** #1 EXCLUSIVE- Egypt could issue up to USD 20 bn in FCY-denominated bonds over the next four years: The government is working on a plan to issue as much as USD 20 bn in foreign-currency denominated bonds between now and 2022, a senior government official told Enterprise on Tuesday. The source declined to go into details of the plan or to explain the administration’s current thinking on what is the longest timeline we’ve heard for FCY-denominated offerings. We do know the government is considering “Samurai” and “Panda” bonds sometime in the coming 12 months and is now on a nondeal roadshow ahead of a planned USD 5 bn eurobond offering.

Gov’t betting on (relative) FX stability? That level of borrowing isn’t out of step with recent practice, and it signals that the Madbouly cabinet, which is trying to rein in the public debt, has faith that the exchange rate isn’t going south on us as far out as four years from now. The move comes as the Madbouly Cabinet works on a strategy to rein in the public debt, striking a balance between expensive local-currency borrowing (with no FX risk) and less expensive foreign-currency borrowing (with plenty of FX risk) at the same time as the Emerging Markets Zombie Apocalypse has some investors pulling out of the market.

FinMin to select investment bank for USD 5 bn eurobond issuance next month: The Finance Ministry is planning to hold at the end of the month a tender to select the investment bank that will manage the sale of USD 5 bn worth of eurobonds it plans to issue early next year. The winning bid will be announced in November. The source noted that the timing of the issuance will be set once the advisors are on board. Finance Minister Mohamed Maait has previously said the issuance would take place sometime in 1Q2019.

** #2 LEGISLATION WATCH- FinMin releases final draft of the Customs Act: The Finance Ministry has released the final draft of the amended Customs Act on Tuesday after consultations with business groups and global financial institutions, according to a ministry statement. The ministry plans to introduce the act to the House of Representatives during the current legislative cycle, but the statement did not note when. The ministry says the bill would bring customs legislation in line with international agreements and raise Egypt’s ranking in a number of global indices, including the World Bank’s Doing Business report. You can read the latest draft of the bill here (pdf) on the Finance Ministry website.

Expedited clearance and facilitating payments: Among the most significant measures are those designed to speed goods through Egypt’s ports, include setting up an expedited track for the clearance of goods, the statement says, without delving into the mechanics of the new system. Government sources had told us back in May that the law would set up “a white list” of importers. Companies on the list will be able to clear their goods without initially undergoing full procedures. An inspection of their warehouses and their documentation would be conducted later. The proposed bill would also, for the first time, allow importers to pay duties in installments, the statement said.

Law expands Customs Authority’s powers: One of the key aims of the law is to increase the supervisory and enforcement powers of the Customs Authority, Finance Minister Mohamed Maait said. The bill would grant the authority expanded powers to seize the goods of suspected customs evaders and the right to track goods and shipping containers from ports of origin. The law will also grant the authority powers the sole power to sign off on temporary customs exemptions, which were expanded earlier this year to include production inputs, said Maait.

Customs Authority approval for econ zone licenses: Licensing for a project in a special economic zone or a freezone will require signoff from the Customs Authority and the General Authority for Freezones and Investments must seek its approval before issuing a license, according to our preliminary reading of the law.

Background: Other changes we’ve been told to look for include a new tariff structure for vehicles imported by tour operators, hotels and resorts and the toughening of penalties for customs dodgers.

Tax Authority to sign agreements soon with ministries of transport, civil aviation on real estate tax calculation: The Tax Authority is close to finalizing agreements with the ministries of transport and civil aviation on the tax treatment of real estate in their respective industries, Real Estate Tax Authority head Samia Hussein told the press yesterday, Al Mal reports. Hussein said the agreements would be signed soon, but did not give a specific date or provide additional details. The Finance Ministry had signed protocols with the ministries of oil and tourism last month that set guidelines for the calculation of real estate taxes for properties in oil, gas, and mining, as well as hotels. Speaking of which, Hussein said that the tax formula for hotels — which under new guidelines will be based on their nominal investment value and star rating — maybe reconsidered and potentially reduced for hotels with low occupancy rates.

Background: Changes to the tax treatment of properties in a variety of industries comes as part of the broader overhaul of the Real Estate Tax Act. The Madbouly government wants to change everything from how rental values are calculated for tax purposes, how property values are appraised, penalties for evasion, and avenues for appeals. We’re also expecting comprehensive changes to the country’s tax code to be presented to the House of Representatives during the current legislative term, which are expected to restructure the Tax Authority, include new policies to curb tax evasion, introduce a framework for electronic payments, and include provisions that will impact sales and real estate taxes. Changes to taxation laws mean to boost tax receipts, which the government has angled as a key part of its plan to ease pressure on the budget.

Expect changes to tax rates on real estate, but not to the income tax or value-added tax rates. Finance Minister Mohamed Maait has not signaled he plans to depart from his predecessor’s clear policy on tax rate stability in those two portfolios.

On a related note, sources claim to Al Mal that the government has no plans to raise taxes on entertainment venues. The claim came after we reported on Monday that Finance Ministry officials have met with members of the Federation of Egyptian Industries’ (FEI) Cinema Industry Chamber to discuss potential tax hikes on entry fees for cinemas, theaters, nightclubs, and other entertainment venues, as well as set a EGP 20 minimum entry fee. As we noted in our initial report: “This proposal has been circulating since 2016 and has been kicked down the road multiple times. That having been said, the treasury has made it clear that boosting tax receipts will be a key component of its drive to ease pressure on the budget as fuel prices see higher outlays for the subsidy program.”

** #4 IPO WATCH- Enppi IPO to include GDR program: The IPO of state-owned energy contractor Enppi is expected to include global depository receipts (GDRs) on the London Stock Exchange alongside a sale of shares on the EGX, government sources said yesterday. The Oil Ministry confirmed over the weekend that Enppi, the first company of the state privatization program to list, is expected to sell 24% of its shares. The ministry did not confirm the timing. CI Capital, Jefferies International Limited, and Emirates NBD are managing the IPO.

INVESTMENT WATCH- Saudi’s Fas Energy looking to invest USD 420 mn in Egypt projects: Fas Energy, a subsidiary of Saudi Arabia’s Al Hokair Group, is looking to invest up to USD 420 mn in solar energy and waste recycling projects in Egypt, company general manager Sabri Asfour is quoted by the domestic press as having said. The Saudi company is looking to build a USD 95 mn solar generation station and a waste recycling project with an investment cost of as much as USD 325 mn, Asfour said.

The company has already invested some USD 100 mn in the Benban solar park where it built a 50 MW solar power plant under phase one of the feed-in tariff program, through which it will sell electricity to Egypt at USD 0.14 per kWh for 25 years.

** #5 INVESTMENT WATCH- India’s LuLu Hypermarket is planning to invest USD 500 mn in Egypt over the next two years to expand its local operations, according to a cabinet statement picked up by Al Masry Al Youm. The company intends to build four new retail outlets in 6 October City, New Cairo, and Obour, Group Chairman and Managing Director Yusuff Ali told Prime Minister Mostafa Madbouly during a meeting in Cairo yesterday. The company will also build two logistics centers from which it will be targeting exports, particularly frozen fish, to markets in the GCC and Europe. Executives from LuLu will visit potential locations for the depots in Alexandria, Sohag, East Port Said, and Ain Sokhna. Work on the new facilities is expected to start in less than a year from now.

** #6 EFG Hermes closing in on Nigeria acquisition: Our friends at EFG Hermes are looking to lock down IPO mandates in Saudi Arabia and close their acquisition of Nigerian brokerage Primera Africa as the firm works to break into more regional markets, co-head of investment banking Mohamed Fahmi tells Reuters. EFG had announced in July signing a sale and purchase agreement for the Lagos-based brokerage and research firm, which will eventually rebadge under the EFG Hermes brand. The transaction is expected to be complete in November, according to an EFG spokesperson.

As for Saudi, EFG is already hiring talent as it looks to win IPO mandates in the kingdom, a market Fahmi expects will “pick up” by the end of 2018. According to Fahmi, many of the potential IPOs in the Saudi market are eyeing dual listings and GDR programs. “Saudi Arabia could be a major growth market for EFG Hermes, which is the biggest investment bank in the Middle East but derives much of its business there from Egypt and the United Arab Emirates,” the newswire notes.

** #7 ECA issues sharp warning against anti-competitive practices in pharma: The Egyptian Competition Authority (ECA) issued a not-so-veiled warning to pharma companies that forthcoming amendments to the Antitrust Act would “allow it to protect small- and medium- pharmacies from predatory collusion by larger players,” ECA head Amir Nabil (LinkedIn) said at a workshop on the law. He referenced the EGP 5.6 bn fine imposed by the Economic Court back in March on 13 executives from Ibnsina Pharma, United Co. for Pharmacists, Ramco Pharm, and Multipharma. All are accused of colluding to cut credit periods and slash discounts to small and medium sized pharmacies. The next hearing of Ibnsina’s appeal will take place on 19 November. The ECA statement (pdf) issued following the workshop gave no detail on the actual law itself.

Background: The ECA has been looking for some time to expand its powers through amendments to the Antitrust Act. The authority is seeking the right to sign-off on mergers worth more than EGP 100 mn. Nabil had said that the ECA was resurrecting plans to pass the amendments following reports that Uber and its regional rival Careem were engaged in merger talks.

** #8 REGULATION WATCH- FRA lays claim to PE industry: The Financial Regulatory Authority (FRA) has released licensing guidelines for private equity firms and funds, Youm7 reports. Conditions for a license to run a private equity firm or fund include minimum capital of EGP 10 mn and a firm’s general partner holding a minimum stake of 0.5% of the value of any fund it raises. The GP must also have 3-5 years of experience working in the financial sector, depending on the level of academic training, can never have previously filed for bankruptcy, and must have a clean criminal record. If our reading of Youm7 is correct, the guidelines bar the managers of PE firms from making personal gains from a fund’s investments, suggesting PE professionals may not be allowed to personally invest in their own transactions. Let us know if we’re off here and you have the inside scoop?

Background: The Investment Ministry had issued in June a directive making the FRA the primary regulator for the private equity industry.

** #9 EXCLUSIVE- All listed companies will have to kick in to fund investor protection fund: Legislation now on the drawing board would make it mandatory for all listed companies to pay annually into the Egyptian Investor Protection Fund (EIPF), Financial Regulatory Authority (FRA) deputy head Khaled El Nashar told Enterprise. We had reported yesterday that the FRA has completed amendments to the law governing the EIPF and sent them over to the Madbouly Cabinet for review. The amendments are expected to expand the scope of the EIPF’s coverage to cover stock market losses resulting from fraud.

In other legislative news, a law to govern franchising is said to be in the works and could be presented to the House of Representatives soon, AmCham and Egyptian Franchise Development Association (EFDA) President Tarek Tawfik tells Amwal Al Ghad. The law, which was drafted by the Trade and Industry Ministry with input from the EFDA, is expected to regulate the relationship between franchisors and brands, facilitate registration procedures, and include provisions to ensure transparency. No further details were provided.

GE Power wins contract for four nuclear turbines: GE Power won a contract to deliver four nuclear turbine islands to the 4.8 GW Dabaa nuclear power plant, the company said in a statement on Tuesday. The units — made up of four nuclear turbine generator sets, including the Arabelle half-speed steam turbines — will be installed and delivered through AAEM, GE’s joint venture with Russia’s Atomenergomash. While the company statement did not note the value of the contract, Bloomberg pegs it at USD 700 mn. The turbine contract is GE’s largest in the Middle East and North Africa and Turkey so far this year, GE North East Africa CEO Ahmed Ramadan told the business information service.

** #10 Egypt needs to increase its investment in clean energy by nearly threefold to meet its energy targets of producing half of the country’s electricity needs from renewables by 2030, the International Renewable Energy Agency (IRENA) says in a report (pdf) on Egypt’s renewable energy outlook. The existing policies have investment in renewables set at USD 2.5 bn per annum, but IRENA says this figure would need to be raised to USD 6.5 bn per year until 2030 in order to meet our targets. According to the agency, sticking to the current pace of investments would enable Egypt to cover around 25% — rather than the targeted 50% — of its energy needs from renewables.

Our potential is there, but the strategy needs to be tweaked: Egypt has “ample potential” to meet its ambitious energy targets, the report says, but doing so would require a significant revision of its strategy. Among the top priorities for the government to realize its renewables target is cutting off energy subsidies altogether, streamlining administrative procedures for investors, and conducting feasibility studies on the potential exploitation of biomass. Local manufacturing should also factor into the strategy, IRENA says, by encouraging the development of the domestic production of renewable energy equipment.

The cost-saving benefits speak for themselves: Increasing our reliance on renewable energy sources would cut down energy costs by USD 900 mn and would have an indirect effect on bringing down other costs, such as medical care to treat pollution-related ailments. “By adopting the right policies now, Egypt could realistically draw 53% of its electricity from renewables by 2030. This higher uptake of renewable power, when combined with renewables used for heat and transport, would end up reducing total costs, including energy, environmental and health-related costs by USD 9 bn per year on average compared to current energy plans.”

In related news: President Abdel Fattah El Sisi met yesterday with IRENA Director-General Adnan Amin, who was in town while his organization presented its report at the Egypt Renewable Energy Conference, which is currently underway in Cairo. El Sisi told Amin that the government targets 20% renewables in Egypt’s 2023 energy mix and 42% by 2035.

Gov’t unveils new incentives for renewable power industry: The report from IRENA came just one day after the Egyptian Electricity Utility and Consumer Protection Agency (Egyptera) unveiled new incentives for the renewable energy industry, Al Mal reports. In addition to being given priority in connecting to the national grid, renewable energy companies will also be offered land for their projects under usufruct contracts with the same tenor as their power purchase agreements with the government. Under the new guidelines, the state will also be issuing letters of guarantee for any venture that will produce more than 500 KW of electricity.

The Finance Ministry is also pledging to facilitate low-interest household financing for renewable energy installations. The program would offer a 4% interest rate for household projects that produce up to 200 KW of power and an 8% interest rate for those that produce between 200-500 KW. The treasury will mobilize in parallel some EGP 2 bn in initial financing for the development of the nation's power distribution grid.

MOVES- Sony Mobile appointed in March Sherif Salem (LinkedIn) as its country head for Egypt, reports Al Mal. The former head of regional sales for the Lenovo-owned Motorola Mobility has over 16 years of sales and marketing experience.

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