Meet your new government: The cabinet of newly-appointed Prime Minister Mostafa Madbouly was announced and sworn into office on Thursday in what stands as the largest cabinet shuffle since Prime Minister Sherif Ismail’s cabinet was appointed back in March 2016. In all, 12 new ministers entered cabinet.

Don’t mistake the breadth of the shuffle as signaling a new policy direction: This is a cabinet of continuity, and three themes will continue to dominate: economic reform, national security and investment in health and education. We got the first sign it would be “business as usual” on the economic front with the unveiling of fuel subsidy cuts on Saturday.

Key ministries get new bosses: The shuffle sees two new faces leading the national security apparatus and three key members of the economic team leaving government service. The ministers of interior and defense were both replaced, while our friends Amr El Garhy (finance) Tarek Kabil (trade and industry) both left, as did Khaled Badawy, who stepped down as minister of public enterprises, whose portfolio grew in importance with the rebirth of the privatization program.

Still in office: Supply Minister Ali El Moselhy and Investment and International Cooperation Minister Sahar Nasr will continue in office, and we won’t have a new housing minister: Madbouly retains that post while serving as PM.

Largest ever number of women in cabinet: As Bloomberg notes, the shuffle also beat the record for the largest number of women ministers in Egypt’s history with the addition of two new women ministers.

Old guard will stick around as presidential advisers: Outgoing Prime Minister Sherif Ismail was appointed as President Abdel Fattah El Sisi’s right hand man on national projects development, a position previously held by former Prime Minister Ibrahim Mahlab. Former Interior Minister Magdy Abdel Ghaffar and former Defense Minister Sedki Sobhi were appointed as advisors to the president on anti-terrorism and defense, respectively, according to Al Shorouk.

And now, without further ado, we present the Madbouly Cabinet:

Finance: Mohamed Maait: Amr El Garhy’s lead on treasury affairs steps up to become minister. The longtime civil servant has a storied history of government service (pdf), including serving as acting head and then deputy chairman of the Financial Regulatory Authority back when it was still known as EFSA.

Deputies: Former World Bank economist and longtime friend of Enterprise Ahmed Kouchouk will continue to serve as Vice Minister of Finance for Fiscal Policy, according to El Dostor. Notable academic Ehab Abouaish (pdf) has replaced Maait as Vice Minister of Finance for Treasury Affairs, according to Youm7. Abouaish has served as the dean of the Faculty of Commerce at Cairo University since 2015.

Trade and Industry: Amr Nassar: Business executive and management expert Amr Nassar has served as a consultant and held policy development roles at industry groups. He is a former Secretary General of the Engineering Industries Export Council and a board member of the Automotive Division of the Federation of Egyptian Industries. Most significantly, Nassar was among the architects of the Automotive Directive, one of the key outstanding legislation of the ministry, according to a ministry statement. Nassar’s top priority as minister will be to drive sustainable industrial growth, he said in a statement. He will also continue to expand Egypt’s exports with a focus on key sectors while looking to expand SME industrial growth at home as per targets set out by the ministry’s 2020 strategy, he added.

Public Enterprise: Hisham Tawfik: We have another private sector appointment for the ministry with longtime business executive Hisham Tawfik, founder and CEO of solar energy and solar panel installation firm Cairo Solar. Prior to founding the company — which became the first private sector company in Egypt to sell solar power to the national grid — the finance industry veteran was the Chairman of Arabeya Online For Securities Brokerage and was a board member at Naeem Holding.

Defense: Lt. Gen. Mohamed Zaky: Zaky most recently served as head of the presidential guard following a career as a paratroop commander, according to the Defense Ministry. Zaky replaces Sedki Sobhi.

Interior: Gen. Mahmoud Kandil: Kandil headed up the homeland security branch of the Interior Ministry prior to his appointment, according to the ministry. Kandil replaces longtime minister Magdy Abdel Ghaffar.

Health: Hala Zayed: Prior to her appointment, Zayed headed up the education program at the 57357 Children’s Cancer Hospital. She also served as a board member of Al Azhar Specialist Hospital and a member of the Armed Forces College of Medicine’s education council, according to a statement from the Health Ministry. Zayed replaces outgoing minister Ahmed Rady. Her priority as minister is to drive implementation of the Universal Healthcare Act, according to Ahram Gate. Zayed made several key appointments at the ministry and state hospitals on Sunday, Al Masry Al Youm reports.

Agriculture: Ezzedin Abu Setit: The veteran academic has led numerous research projects, including on the deployment of sustainable and arid agriculture methods — a project funded through the Japan International Cooperation Agency (JICA), according to Al Shorouk.

CIT: Amr Talaat: Industry veteran and business executive Talaat rose through the ranks at IBM Egypt since joining the company in 1988 to become IBM Egypt’s General Manager in 2010, according to a ministry statement. He replaces Yasser El Kady. Talaat’s priorities going forward include improving quality of telecom and internet services in Egypt (thank God), and fostering entrepreneurship and human capital development, he said in a statement.

Civil Aviation: Younes El Masry: El Masry commanded Egypt’s Air Force prior to his appointment as minister, according to Al Shorouk. His priorities going forward would be to press on with the ministry’s program to expand airport capacity and EgyptAir’s fleets, he said during an inspection of Sharm El Sheikh Airport on Sunday.

Local Development: Mahmoud Shaarawi: Shaarawi joins the ministry following a career in the Interior Ministry, where her was most recently deputy minister for financial crimes, according to a ministry bio. The local press claims his most pressing priority is to ensure that the new taxi fares comply with last weekend’s directives nationwide, but…

Environment: Yasmine Abdel Aziz: Abdel Aziz has held numerous positions within the ministry, most recently as an adviser and assistant to outgoing minister Khaled Fahmy on international agreements, particularly those pertaining to the Paris Climate Change Accord. She also served as an international expert on the Nile Basin Initiative, according to a ministry statement. Her priorities moving forward include pressing on with developing the state’s waste management program.

Youth and Sports: Sobhi served as assistant Youth and Sports Minister following a stint as the marketing director for Zamalek football club, according to Ahram Gate.

Fuel price hikes came into effect over the long weekend: The government raised the price of fuel products by c. 50%, according to a detailed price list put out by the Oil Ministry. The subsidy cuts were necessary to save the FY2018-19 budget around EGP 90 bn in fuel subsidy costs, said Finance Minister Mohamed Maait following the hikes. Next year’s budget allocates EGP 89.1 bn for fuel subsidy spending, down from EGP 110.2 bn in FY2017-18. Maait noted that the savings from the subsidy cuts will allow the government to allocate funds towards social welfare spending and other subsidy benefits, which total EGP 334 bn, including EGP 100 bn for bread subsidy spending. It will also allow the government to health and education spending targets, Maait added in a statement.

Background: This would be the third time the government has hiked fuel prices since signing the USD 12 bn IMF Extended Fund Facility in 2016. The price hike came just days after the government raised electricity prices by an average of 26% last week, following a 46.5% increase in water prices and the threefoldincrease in Metro ticket prices. Fuel prices as of Saturday are as follows:

• 95 octane petrol at the pumps will now cost EGP 7.75 per liter, up from EGP 6.60;
• 92 octane petrol rose to EGP 6.75 per liter, from EGP 5.00;
• 80 octane petrol increased to EGP 5.50 per liter from EGP 3.65;
• Diesel fuel will also sell for EGP 5.50 per liter from EGP 3.65;
• Kerosene as well rose to EGP 5.50 per liter from EGP 3.65;
• Cooking gas cylinders now cost EGP 50 from EGP 30;
• Gas cylinders for commercial ventures jumped to EGP 100 from EGP 60;
• Compressed natural gas for automobiles rose to EGP 2.75 per cubic meter from EGP 2;
• The price of fuel oil (mazot) to factories has not changed and remains at EGP 3,500 per tonne.

Expect inflation to rise only temporarily as the economy absorbs the shock from the recent hike, Maait told Enterprise yesterday. The headline inflation rate for June could rise to an average 13-14%, according to economic advisor Reham El Desoki, who tells Al Shorouk that monthly inflation will hover around 2-3%. The investment bank expects inflation to hit 12.4% in July as electricity prices also increase at the start of the month with the beginning of the new fiscal year.

The government also raised cab fares 10-20% on Saturday following the hikes. The Madbouly Cabinet left it up to the governorates to decide on the exact fare hike, according to a cabinet statement on Saturday. The statement said that authorities were coordinating to ensure compliance with the new prices, which will be posted at taxi stands. Microbuses have also been issued a strict set of standard fares by the Consumer Protection Authority, as Prime Minister Mostafa Madbouly warned there would be no tolerance for price gouging.

That means Uber and Careem as well: Ride-hailing apps Uber and Careem will also raise their fares. Careem Egypt Managing Director Ramy Kato reportedly told Al Mal that the company was considering raising prices by an average 35% “to meet operating costs.” Uber, meanwhile, announced that it had raised prices and put out an updated price sheet.

Traveling by bus may also get more expensive. The Holding Company for Maritime and Land Transport is studying whether to raise bus fares for travel across the country using the Upper Egypt or East and West Delta companies, according to Al Mal. This comes as government sources tell the newspaper that higher fuel prices will cost the National Railway Authority some EGP 1 bn in annual losses. They add that the Transport Ministry is working on developing the sector’s infrastructure to encourage more cargo transport via rail as a way of widening its revenue stream.

No impact on bread subsidies: The increase in fuel prices will not impact the price of subsidized bread, as the Supply Ministry will take on the burden and reimburse bakers for additional costs incurred, according to a statement carried by Ahram Gate. Minister Ali El Moselhy had also confirmed as much during an interview on Saturday (watch, runtime: 13:47).

The price of a range of food products will rise 3-7% over the coming period, said Mohamed Shoukry, the deputy head of the Federation of Egyptian Industries’ (FEI) food producers division, who explained that the increase will come on the back of higher transport costs. Other commodities, such as construction and building materials and electronic appliances are also expected to see price increases over the coming weeks and months.

Telecoms are angling to raise prices, but the gov’t isn’t having it: A source from a telecoms company tells Al Mal that the fuel price hike will force mobile network operators to consider raising the price of services by as much as 50%. Sources from the National Telecommunications Authority were quick to throw cold water on the notion, telling AMAY that there will be no price increases in phone services.

Pharma is also trying to ride the wave. Members of the FEI’s pharma division, who have been trying to push for higher med prices since their last hike was approved in January, will meet next week to discuss the impact of higher fuel and power prices on their production costs, according to member Hisham Hagar. The FEI is also planning to meet with newly-appointed Health Minister Hala Zayed to discuss the possibility of another increase in med prices.

FEI pushes for minor wage increase for private sector industrial workers: Meanwhile, the FEI appears to be lobbying for private sector industrial workers to receive a minor wage increase of EGP 100-200 per month to offset the rising prices of fuel and electricity, FEI head Mohamed Elsewedy said yesterday. The federation is also in talks with the government to allow the increase to be tax-exempt, according to Elsewedy. The push comes a few weeks after Parliament signed off on an exceptional raise for civil servants.

Trouble in parliament: Members of the small House opposition bloc, the 25-30 Alliance, sent an urgent note to President Abdel Fattah El Sisi, asking that he reverse what they described as “errant economic decisions,” Reuters reports.

Also good for the nation’s finances: Record Suez Canal revenues. Suez Canal revenues rose 11.5% y-o-y during FY2017-18 to USD 5.585 bn, up from USD 5.008 bn in FY2016-17, according to the Suez Canal Authority. The canal’s revenues during the current fiscal year mark an all-time high, authority chief Mohab Mamish said.

Delek, Noble, Egyptian partner in talks to acquire stake in EMG, which could quash outstanding arbitration ruling: The stars appear to be aligning in favor of an agreement that could see Egypt become a hub for East Mediterranean gas and end a long-standing arbitration case. Israel’s Delek, its Texas-based partner on the Leviathan gas field in Israel Noble Energy, and an unnamed Egyptian partner are in advanced talks to close on the acquisition of a 37% stake in the East Mediterranean Gas Company (EMG), which owns a pipeline that had once been used to transport Egyptian LNG to Israel, people familiar with the matter tell Bloomberg.

Clearing the way for gas imports from Israel: The stakes under discussion include those currently owned by businessmen Sam Zell and Yossi Maiman, who along with Israel Electric Corporation, successfully won arbitration cases against Egypt for cutting off natural gas exports to Israel in favor of domestic consumption back in 2012. If completed, the transaction would make the consortium the largest voting bloc in EGM, and potentially clearing the biggest legal hurdle standing against Egypt importing gas from Israel. As we noted last week, Delek shareholders will meet on 1 July to vote on investing USD 200 mn to buy EMG.

What’s at stake? A 10-year, USD 15 bn agreement signed in February to export gas from Israel’s Tamar and Leviathan fields to Egypt via Alaa Arafa’s Dolphinus Holdings. While the then-Ismail Cabinet had signed off on the agreement, it had for years held up plans to import gas from Israel on account of the USD 1.76 bn international arbitration ruling. Prime Minister Sherif Ismail had hinted at the time of the signing that there was some compromise in the works, which the Israeli government denied. February’s agreement is the first of many that Egypt is hoping to sign as it presses ahead with plans to turn the country into a regional energy export hub.

On a related note, production at the Zohr gas field will reach 1.75 bcf/d by August following the completion of the third unit of the field’s gas treatment plant, Oil Minister Tarek Molla said in a statement on Thursday. He added that recent production increases have pushed Egypt’s total natural gas production to about 6 bcf/d.

Which is good news as we’re relying more on cheaper gas and less on expensive oil: This comes as BP says Egypt grew its market share of global gas consumption by 4.4% y-o-y in 2017, according to a breakdown of the report on Bloomberg. Egypt’s reliance oil as a market share of global consumption fell by almost similar 4.3% y-o-y.

This came as EGAS purchased an unspecified quantity of LNG in a tender yesterday at reportedly more than USD 11 per MMBTU, traders tell Reuters’ Arabic service. The shipment is scheduled for a July-August delivery.

Abraaj submits application for court-supervised restructuring: The once high-flying emerging markets private equity firm filed last week an application for a court-supervised restructuring in the Cayman Islands, it said in a statement last Thursday (pdf). “The Company has made this application so that the rights of all stakeholders can be protected while the Company and the [joint liquidators] promote a consensual restructuring of the Company's obligations,” the firm added. The move comes as investors and creditors have been howling to get their money out of the firm, which once managed USD 14 bn in assets. Among them is the UAE’s Jafar family, a one-time Naqvi ally and founders of Dana Gas, who are looking to recoup a USD 100 mn loan from Abraaj, according to Bloomberg. You can catch the timeline of the unravelling, courtesy of Bloomberg.

Can’t get enough? The business information service has a tic-toc on what went wrong headlined “The Downfall of Dubai’s Star Investor.”

Seeking liquidity, Abraaj has sold its full 5.4% stake in Orascom Construction, according to a regulatory filing from OC on the Nasdaq Dubai on Thursday. Abraaj sold at a price of USD 8.30 per share, valuing the stake at USD 52 mn.

Cleopatra Hospitals Group has put out a statement reassuring investors that troubles at Abraaj won’t impact the nation’s largest private-sector hospital group. Abraaj’s stake in Cleopatra is in the single digits, it said. “Abraaj Capital does not own any direct stake and indirectly owns less than 5% of Cleopatra through its investment as a limited partner in the private equity funds it manages,” the company said in a statement on Thursday (pdf). The statement notes that private equity funds managed by Abraaj, together with development finance institutions, own a combined c.69% of Cleopatra.

Meanwhile, Cleo is still on the hunt for acquisition targets, the company said in a bourse filing on Thursday (pdf). Among the companies Cleopatra is considering is El Katib Hospital in Dokki, the firm added. Cleopatra noted, however, that it has yet to take any actionable steps to acquire a hospital, including seeking regulatory approval. The statement in response to what the company said was an erroneous reports in Al Mal that claimed Cleo was close to completing an acquisition. The statement also came a day after the Financial Regulatory Authority blocked (pdf) its attempted acquisition of El Nozha International Hospital.

M&A WATCH- Dr. Oetker acquires 100% of Cook’s parent company Tag El Melouk. Tag El Melouk Food Industries is about to become a Dr. Oetker company after singing “definitive agreements” for the full sale of the company to the German multinational known for its cake mixes, frozen pizzas and other food products. Tag El Melouk is a market leader in the production of baking powder, vanilla and salt, among other products, having been founded in 1954 by the Paraskevas family, who were selling shareholders in the transaction. The sale was confirmed in a statement this weekend from Arqaam Capital (pdf) quoting Suleiman-Sebastien Paraskevas as a representative of the selling shareholders. Neither party has confirmed a price tag for the sale. We had previously noted domestic press reports that pegged the transaction value at about EGP 1 bn.

Advisors: Arqaam capital was sole sell-side advisor, while Matouk Bassiouny was legal counsel to the selling shareholders. Dr. Oetker had reportedly tapped CI Capital as buy-side advisor.

M&A WATCH- Thailand’s Indorama to acquire for 50% stake in EIPET from India’s Dhunseri: Indorama Netherlands BV, an indirect subsidiary of Thailand’s Indorama Ventures, signed on Thursday an agreement with India’s Dhunseri Petrochem to acquire a chunk of the Egyptian Indian Polyester Company’s (EIPET) polyethylene terephthalate (PET) plant in Ain Sokhna. The facility has an annual manufacturing capacity of 540k tonnes, according to a release (pdf). The value of the transaction was not disclosed.

The agreement, which came into immediate effect, also saw Indorama acquire 50% of EIPET’s equity and enter a 50% JV partnership with Dhunseri, Indorama said in a statement to the Thai stock exchange (pdf). The JV will focus on the domestic “consumer beverage industry and increase[d] demand for sustainable packaging,” and will be the biggest such project in the EMEA region, according to Indorama.

Background: Dhunseri had bought out the Egyptian Petrochemicals Holding Company’s (ECHEM) 23% share in EIPET last month. The Indian company is planning to invest USD 225 mn in EIPET and begin operating one production line in August of this year.

IPO WATCH- Ebtikar planning EGX debut in two years: Ebtikar, the SME finance outfit owned by B Investments and MM Group, could list shares on the EGX in two years’ time, Investors Relations Head Omar El Labban tells Al Mal. The company is also in the process of applying for a EGP 100 mn capital increase to EGP 375 mn, the proceeds from which it intends to use to continue growing within the non-banking financial services sector, which should see it begin to offer new services such as factoring, according to El Labban. The initial public offering and capital increase are part of the company’s plan to expand its activities, which recently saw it acquire an 87% stake in Tamweel Group from Orascom Development Egypt in a transaction valued at EGP 360 mn.

EFG Hermes lands first frontier markets IPO: ASA International, which bills itself as “of the world’s largest and most profitable international microfinance institutions” has announced its intention to proceed with an initial public offering on the London Stock Exchange. The group, which claims a 12-country footprint spanning Africa and Asia, expects its shares to be admitted to trading on the LSE in July, it said in its intention to float. ASA bills itself as a Bangladeshi-Dutch lender. The company operates in 12 countries, with the biggest branch networks in the Philippines, Pakistan and Nigeria. The company had pre-tax profits of USD 43.3 mn last year, up 23% on the previous year. EFG Hermes is bookrunner for the transaction alongside Investec. Citigroup Global Markets are sole sponsor, sole global coordinator and joint bookrunner, while Keefe, Bruyette & Woods (acting through Stifel Nicolaus Europe Limited) is acting as lead manager. You can read the intention to float here (pdf) or catch full coverage in the Financial Times.

CIB, Elsewedy Electric, Orascom Construction among top 100 listed companies in Arab world: Our friends at CIB, Elsewedy Electric, Orascom Construction as well as Global Telecom Holding were the only four Egyptian companies to get a nod in Forbes’ list of the top 100 listed companies in the Arab world for 2018. Based on the list’s four metrics — revenues, profits, market value, and total assets — CIB landed in the 38th spot, while Elsewedy Electric is ranked 69th, Orascom Construction 82nd, and Global Telecom 95th.

MOVES- IBM announced the appointment of Wael Abdoush as Country General Manager to IBM Egypt, Al Mal reports. Abdoush, who was the director of server solution sales team for the Middle East and Africa at the company, succeeds Amr Talaat who now heads the ICT Ministry.