Companies considering entering the bid round will need to be producing more than 500k oz of gold a year and have more than 10 mn oz of gold reserves to qualify, according to a copy of the tender booklet we got hold of yesterday. The company also wants only firms with more than 10 years of experience.

REFRESHER: Announced last week, SMRC is inviting companies to bid for concessions in five areas of the Eastern Desert. The tender will close on 10 August.

The contract terms: The contracting companies will be entitled to 49% of the earnings from the concessions, while the Egyptian Mineral Resources Authority will take 31% and SMRC will get 20%. The Oil Ministry will charge the minimum 5% royalty.

HAPPENING TODAY-

Issa to speak at BEBA iftar: Tourism Minister Ahmed Issa will be guest of honor at the British Egyptian Business Association’s (BEBA Egypt) annual Ramadan iftar, which will be held at Salah El Din Citadel.

Today at the House: MPs will discuss and vote on proposed changes to the nationality law that would make it easier for foreigners to become Egyptian citizens. The amendments would:

  • Allow all Egypt-born children of foreigners from Arab or Muslim countries who were also born in Egypt to apply for citizenship, a privilege that is currently only available to the children of men from those countries.
  • Allow foreigners to acquire Egyptian citizenship in return for purchasing real estate, investing directly in local projects, or depositing money with the central bank.

The House will also vote on two USAID grants meant to stimulate trade and investment and improve economic governance.

Yesterday at the House: MPs gave preliminary approval to amendments that would tighten rules on who is eligible to enroll in the police academy.

The Enterprise Exports & FDI Forum, our latest industry-specific conference, is taking place on Monday, 15 May at Four Seasons, Nile Plaza. The Enterprise Exports & FDI Forum will give insiders and newcomers alike the chance to talk about how to develop an export-centered business and how their companies can help us build an export-led economy that makes us a magnet for foreign direct investment (FDI).

What’s the Enterprise Exports & FDI Forum? In the wake of successive floats of EGP, exports and FDI have never been more important to our economy — or our businesses. We’re gathering some of the CEOs, top execs from local companies and multinationals, investors, bankers and finance folks to speak on how businesses can adapt their strategies to be export-oriented and what we as a country can do to draw foreign investment and much-needed FX. Expect it to be heavy on lessons learned in Egypt and other global growth markets — and lots of success stories.You can learn more on our conference website here.

Some of the biggest names in business and finance are on board — are you? If you’re a C-suite exec, business owner, DFI staff, export executive, investor or banker, please fill out the form here to signal your interest, letting us know your name, title and where you work.

WANT TO BECOME A COMMERCIAL PARTNER? Ping a note to Moustafa, our head of commercial, here.

MORNING MUST READ-

Regulation is coming for the robots: ChatGPT and other artificial intelligence tools could soon have to meet more stringent checks as governments look into regulating the wildly popular new tech. ChatGPT has grown faster than any other online service in history, with more than 100 mn people now using the AI to help them work, study, and create. But tech insiders have warned that the AI could help spread misinformation and foment social unrest — and regulators are now looking into curbing its power.

Policing AI’s politics? In China, new rules mean AI-generated content will have to “embody core socialist values and must not contain any content that subverts state power.” US and EU regulators, meanwhile, are looking into “guardrails” for AI to reduce the risk of spreading harmful content. (Wall Street Journal | Bloomberg | Financial Times)

CIRCLE YOUR CALENDAR-

Japanese PM to visit Egypt in coming weeks: Japanese Prime Minister Fumio Kishida will visit Egypt as part of an African tour taking place in late April to early May, the country’s cabinet secretary said at a press conference (watch, runtime: 0:26) yesterday. Kishida will also visit Ghana, Kenya, and Mozambique. The visit comes a few weeks before Japan hosts the annual G7 summit.

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

*** 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 where progress stands on Dabaa, the country’s first nuclear plant.

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For more information, please contact book@somabayholidays.com or 16390.

2

Economy

Rising rates risk global growth, IMF warns

The IMF has warned of rising risks to financial stability despite keeping its global growth outlook almost unchanged in its latest assessment of the world economy. In its World Economic Outlook (pdf) released yesterday, the Fund trimmed its 2023 forecast by just 0.1 percentage points to 2.8% but cautioned that sticky inflation and rapid policy tightening are presenting serious risks to the global economy.

Growth to bottom out this year: The IMF now expects global growth to fall to 2.8% this year from 3.4% in 2022. Much of the slowdown will take place in advanced economies — particularly the eurozone and UK — where growth will more than halve to 1.3%. Meanwhile, output in emerging and developing economies will remain strong, jumping from 2.8% to 4.5% in 4Q 2023.

Flatline: The Fund is forecasting growth to rebound to 3.0% next year and remain at the same level through to 2028.

“Serious side effects”: Growth projections may be little changed from the Fund’s last outlook three months ago, but the emphasis from IMF chief economist Pierre-Olivier Gourinchas was firmly on the intensifying financial risks caused by the dramatic rise in global interest rates over the past year. “The sharp policy tightening of the past 12 months is starting to have serious side effects for the financial sector,” he wrote, pointing to the instability in the UK gilt market last year and last month’s US banking crisis. “Below the surface, turbulence is building, and the situation is quite fragile.”

“Downside risks dominate”: “We are entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner,” Gourinchas wrote. Sharp policy tightening could have a “dramatic impact” on the global financial system that potentially causes growth to slow to as low as 2.5%. At the same time, the outlook for inflation remains highly uncertain and sticky prices could still force central banks to further raise interest rates in the coming months, he wrote.

The inflation outlook: The Fund is now predicting global headline inflation to fall to 7.0% this year from 8.7% in 2022, mainly thanks to lower energy and food prices. Core inflation — which excludes volatile food and energy prices — will see a slower decline to 5.1% by the final quarter of this year, an upward revision of 0.6 percentage points from the IMF’s January forecast.

THE EGYPT OUTLOOK-

Egypt growth outlook trimmed again: The IMF now expects Egypt’s economic growth to slow to 3.7% this year, a 0.3 percentage point trim from its previous forecast in January and a sizable drop from the 6.6% growth rate in 2022. The multilateral lender sees the economy expanding at a 5.0% clip in 2024 and 6.0% in 2028.

Inflation will cool off this year: Consumer price growth is expected to average 21.6% this year from 8.5% last year. That’s a dip from current inflation, which came in at 32.7% in March on the back of successive devaluations of the EGP. The IMF sees inflation continuing to slow to 18.0% in 2024 and 5.3% in 2028. The Central Bank of Egypt is currently targeting a 7% inflation rate — plus or minus two percentage points — by the end of 2024.

MENA outlook unchanged: The IMF trimmed its MENA growth outlook by 0.1 percentage points and now expects growth in the region to fall to 3.1% this year from 5.3% in 2022. Inflation across the region will remain unchanged from 2022 at 14.8%

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3

Startup watch

Nasdaq-listed Swvl receives investment offers in attempts to prevent delisting

At risk of delisting, Swvl is contemplating new investment offers: Cairo-born mass transit app Swvl has received acquisition and partnership offers from investors as it tries to avoid being kicked off the Nasdaq stock exchange, Al Mal reports, citing sources it says have knowledge of the offers. Swvl has received several delisting warnings from the tech-focused US bourse due to the collapse of its share price and in December said it was considering a range of options to support the company.

Details are few and far between: The newspaper provides little detail about the offers on the table, which reportedly vary between investors buying an existing stake in the company or subscribing to new shares via a capital increase. Enterprise was unable to reach a company representative for comment on the report.

Swvl said last month that it had “received indications of interest” and was evaluating its options, but did not provide further details. The company in December set up a committee to explore a range of options including “corporate sale, merger or other business combination, a sale of all or a portion of the company’s assets, strategic investment, new debt or equity financings or other significant transactions.”

One of the casualties of the US tech downturn: Swvl has seen its share price collapse more than 99% since its IPO in April 2022 as tightening financial conditions caused investor interest to dry up. The company’s valuation has fallen from USD 1.5 bn to less than USD 6.0 mn, triggering delisting warnings from the Nasdaq to raise its market cap. Meanwhile, widening losses have forced the company to make large-scale layoffs and operational cutbacks, as well ascall off acquisitions.

Another warning: The Nasdaq issued Swvl with a fresh delisting warning at the end of March, notifying it that it has until 25 September to raise the value of its publicly held shares above USD 15 mn. The company has to meet this threshold for at least 10 consecutive business days to remain on the exchange. A reverse stock split earlier this year briefly propped up its shares and brought it back into compliance with another Nasdaq rule that requires a minimum USD 1.00 share price.

And to add another problem: Two of Swvl’s board members and independent members of its audit committee — Steve Albrecht and Gbenga Oyebode — resigned last week. That leaves Swvl with just one member on its audit committee, when it needs three to comply with Nasdaq rules, according to a SEC disclosure.

Swvl CFO Youssef Salem also resigned at the end of last month. Read more in today’s Moves section, below.

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4

DEBT WATCH

Egypt’s EFG Hermes closes short-term note issuance for Hermes Securities Brokerage

EFG Hermes Holding has issued an EGP 250 mn senior unsecured short-term note for its subsidiary Hermes Securities Brokerage (HSB), according toacompany statement (pdf). This is the fourth issuance for the brokerage and the first in its newly-approved EGP 2 bn two-year program.

About the issuance: The 12-month bullet note will carry a fixed rate coupon paid at the end of the bond, with proceeds aimed at diversifying HSB’s funding sources.

EFG Hermes recently concluded advisory on several debt issuances,including securitizations for its subsidiary valU, Premium Card, Bedaya Mortgage Finance, and Al Oula Mortgage Finance in March.

Advisors: EFG Hermes acted as sole financial advisor, sole transaction manager, and bookrunner, underwriter and arranger.

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5

Real estate

Egypt office rents to fall 30% year on economic woes

Office rents in Egypt will fall by 30% this year in USD terms as challenging economic conditions sap demand for office space, Fitch Solutions says in a report picked up by Zawya.

Tl;dr: The country’s commercial real estate sector will face pressure this year as higher borrowing costs, soaring inflation, and slowing economic growth weigh on businesses.

Hardest hit: Average monthly rents in Alexandria will fall almost 36% y-o-y to USD 8.20 per sqm.

In the capital: Monthly rents in Cairo — where demand is greatest and rents are highest — are expected to drop more than 30% y-o-y to USD 17.40 per sqm. Rents in Giza will fall almost 32% y-o-y to USD 9.30 per sqm.

Lower rent ≠ lower yield: Despite falling rents, returns on investment in the commercial real estate sector will remain roughly the same. Yields will remain at 8-10% in Cairo and Giza and 6-7% in Alexandria.

Driving the trend:High interest rates will dampen private investment and weigh on the construction sector, Fitch Solutions says. The Central Bank of Egypt has raised rates by 1k bps since March 2022 — including a 200-bps hike last month — in a bid to offset the impact of multiple currency devaluations triggered by the war in Ukraine. The spillover effects from the conflict have caused inflation to surge to near-record highs

The medium-term outlook isn’t so bad: Fitch Solutions’ medium-term forecast period holds a more positive outlook with real GDP increasing to 5.1% in 2024, weaker inflation, and lower borrowing costs. “In the longer term, a stabilization in GDP growth as well as in the growth of tertiary services output should provide some support for office space demand,” the report says.

Demand for residential housing is also expected to increase in the long-term owing to economic diversification, population growth and growing urbanization.

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6

Moves

Swvl CFO Youssef Salem resigns + Mohamed Ayad appointed chairman at Prime Holding

Swvl Chief Financial Officer Youssef Salem (LinkedIn) has resigned from his position effective 31 March, the company said in a SEC disclosure at the end of last month. His resignation “was not related to any disagreement with Swvl on any matter relating to Swvl’s operations, policies or practices,” the company said. Abdullah Mansour, who was formerly the CFO for the company’s Middle East business, has been appointed to the role on an interim basis. Mansour has been at the company since December 2021, and previously served as senior associate with PricewaterhouseCoopers from 2017 to 2021.

Prime Holding appointed Mohamed Ayad as non-executive chairman of the company’s board, replacing Mohamed Maher (LinkedIn), according to anEGX disclosure (pdf). Maher resigned after three months in the chairman role, having previously spent decades at the helm of Prime as its CEO and vice-chairman. Hassan Samir (LinkedIn) took on the CEO, vice-chairman, and managing director roles at Prime in January.

More changes at Prime: Investor relations director Gihane Halawa (LinkedIn) has resigned, leaving Mohamed Sayed as the sole IR director in the company. Board member Shahinaz Foda (bio) also stepped down from her position.

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7

LAST NIGHT’S TALK SHOWS

Egyptian talk shows cover FM Sameh Shoukry’s visit to Greece

Diplomacy topped coverage on the talk shows once again last night: Foreign Minister Sameh Shoukry’s trip to Athens got top billing on another quiet night for the talk shows as Ramadan continues.

Ahmed Moussa took note of FM Sameh Shoukry’s trip to Greece for talks with the country’s PM and FM. The Egyptian-Greek relationship is “strategic in every sense of the word,” Shoukry said in Athens (watch, runtime: 11:42.)

AND- Don't stash your winter clothes just yet, the Egyptian Meteorological Authority’s Manar Ghanem told Ala Mas’ouleety (watch, runtime: 5:27). Unstable spring weather — which brought rain and wind to the capital last night – will continue, she said, though temperatures should get warmer as the week goes on.

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8

EGYPT IN THE NEWS

Leaked Pentagon docs lead coverage of Egypt in the foreign press on 12 April, 2023

Gov’t denial of claims based on Pentagon documents continues to lead the conversation: Government sources’ denial that Egypt considered supplying Russia with arms in the war against Ukraine is still generating headlines this morning. The claims first appeared in the Washington Post on Monday off the basis of apparent US intelligence documents that were leaked to the internet. (New York Times | Times UK | Al Monitor |Independent)

AND- France24 covered the arrest of TikTok influencer Salma Elshimy on charges of debauchery and violating family values upon her arrival at Cairo International Airport last week.

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9

Also on our Radar

EFG Hermes exits Oman. PLUS: FRA launches carbon trading committee + Mansour Group to open 80 new branches in 2023

CAPITAL MARKETS-

EFG Hermes Holding has completed its exit from Oman, the company said in an EGXdisclosure(pdf), revealing the unspecified market that in January it said it planned to exit in addition to Jordan and Pakistan. Despite the exit, “EFG Hermes will continue to serve its institutional clients base … through its regional hubs,” the statement reads.

REMEMBER- The high-profile EGX-listed institution earlier this year said it would make the exits to “simplify its operations” and double-down on its core strengths as it aims to improve its return on equity and “better equip itself for the unfavorable global economic environment.” The three markets account for no more than rounding errors on EFG Hermes’ income.

REGULATION-

FRA committee brings a local carbon trading scheme one step closer: The Financial Regulatory Authority (FRA) has set up a body to oversee the forthcoming carbon market, it said in a statement yesterday. The committee will draft regulations governing the issuance of carbon certificates and set rules for corporate disclosures.

This is the most recent measure to accelerate the introduction of a carbon market in Egypt. Amendments to the Capital Markets Law to make carbon certificates a tradable security are making their way through the House of Representatives, ahead of EGX plans to launch Africa’s first voluntary carbon market in the middle of this year.

RETAIL-

Mansour Group to up retail branch count by 50% this year: Mansour Group plans to open 80 more branches of its retail brands by the end of the year, Al Borsa reports, citing statements from the company’s corporate affairs director. The group — which owns the Kheir Zaman, Metro, and Fresh Food Market brands — has opened one Kheir Zaman branch in 6 October City and two in Sohag this year and expects to launch another 77 before the year is out, he reportedly said. Mansour Group currently operates 160 branches across the country, including almost 130 Kheir Zaman outlets.

CLIMATE-

Money to strengthen climate finance policy: The environment and foreign ministries, the French Development Agency (AFD), and the UNDP inked an EUR 1.5 mn grant to support the country’s climate finance strategy and encourage local banks to implement their own climate policies, the Environment Ministry said in a statement. MPs late last year approved the grant agreement, which comes under the UN Green Climate Fund’s Transforming Financial Systems for Climate (TFSC) project.

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10

PLANET FINANCE

Traders rush into long oil positions after OPEC+ cut. PLUS: Crypto on a tear + EY retreats from split

Traders go long on oil after surprise OPEC+ cut: Net-long positions on Brent crude saw their second-highest increase on record in the week up to 4 April after the oil cartel’s shock move to cut more than 1 mn barrels per day of supply from the market, Bloomberg reports. “We expect bullish capital flows to continue for the time being as the production cuts will drive storage draws,” Macquarie Group analysts said in a note.

A rise in net-long wagers? More traders took “long” positions — wagering that oil prices will rise — and fewer took “short” positions — wagering that prices will fall. Many analysts are predicting crude prices to pass the USD 100 mark on the back of the cartel’s move, though global recession fears are clouding the outlook. Brent is currently trading at just over USD 85 per barrel.

Crypto is riding high: BTC rose above USD 30k for the first time in 10 months yesterday as the rally in digital assets that accompanied last month’s banking crisis continues. The cryptocurrency peaked at USD 30.5k and was trading at around USD 30.2k as of midnight. BTC has risen more than 50% since the second week of March, when the collapse of three mid-sized US lenders triggered fears of a global banking crisis, and is up 83% year-to-date.

Driving the rally: The banking crisis has raised market expectations that the Federal Reserve will bring its tightening cycle to a premature end, helping to fuel a rally in speculative digital assets. Some analysts think investors are being drawn to crypto because of its separation from the traditional banking system, while others suggest that a drop in trading volumes following the collapse of market makers Silvergate Capital and Signature Bank is exaggerating price movements. (Bloomberg | Reuters)

Also worth noting:

  • EY won’t be splitting up after all: Big Four accountant Ernst & Young has scrapped plans to split its audit and consulting businesses following internal disagreements. (Financial Times)
  • Oman’s second-largest bank could get bigger: Oman’s Bank Dhofar has submitted a non-binding offer to merge with smaller lender Ahli Bank, a transaction that would create a banking group with more than USD 19 bn in assets. (MSX disclosure, pdf | Asharq Business)

EGX30

17,012

+1.4% (YTD: +16.5%)

USD (CBE)

Buy 30.83

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

18.25% deposit

19.25% lending

Tadawul

10,849

-0.5% (YTD: +3.5%)

ADX

9,511

+0.1% (YTD: -6.9%)

DFM

3,444

+1.0% (YTD: +3.2%)

S&P 500

4,109

0.0% (YTD: +7.0%)

FTSE 100

7,786

+0.6% (YTD: +4.5%)

Euro Stoxx 50

4,333

+0.6% (YTD: +14.2%)

Brent crude

USD 85.61

+1.7%

Natural gas (Nymex)

USD 2.22

+1.5%

Gold

USD 2,018.90

0.0%

BTC

USD 30,226

+1.9% (YTD: +82.8%)

THE CLOSING BELL-

The EGX30 rose 1.4% at yesterday’s close on turnover of EGP 1.68 bn. Local investors were net buyers. The index is up 16.5% YTD.

In the green: Eastern Company (+6.2%), Heliopolis Housing (+5.2%) and Juhayna (+4.8%).

In the red: Edita (-2.2%), Egypt Kuwait Holding - EGP (-1.1%) and Qalaa Holdings (-1.0%).

Asian markets are mostly up in early trading this morning and futures suggest a sea of green when US and European indices open later on in the day.

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11

Diplomacy

Investment, energy ties top Egyptian FM Shoukry’s talks in Greece

The Madbouly government is working to up Greek investment to Egypt and remove any obstacles for the country’s investors, Foreign Minister Sameh Shoukry said during talks with Greek Prime Minister Kyriakos Mitsotakis and Foreign Minister Nikos Dendias in Athens yesterday, according to a statement.

The two sides also discussed their joint energy projects, which include the 3-GW Greece-Egypt Interconnector (GREGY) led by Greek contractor Copelouzos Group, as well as cooperation on renewables and green hydrogen. They also touched on regional energy cooperation through the tripartite cooperation mechanism with Cyprus and the East Mediterranean Gas Forum (EMGF).

It’s official: Shoukry is spending the weekend in Turkey. “I will visit Ankara in two days to carry on the efforts we’ve started to normalize relations,” Shoukry confirmed at a presser in Greece (watch, runtime: 11:42.) Turkey’s top diplomat pledged with Shoukry to put aside their differences and normalize relations during talks in Cairo last month, after they became the first senior diplomats to visit each others’ countries in over a decade.

THE REALIGNMENT- Could Greece and Turkey make up? “Greece is always looking for ways to have honest and sincere cooperation with Turkey,” Dendias said following his talks with Shoukry, AP reports. He also implied that Greece could consider allowing Turkey to participate in the EMGF — “on one obvious condition: Respect for international law, and respect for the international law of the sea.”

SOUND SMART- Energy resources have long been a point of tension between Greece and Turkey. A recent dispute over maritime borders in the oil and gas-rich East Med saw sharp words exchanged between EMGF members Greece and Egypt on the one side, and non-members Turkey and Libya on the other.

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Our weekly deep-dive into infrastructure in Egypt.

Published every Wednesday in EnterpriseAM.

Read Hardhat
12

HARDHAT

Project update: Where things stand with Egypt’s Dabaa nuclear power plant

PROJECT UPDATE- The Dabaa nuclear power plant: Egypt’s nuclear energy production strategy is seeing progress as construction begins on the planned 4.8 GW nuclear power plant in Dabaa. The project — which has faced delays due to covid-19 — is now moving ahead, with more tenders kicking off for the third reactor at the plant, after the Egyptian Nuclear and Radiological Regulatory Authority (ENRRA) gave Russian state nuclear company Rosatom a construction permit for the reactor.

REFRESHER- Rosatom was contracted in 2015 to handle the construction and provide fuel for Dabaa, Egypt’s first nuclear power plant. The company broke ground on the USD 30 bn project last summer. Dabaa will include four 1.2-GW reactors and is set to come online at the beginning of the next decade. Construction work was set to begin in the second half of 2020 and complete by the 2028-2029 fiscal year, but disruptions caused by the pandemic now means that the plant is unlikely to be up and running before 2030.

What’s happening now? The process of selecting contractors and consultants for the third reactor is currently underway after ENRRA granted Rosatom the construction permit for the reactor, a source with knowledge of the matter told Enterprise. Rosatom subsidiary Atomstroyexport is the plant’s main contractor and is issuing tenders for subcontractors for the project.

Who’s already working on the plant: Our friends at Hassan Allam Construction, alongside Arab Contractors and Petrojet, were awarded contracts in three separate tenders to work on the site of the plant back in 2020. Hassan Allam was awarded a USD 20 mn contract to prepare the “pioneers base camp” for staff working on the facility, while Arab Contractors were tapped to do leveling work for the camp.

The new tenders are expected to draw interest from contractors, particularly considering the tax holiday that will be granted to all contractors on the project, our sources tell us. The tax exemption was introduced last year through amendments to the law regulating the Nuclear Power Plants Authority (NPPA) to fully exempt from taxes all parties involved in building and operating nuclear projects, including contractors, sub-contractors, equipment suppliers, and workers.

What’s the timeline for the reactor looking like? Now that ENRRA has handed Rosatom the construction permit for the third reactor, it’s expected that technical work to lay the first concrete foundation for the reactor will begin in the second quarter of the year, sources from the Electricity Ministry who requested to remain anonymous told Enterprise.

The good news: The timeline to complete the plant is unlikely to be affected by fiscal constraints at the state budget level, since the vast majority of the work is being executed by the private sector, or financed through loans and grants, our Electricity Ministry sources said. This means that work on the plant is expected to move ahead without further delays, the sources explained.

And: Contractors are getting their compensation payouts for delayed state projects: Generally speaking, the procedures for contractors who have suffered losses on state projects due to macroeconomic headwinds to receive compensation from the government are going smoothly, head of the Egyptian Federation of Construction and Building Contractors Mohamed Sami Saad told Enterprise. These payouts are helping to boost liquidity in the sector, which is increasing contractors’ appetite to compete on new projects, including the contract for the third reactor, Saad said.

Background:Late last year, President Abdel Fattah El Sisi ratified amendments to the Contractors Compensation Act to hand out compensation from the government for losses they incurred on state projects. The amendments came as contractors suffered from a combination of headwinds, including higher costs of raw materials, previous import restrictions, EGP devaluation, and limited financing options. The government is expected to dish out some EGP 40 bn in compensation, Saad had previously told us.

Your top infrastructure stories for the week:

  • A Russian and a US firm reportedly intend to bid to build small nuclear reactors in Egypt.
  • President Abdel Fattah El Sisi discussed energy links with Cypriot counterpart Nikos Christodoulides in Cairo.
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CALENDAR

APRIL

April: SCZone roadshow in China.

April: SCZone to begin providing ship bunkering services in the Suez Canal’s ports.

10-16 April (Monday-Sunday): IMF / World Bank Spring Meetings, Washington DC.

12 April (Wednesday): British Egyptian Business Association (BEBA) annual Ramadan iftar, Salah El Din Citadel, Cairo.

15 April: Lamees El Hadidi’s startup competition show, El Forsa, closes applications.

16 April (Sunday): Coptic Easter. Official holiday for banks and the EGX.

17 April (Monday): Official holiday in observance of Sham El Nessim.

20-25 April (Thursday-Tuesday): Public sector holiday in observance of Eid El Fitr and Sinai Liberation Day.

21 April (Friday): Eid El Fitr (TBC).

28 April (Friday): First day of daylight saving time.

30 April (Sunday): Tenth of Ramadan dry port tender deadline.

30 April (Sunday): Deadline for self-employed to register for e-invoicing.

30 April (Sunday): Deadline for corporate tax returns.

30 April (Sunday): End of Mediterranean, Nile Delta oil + gas exploration tender.

Late April – 15 May: 1Q2023 earnings season.

MAY

1 May (Monday): Labor Day.

1 May (Monday): Deadline to apply to VC funds program by GIZ Egypt, AfricaGrow and Dutch development bank FMO.

2 May (Tuesday): National Paints Holding’s and Eagle Chemicals’ MTOs for Pachin ends.

2-3 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 May (Wednesday): National Dialogue begins.

4 May (Thursday): National holiday in observance of Labor Day (TBC).

4 May (Thursday): IEF-IGU Ministerial Gas Forum, Cairo.

7 May (Sunday): Senate back in session.

9-11 May (Tuesday-Thursday): First edition of the Arab Actuarial Conference, Cairo.

12-15 May (Friday-Monday): Egypt Fashion Week.

14 May (Sunday): Expat car import scheme ends.

14 May (Sunday): EgyptAir to launcha new route to Dhaka, Bangladesh.

15 May (Monday): Enterprise Exports & FDI Forum, Four Seasons Hotel Cairo at Nile Plaza.

16-18 May (Tuesday-Thursday): Egypt will host its first conferenceon cybersecurity and defense intelligence systems (CDIS-Egypt).

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

19 May (Friday): Arab League summit, Riyadh.

19-21 May (Friday-Sunday): G7 summit, Hiroshima, Japan.

20-21 May (Saturday-Sunday): eGlob Expo, St. Regis Almasa Hotel, Cairo.

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

JUNE

June: Indian representatives to discuss prospect investments in the Suez Canal.

7-10 (Wednesday-Saturday): The second edition of Africa Health Excon.

10 June (Saturday): Thanaweya Amma examinations begin.

12 June - 15 July (Monday-Saturday): Thanaweya Amma exams.

13-14 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 June (Thursday): Deadline for bids in EGPC’s mature oil fields tender.

19-21 June (Monday-Wednesday): Egypt Infrastructure and Water Expo debuts at the Egypt International Exhibition Center.

22 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

28 June-2 July (Wednesday-Sunday): Eid El Adha (TBC).

30 June (Friday): June 30 Revolution Day.

30 June (Friday): Egypt to exit Grains Trade Convention.

JULY

1 July: House of Representatives deadline to approve the FY 2023-2024 budget.

1 July: GAFI to launch the country’s first integrated electronic platform to facilitate setting up a business.

18 July (Tuesday): Islamic New Year.

20 July (Thursday): National holiday in observance of Islamic New Year (TBC).

23 July (Sunday): Revolution Day.

25-26 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

27 July (Thursday): National holiday in observance of Revolution Day.

Late July-14 August: 2Q2023 earnings season.

AUGUST

August: Hassan Allam Utilities + Agility to open Yanmu East logistics park.

3 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

10 August (Thursday): Shalateen Mineral Resources gold mining tender closes.

22-24 August (Tuesday-Thursday): BRICS summit, Johannesburg, South Africa.

SEPTEMBER

9-10 September (Saturday-Sunday): G20 summit, New Delhi, India.

15 September (Friday): IMF to review USD 3 bn program.

19-20 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

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

21-23 September (Thursday-Saturday): Narrative PR Summit, Somabay.

25 September (Monday): Nasdaq deadline for Swvl Holdings Corp to increase its market value of publicly held shares to a minimum of USD 15 mn.

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

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

OCTOBER

October: Deadlinefor ins. providers to link their databases with the FRA.

2-5 October (Monday-Thursday): ADIPEC 2023, Abu Dhabi National Exhibition Center.

6 October (Friday): Armed Forces Day.

13 October- 20 October (Friday-Friday): The sixth edition of El Gouna Film Festival (GFF).

Late October-14 November: 3Q2023 earnings season.

26 October (Thursday): Daylight saving time ends.

31 October - 1 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

NOVEMBER

November: Cairo to hostIntra-African Trade Fair.

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

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

DECEMBER

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

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

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

Summer 2023: EGX to launch a shariah-compliant index.

1H 2023: GAFI roadshow set to launch to drum up foreign investment for golden licenses

1H 2023: Abu Dhabi Islamic Bank intends to launch a digital consumer finance company

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.

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

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

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

2Q 2025: Safaga Terminal 2 to initiate operations.

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