Net foreign liabilities narrow in February after hitting record high in January thanks to Ras El Hekma money and investor confidence

Tuesday, 2 Apr 2024

Net foreign liabilities narrow in February after hitting record high in January thanks to Ras El Hekma money and investor confidence

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Today at a glance

What We're Tracking Today

El Sisi will be sworn in for his third term today.

Economy

Net foreign liabilities narrow by USD 7.1 bn in February as Ras El Hekma funds start to reflect in banks’ sheets.

Economy

We could receive the second tranche of our IMF loan in June.

Moves

Akef El Maghraby appointed as Suez Canal Bank’s new CEO and managing director.

Automotive

Auto sales rebound in February.

What We're Tracking Today

March’s PMI figures are out tomorrow.

What We're Tracking Today

We have a date for the EU-Egypt Investment Conference.

PLANET FINANCE

Gulf nations are pushing aggressively into mining in a bid for diversification.

Going Green

Egypt could start producing sustainable aviation fuel next year.

What We're Tracking Today

Egypt’s El Sisi begins his third term in office today

Good morning, folks. We have plenty of news for you this morning, but it’s all good: Foreign liabilities in banks are narrowing, the second tranche of our IMF package is due this summer, and auto sales are picking up.

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

** Were you forwarded this email? Tap or click here to get your own copy delivered every weekday before 7am Cairo time — without charge.

HAPPENING TODAY-

President Abdel Fattah El Sisi will be sworn in for his third term later today after he takes the oath of office before the House of Representatives at the new administrative capital. El Sisi’s new term is likely to start with some new faces at the helm of some of the country’s ministries and other government bodies.

And the presidency will officially begin its move to the new capital as of today, Administrative Capital for Urban Development CEO Khaled Abbas confirmed over the weekend.

El Sisi spent the day in Jordan yesterday before returning to Egypt in the evening. During his day in Amman, he met with Jordan’s King Abdullah II to discuss the ongoing situation in Gaza.

HAPPENING TOMORROW-

It’s PMI week: S&P Global will publish Egypt’s PMI figures for March tomorrow. All eyes will be on the gauge to see the effect of the float on the growth — or lack thereof — of the country’s non-oil private sector and business confidence.

Finally, some positive PMI news? After having been in contraction for 39 straight months and falling to an 11-month low last month on the back of Red Sea disruptions and high inflation, there is reasonable hope that the end of the FX shortage, death of the parallel market, and clearing of port backlogs — all stemming from the float of the EGP — may put the private sector on a new trajectory.

WEATHER- It’s spring in Cairo today, with a high of 31°C and a low of 19°C, according to our favorite weather app.

It’s cooler in Alexandria, with a high of 24°C and a low of 15°C.

So, when do we eat? Maghrib prayers are at 6:15 pm in the capital city, and you’ll have until 4:13 am tomorrow to hydrate and caffeinate ahead of fajr.

WATCH THIS SPACE-

Poultry and egg prices to dip starting today: Poultry and egg producers will impose price caps on the two commodities starting today as part of a new initiative by the Poultry Producers Union to cut prices by 10-15%, according to a cabinet statement.

The new price tags: Farms are to sell chicken at EGP 85 per kg and eggs at EGP 135 per carton to shops. For the end consumer, the new prices will translate to a maximum of EGP 95 per kg of chicken and EGP 145 per carton of eggs, according to the statement.

Remember: Last week, the government directed local manufacturers, suppliers, and retailers to gradually slash prices by up to 30% by the end of the Eid Al Fitr holiday.

CIRCLE YOUR CALENDAR-

The EU-Egypt Investment Conference is happening on Saturday, June 29, according to a cabinet statement. The conference, originally scheduled for May, is expected to bring together some 450 European companies.

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-

#1- The UK and US have inked what policymakers on both sides of the Atlantic are positioning as a “landmark” AI agreement, formally laying out how they will work together to assess risks from AI models. Calling AI “the defining technology of our generation,” US Secretary of Commerce Gina Raimondo said the agreement will help keep “AI safe both now and in the future.”

Is joint regulation next? That’s the dream of AI doomers — and the nightmare of AI boomers, who are chafing at US, UK and EU regulators having recently taken a much more hands-on approach to Big Tech than at any point in the past three decades.

Read for yourself: Check out the announcement of the US-UK AI agreement, or go deeper with Time (it interviewed Michelle Donelan, the UK Secretary of State for Science, Innovation, and Technology) or the Financial Times.

SPEAKING OF REGULATION- Microsoft will start selling Teams separately from Office as it worries about antitrust legislation, Reuters notes. The regulators began looking into Teams when it set out in 2020 to kill Slack, the popular workplace messaging app.

#2- Israeli warplanes bombed Iran’s embassy in Syria yesterday, killing seven Iranian military advisors.

AND- Tens of thousands of Israelis turned out to protest Benjamin Netanyahu over the weekend and call for new elections. It was the “largest anti-government protest since the war in Gaza began,” Semafor notes.

ALSO- White House national security advisor Jake Sullivan is due in Saudi today to meet with Crown Prince and Prime Minister Mohamed bin Salman, Axios reports in an exclusive out early this morning. Sullivan will be joined by Brett McGurk, the top White House Middle East envoy, and senior energy advisor Amos Hochstein

On the agenda: “A potential mega-deal that would include Saudi normalization with Israel” as part of a series of agreements that would include a US-Saudi defense pact, the news outlet reports. A nuclear agreement could also be part of it.

SIGN OF THE TIMES- How Gen Z is becoming the toolbelt generation, in the Wall Street Journal, which notes that in the United States, “more young workers are going into trades as disenchantment with the college track continues, and rising pay and new technologies shine up plumbing and electrical jobs.”

But Gen X did it first: Go read Matthew Crawford ’s Shop Class as Soulcraft: An Inquiry into the Value of Work.

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: We take a look at the Oil Ministry’s plan to produce the country’s first sustainable aviation fuels.

Tags:

Abdel Fattah El Sisi What We're Tracking Today

Somabay set to make a splash again with World Aquatics triple event extravaganza: Somabay is hosting the World Aquatics series for the second year, featuring three events in March, May, and August. The series includes the World Aquatics Open Water Swimming World Cup 2024, World Aquatics Elite Beach Water Polo World Cup 2024, and the World Aquatics Under 18 Beach Water Polo Cup 2024.

Economy

Net foreign liabilities narrow by USD 7.1 bn in February as Ras El Hekma funds start to reflect in Egyptian banks’ sheets

Net foreign liabilities in the banking system saw a 24% drop in February from the all-time high reached in January, in what can be considered the first official data to show the significant impact of Ras El Hekma agreement and what it brought along from de-dollarization and investor appetite for local debt on banks’ balance sheets.

By the numbers: By the end of February, net foreign liabilities in the country’s banking system stood at USD 21.9 bn from USD 29.0 bn the previous month, marking the lowest figure recorded in 13 months according to Enterprise calculations based on Central Bank of Egypt data.

The main drivers: Foreign assets in commercial banks improved by USD 3.9 bn, while foreign liabilities in the central bank eased by USD 2.6 bn during February. Although the central bank doesn’t provide the reasons behind the change in balances, it is likely driven by the first tranche of USD 15 bn from the Ras El Hekma agreement that arrived in the nation’s coffers in late February and renewed appetite for Egyptian debt and equities following the agreement.

The caveat: The net foreign liabilities figure was denominated in EGP using a pre-float exchange rate of c. EGP 30.90 to the USD at the end of February. Liabilities are expected to widen again in the coming few months to reflect the 35% depreciation of the EGP over the past month as a result of the currency float on 6 March.

But it could just be a matter of time before we see a significant improvement: Egypt has a whole lot of funds coming in over the next few months. We’re getting the first USD 820 mn tranche of the IMF USD 8 bn package this week and another USD 820 mn in June and EUR 1 bn from the EU EUR 7.4 bn package before the summer. Egypt is also due to receive the second tranche of USD 20 bn from the Abu Dhabi wealth fund ADQ as part of the Ras El Hekma agreement in May.

What this means: These funds should be enough to outweigh the expected increase in net foreign liabilities due to the weakened EGP — a trend we saw before following the 2016 managed float.

Tags:

Central Bank of Egypt economy foreign exchange

Economy

The second tranche of Egypt’s loan programme from the IMF could arrive in June

The second tranche of our IMF package could arrive this summer: We are in line to receive the second USD 820 mn tranche under the IMF’s USD 8 bn loan program this summer after the fund completes its third review of the facility, IMF mission chief for Egypt Ivanna Hollar said during a press conference yesterday. The third review is expected to be complete by the end of June.

Remember: The IMF’s Executive Board signed off on the USD 5 bn extension for our extended fund facility and completed its long-delayed first and second reviews of the facility over the weekend. Of the total USD 8 bn program, the Fund also approved a decision to let the state “immediately draw” around USD 820 mn this week.

What about the rest of the funds? Reviews, each unlocking a USD 1.3 bn tranche, will take place every six months, until the program comes to an end in fall of 2026, Hollar added.

To ensure loan disbursement: “At each individual review, the expectation is that the conditions that we're seeing now in the market are going to continue to hold, in the sense that we do not see a return to a system of FX rationing and lack of FX availability,” Hollar said.

FDI secured, now what? The IMF will keep its eyes peeled as to how authorities manage recent inflows, Hollar explained, adding that policies to ensure maximum gains from these inflows will be discussed during upcoming reviews.

More cuts to energy subsidies are needed: “The commitment under the program is to continue reducing [energy subsidies] using the fuel price adjustment mechanism that has been proposed by the authorities in favor of using some of those resources to better target the resources that are going to households which need additional income support,” Hollar said.

Egypt had originally planned to eliminate energy subsidies by the end of the fiscal year 2018-2019, but has been prolonging the phase-out process ever since. The government hiked electricity prices for households and businesses at the start of 2024 by 16-26%.

The Madbouly government raised fuel prices by 8.0-21.2% last month. The increases came in line with promises made by Egypt to the IMF over a year ago as part of the financial support agreement, when the government said it would allow fuel prices to rise to bring domestic prices in line with international energy markets.

More private sector involvement is crucial: Hollar highlighted the significance of having reforms that “strengthen the capacity of the private sector to operate in this environment and have the private sector be the engine of growth.”

ICYMI- The IMF and Egyptian authorities agreed on the expansion of the program last month after floating the EGP and enacting a jumbo 600-bps interest rate hike.

More to come: The loan review scheduled for June will also discuss the USD 1.2 bn long-term, low-cost climate financing Egypt plans on applying for under the IMF's Resilience and Sustainability Facility, Hollar said. “To qualify, countries need to have in place a strong set of policies that are intended to address the bases of climate change," she added.

MEANWHILE- No more rate hikes from the CBE? “I believe we’ve reached the peak of interest rates,” Cairo Capital Securities Chief Economist Hany Genena told Al Arabiya Business (watch, runtime: 5:40). “No further monetary tightening is needed,” he explained, pointing to the CBE using macroprudential tools, alongside the 600-bps rate hike.

The IMF disagrees: “The Central Bank should stand ready actually to tighten if we see inflation pressures to continue,” Hollar said.

** More to come: The IMF will publish its staff report on Egypt in the coming days.

Tags:

devaluation economy IMF

Moves

Akef El Maghraby appointed as Suez Canal Bank’s new CEO and managing director

New boss at the helm of the Suez Canal Bank: Suez Canal Bank has appointed our friend Akef El Maghraby (LinkedIn) as its CEO and managing director, the state-owned bank said in an EGX disclosure (pdf). El Maghraby enters the role following nearly eight years as the vice chairman of Banque Misr, preceded by an 11-year stint as the corporate bank head of Citibank Egypt. He is taking over from Hussein Refaie (LinkedIn), who led Suez Canal Bank for nearly seven years after serving as the CFO of the National Bank of Egypt, Barclays Egypt (now Attijariwafa Bank), and Citibank.

We knew this was happening: A source with knowledge of the matter told Enterprise last week about El Maghraby’s move to the Suez Canal Bank as part of a wider leadership shuffle at a number of state-owned banks.

Other upcoming leadership changes we’re keeping an eye for that are yet to be confirmed:

Al Baraka Bank Vice Chairman and CEO Hazem Hegazy is expected to take the reins at Banque du Caire, where he was previously executive vice-chairman.
AAIB Vice Chairman and Managing Director Tamer Waheedis expected to be named the next MD of the National Bank of Egypt;
EGBank Vice Chairman and CEO Nidal Assar is expected to run Banque Misr. He’s a former deputy governor of the central bank.
National Bank of Egypt Deputy Chairman Yehia Abou El Fotouh will reportedly move to AAIB;
And Banque du Caire Chairman and CEO Tarek Fayed is expected to head over to EBank.

The caveat: Our source was speaking anonymously to discuss sensitive personnel matters and cautioned that one or more of the appointments could change or fall through.

Tags:

Akef El Maghraby banking moves Suez Canal Bank

Automotive

Egypt’s auto sales rebound in February

The auto market bounces back: Auto sales rebounded in February, recovering from the 10-month low recorded in January, according to figures from the Automotive Marketing Information Council (AMIC). Distributors sold some 7.4k units last month, up almost 20% m-o-m.

Driving the jump: A22% m-o-m uptick in passenger car sales drove the trend, with 5,852 units sold. Truck sales also rose almost 9% m-o-m to 1,026 units. Bus sales remained almost unchanged, with a less than 1% m-o-m decline to 519 units.

Sales are also up from where they were a year ago, recording a 22% y-o-y increase on the back of a 38% y-o-y increase in passenger car sales. Bus and truck sales were both down in comparison to where they were a year ago, falling 32% and 2%, respectively.

Will the upward trend continue? It’s anyone’s guess. Passenger car prices saw notable drops following the float of the EGP and significant FX inflows and we’re expecting prices to continue to fall as more cars enter the market, which could boost sales. Some buyers have adopted a wait-and-see approach as they hold off on making car purchases in hopes that prices will fall further — this started following the announcement of the USD 35 bn Ras El Hekma agreement.

Our take: The auto market will stabilize when sellers and buyers believe that the EGP / USD exchange rate has stabilized and stop thinking of cars as an investment.

SOUND SMART- Cars became one of several safe haven assets Egyptians have been putting their money into to hedge against a weakening EGP, alongside gold and real estate. This makes it somewhat difficult to differentiate the real demand for cars from artificial demand.

The caveat: AMIC figures reflect data contributed by member distributors, who include most (but not all) industry participants.

Tags:

AMIC automotive

Capital markets

EFG Hermes tops the Egyptian Exchange brokerage league table in March

EFG Hermes’ brokerage arms once again topped the EGX brokerage league table in March with a market share of 17.7% according to figures released by the exchange (pdf). Rounding out the top five were CI Capital (8.2%), Thndr Securities (7.0%), Al Ahly Pharos (6.9%), and Mubasher Securities (5.5%). EFG Hermes has led the table for ten months in a row now, it also held the top spot every month but one in 2023.

Tags:

Al Ahly Pharos brokerage league capital markets CI Capital EFG Hermes EGX Mubasher Securities Thndr

EGYPT IN THE NEWS

Egypt’s literary scene is catching the attention of the int’l press

The international press is taking a brief break from reporting on Egypt’s economy to focus on a forgotten literary great, with the New York Times showcasing Egyptian author Iman Mersal’s efforts to work out the mystery behind the underappreciated writer Enayat Al Zayyat in Traces of Enayat, the English translation of which is set to hit US bookshops today. After stumbling across and buying Al Zayyat’s Love and Silence by chance thirty years ago in a Cairo market, Mersal has been captivated by the unacknowledged author from Egypt’s post-1952 revolution golden era for literature who ended her life in 1963 after having her manuscript rejected from a publisher.

Want to give it a read? Download the book on your Kindle here.

Tags:

literature

Also on our Radar

Offers roll in for the rehabilitation of EGX-listed EgyptAlum

MANUFACTURING-

Emirati + Chinese offers to rehabilitate EgyptAlum: UAE-based energy trading firm Fleet Energy, and China’s Nonferrous Metal Mining Group (NFC) have both submitted technical offers to rehabilitate EGX-listed Egypt Aluminum (EgyptAlum), the company said in a bourse disclosure (pdf).

ICYMI- The state-owned company in January pushed back the deadline for receiving technical and financial offers for an external public tender for rehabilitating the company to the end of March. The tender originally had a 15 January deadline.

HOSPITALITY-

Rixos Hotels to develop Alexandria’s Montazah: Rixos Hotels will develop and manage the Al Montazah Palace in Alexandria after group owner Nasser Abdel Latif inked an usufruct agreement to set up a hotel inside the palace, Cairo24 reports.

HEALTHCARE-

ADQ merges Amoun with two other assets to establish healthcare giant: Abu Dhabi sovereign wealth fund (ADQ) launched Arcera, a global life sciences holding company headquartered in Abu Dhabi, by combining three of the sovereign wealth fund’s healthcare assets, a press release reads. The company will offer 2k branded medicines across various therapeutic areas and boasts manufacturing and packaging facilities in the UAE, Switzerland, Ukraine, Estonia, South Africa, Turkey, and Egypt.

The assets in question: Egypt’s Amoun, a manufacturer of human and animal health products; Switzerland-based Acino International, a global pharma firm with a long history and operations across continents; and Birgi Mefar Group, a Turkish sterile production and pharma distribution company.

Want the full story? EnterpriseAM UAE has coverage.

FINTECH-

EFG Holding’s fintech arm Valu will offer noon Payments users payment plans to “facilitate the growth journey for enterprises of all sizes,” the two firms said in a joint statement (pdf).

DIPLO-

Kiwi FM in Egypt: Foreign Minister Sameh Shoukry discussed a number of regional issues including the latest developments in Gaza, as well as the situations in Libya, Sudan, and Syria with New Zealand’s FM Winston Peters during his time in Egypt, according to a statement. The two sides also discussed ways to boost New Zealand investments to Egypt.

EARNINGS WATCH-

#1-B Investments’ net income down 47% in 2023 after bumper 2022: B Investments Holding posted a net income of EGP 694 mn for the financial year that ended on 31 December, down 48% y-o-y, according to the private equity firm’s earnings release (pdf). Revenues for the same period came at about EGP 569 mn, 62% below the company’s topline in 2022 that surged on the back of EGP 1.4 bn in capital gains from the sale of Giza Systems. Total assets inched down 16% y-o-y to EGP 3.6 bn.

THE FINE PRINT- The firm’s 2023 net income was mainly driven by a EGP 583 mn foreign exchange gain — this explains why the income is higher than the firm’s revenues for the year.

#2- HHD net income up nearly 1200% y-o-y in 2023: Heliopolis Housing and Development (HHD) logged EGP 7.8 bn in net income in 2023, up 1194% from the EGP 603 mn the developer logged last year, according to the board of dire ctor’s annual report (pdf). The developers topline for the year stood at about EGP 15.6 bn, up 681% y-o-y.

Tags:

ALSO ON OUR RADAR B Investments earnings watch Egypt Aluminum Heliopolis Housing and Development Manufacturing Sameh Shoukry ValU

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PLANET FINANCE

Gulf nations are pushing aggressively into mining in a bid for diversification

The gulf is headed toward a new mining era: Gulf states are investing heavily in mining copper, nickel, and other minerals as they look to secure the resources needed to produce clean energy and diversify their economies beyond oil, the Financial Times writes. With fossil fuels reeling in some USD 400 bn in annual revenues for Gulf nations, the mining industry makes for a promising pivot as the world transitions away from hydrocarbons. “The region has huge potential to create a major mining industry,” the salmon-color paper quotes Tom Harley, managing director of mining advisory Dragoman, as saying.

Who is doing what? Saudi Arabia is working to raise the mining sector’s share of revenues to USD 75 bn by 2035 from USD 17 bn currently, while the UAE is pursuing a host of government-to-government partnerships in minerals with a focus on Africa. Oman has started building what is expected to be the world’s largest green steel plant, with plans to use iron ore from Cameroon. And Qatari wealth fund QIA has snapped up a sizable stake in Swiss commodities and mining giant Glencore.

Some of these ventures are right here at home: Saudi Arabia in January inked an MoU with the Egyptian government to boost mining cooperation and promote the role of the private sector in both countries’ mineral resources industry. Meanwhile, the UAE has a robust network of ports and logistics centers across Africa that made Dubai a “key precious metals trading hub.”

Remember: Emirati port operator DP World recently broke ground on its USD 80 mn logistics zone in Ain Sokhna, while Abu Dhabi Ports has been pushing aggressively into Egypt’s maritime logistics industry.

A win for all: Resource-rich nations in Africa, Asia, and Latin America welcome the entry of Gulf states into their mining sectors as an alternative to decades of colonialist enterprises by the West and a way to avoid ongoing US-China tensions over their minerals. The push also sits well with the US, which views it as a way to weaken Beijing’s monopoly on minerals.

THE MARKETS THIS MORNING-

Major Asian benchmarks are in the green in early trading this morning, withXiaomi leading gainers in Hong Kong’s Hang Seng. The smartphone maker wowed fans and critics alike with the launch of SU7 EV, selling out its full 2024 production run in less than two days. European stock futures are slightly up this morning and US futures are in the red.

EGX30	28,297	+5.3% (YTD: +13.7%)
USD (CBE)	Buy 47.12	Sell 47.26
USD (CIB)	Buy 47.15	Sell 47.25
Interest rates CBE	27.25% deposit	28.25% lending
Tadawul	12,423	+0.2% (YTD: +3.8%)
ADX	9,245	+0.2% (YTD: -3.5%)
DFM	4,263	+0.4% (YTD: +5.0%)
S&P 500	5,244	-0.2% (YTD: +9.9%)
FTSE 100	7,953	+0.3% (YTD: +2.8%)
Euro Stoxx 50	5,083	0.0% (YTD: +12.4%)
Brent crude	USD 87.43	+0.5%
Natural gas (Nymex)	USD 1.84	0.0%
Gold	USD 2,252	0.0%
BTC	USD 69,733	-1.8% (YTD: +65.0%)

THE CLOSING BELL-

The EGX30 rose 5.3% at yesterday’s close on turnover of EGP 2.9 bn (41.8% below the 90-day average). Regional investors were net sellers. The index is up 13.7% YTD.

In the green: E-finance (+11.8%), Heliopolis Housing (+11.7%), and Beltone Holding (+10.4%).

In the red: Ezz Steel (-2.7%), Juhayna (-1.5%), and Eipico (-0.2%).

CORPORATE ACTIONS-

#1- Qalaa Holdings reclaims full ownership of two subsidiaries: Financial Holdings International (FHI) has transferred its shares in two Qalaa Holdings’ subsidiaries — the National Development and Trading Company and the United Company for Foundries — back to Qalaa, giving it 100% ownership over the two companies, according to a statement (pdf). The share transfer came as part of a wider settlement agreement between the two sides.

#2- B Investments’ board of directors approved distributing dividends of EGP 1 per share. The decision now awaits the approval of the shareholder’s annual general meeting, according to a bourse disclosure (pdf).

#3- E-finance will pay out a dividend of EGP 0.19 per share on its 2023 earnings, it said in an EGX disclosure (pdf).

#4- Egypt Kuwait Holdings will pay out a dividend of USD 0.06 per share on its 2023 earnings, it said in a bourse disclosure (pdf).

Tags:

GCC mining Planet Finance

Our weekly deep dive into the green economy and ESG issue in Egypt.

Published every Tuesday in EnterpriseAM.

Read going Green

Going Green

Egypt could start producing sustainable aviation fuel in 2025

Egypt is moving closer to launching its first SAF production facility: The Oil Ministry has been working on a plan that will see state-owned firm Egyptian Petrochemicals Holding Company producing the country’s first sustainable aviation fuels (SAF). Production from the project is expected to kick off in 2025, after the necessary studies are completed, a government source told Enterprise.

Remember: Unnamed international organizations are set to prepare studies and secure financing for the project during its initial stages, Oil Minister Tarek El Molla said earlier this month. Moreover, the government will form an executive committee featuring teams from its ministries to expedite work on the project. The committee will be tasked with streamlining procedures and working closely with the aviation sector — the end consumer of the biofuel.

What is SAF? SAF is a biofuel used to power aircraft that is made from non-petroleum feedstock such as waste cooking oil, animal fat, and non-food crops. It can reduce carbon emissions by up to 80% compared to traditional jet fuel, according to the International Air Transport Association (IATA) estimates. Aviation was responsible for 2% of energy-related carbon emissions in 2022, the International Energy Agency’s most recent figures show.

SAF global production is moving at a fast pace: IATA expects SAF production to triple to just shy of 1.9 bn liters in 2024, up from 600 mn liters produced last year, which would account for 0.53% of the aviation sector’s fuel consumption. SAF production has already doubled in 2023 compared to a year earlier. The International Airline Transport Association also estimates that SAF could account for 65% of the reduction in emissions needed by the aviation industry to reach net zero by 2050.

THE ROAD TO LOCAL SAF-

Egypt’s very own SAF production facility: US multinational conglomerate Honeywell has teamed up with the European Bank for Reconstruction and Development to complete a feasibility study within the next few months for a proposed SAF production facility in Egypt, a delegation from the firm said last month.

Remember: Honeywell has been considering building a SAF production facility in Alexandria under a public-private partnership with state-run Egyptian Petrochemicals Holding Company and local private companies. The facility is expected to produce 120k tons of fuel per year.

A gov’t platform to procure raw materials? The Environment Ministry plans to roll out a platform to facilitate the procurement of waste cooking oil needed for the production of SAF from the private sector, an official at the Waste Management Regulatory Authority (WMRA) told us.

More efforts to formalize the sector are needed: The government will need to ramp up efforts to license private sector players in the informal sector, given that the collection and refining of waste cooking oil are mainly dominated by the latter, the source said.

A regulatory framework is a must: A regulatory framework for SAF production needs to be passed to encourage investors to participate in the sector, government sources told us. While the current environmental law covers the use of waste cooking oil, more specific regulations on SAF production would fast-track the nascent SAF industry in Egypt, the sources added.

Eyes on FDI: The government aims to attract FDI to the project, the sources told us. The country’s oil refining and derivatives market attracted EGP 263 bn in investments in 2022, they added.

ALSO IN THE PIPELINE-

Sustainable biofuel from jatropha: The government is currently mulling over a project to produce sustainable biofuel from jatropha (nettlespurge) plants, where laboratory studies are being funded via an Italian grant, an Environment Ministry source told us. Once studies are complete, the government will offer the project to private sector players who may be interested.

What else is in the pipeline? Similar projects to produce sustainable biofuel from rice straw, eichhornia (water hyacinths), and arundo donax (giant reed) are also being considered, the source said, adding that some of the output from these projects could be exported to Europe.

European companies are already eyeing biofuel projects in Egypt: Norwegian biogas company Antec has shown interest in working on a biofuel project in Egypt, our source said. Italian oil and gas firm Eni is also working with authorities to prepare studies for a project to produce biogas with a capacity of 4.7 cbm per day, the source added.

Your top green economy stories for the week:

Gov’t kicks off new phase of Greater Cairo pollution reduction project: The Environment Ministry has begun the sixth componentof the World Bank-funded Greater Cairo Air Pollution Management and Climate Change Project and will improve the disposal and treatment of e-waste and healthcare waste to reduce unintentional persistent organic pollutants. (Statement)
The SCZone will create a route to transport green fuel produced in the zone to the Dutch Port of Rotterdam, which will help the fuel reach European markets, under an MoU inked between the two sides. The MoU will also see the two sides working on a green bunkering corridor that will link Singapore to Rotterdam through the Suez Canal, creating the first corridor for green bunkering between Asia, Africa, and Europe. (Statement)
Work on the 20 MW Hurghada solar power plant will begin in 2H 2024, New and Renewable Energy Authority head Mohamed El Khayat told Al Arabiya (watch, runtime: 2:42).

Tags:

aviation biofuel carbon footprint climate change Eni Environment Ministry going green informal economy Oil Ministry regulation SAF Tarek El Molla

CALENDAR

2024

APRIL

2 April (Tuesday): President Abdel Fattah El Sisi swearing in ceremony, New Administrative Capital.

9 April (Tuesday): Eid El Fitr (TBC) (national holiday).

15-21 April (Monday-Sunday): The IMF / World Bank Spring Meetings.

25 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC) (national holiday).

26 April (Wednesday): Clocks move forward one hour at midnight as daylight saving time starts.

28 April (Sunday): Grace period to ins. brokerage firms to comply with Law 215 for 2023 expires.

28-29 April (Sunday-Monday): Saudi Arabia hosts a World Economic Forum (WEF) meeting on ‘global collaboration, growth, and energy.’

29 April (Monday): The government’s car export scheme expires.

MAY

1 May (Wednesday): National holiday in observance of Labor Day (TBC) (national holiday).

2-5 May (Thursday-Sunday): Townhall Expo in Riyadh.

5 May (Sunday): Coptic Easter.

6 May (Monday): Sham El Nessim (national holiday).

20 May (Monday): Malaysian Palm Oil Forum in Cairo, with attendance from Malaysian Plantation and Commodities Minister Johari Abdul Ghani.

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

29 May (Wednesday): Virtual launch of Chicago Booth Executive Program.

JUNE

15-19 June (Saturday-Wednesday): Eid El Adha (TBC) (national holiday).

29 June: EU-Egypt Investment Conference.

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

JULY

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

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

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

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.

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

NOVEMBER

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

DECEMBER

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

EVENTS WITH NO SET DATE

April 2024: President Abdel Fattah El Sisi will visit Turkey.

1Q 2024: Egyptian-Qatari Joint Supreme Committee.

1Q 2024: Opening of the newly developed Pyramids Plateau in Giza.

1Q 2024: The government is set to finalize the sale of the Gabal El Zeit wind farm.

February-May: The Grand Egyptian Museum could officially open to visitors.

March 2024: The USD 2.7 bn MIDOR Refinery is set to begin full operations.

May 2024: Egypt to receive USD 20 bn of Ras El Hekma funds.

May 2024: Arab Finance Ministers’ meeting at Egypt’s administrative capital.

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.

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.

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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