{"id":709006,"date":"2026-06-10T00:00:00","date_gmt":"2026-06-10T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/?post_type=hardhat&p=709006"},"modified":"2026-06-10T02:43:37","modified_gmt":"2026-06-10T02:43:37","slug":"how-egypts-contracting-market-is-being-rewired-around-three-structural-shifts","status":"publish","type":"hardhat","link":"https:\/\/enterpriseam.com\/egypt\/hardhats\/how-egypts-contracting-market-is-being-rewired-around-three-structural-shifts\/","title":{"rendered":"How Egypt\u2019s contracting market is being rewired around three structural shifts"},"content":{"rendered":"

Egypt\u2019s contracting market is being rewired around three structural shifts <\/strong>that together describe the end of the \u201cbuild-only contractor\u201d era<\/strong>, executives at major firms tell EnterpriseAM. First, large contractors are flipping their order books from government work toward private-sector industrial, logistics, and real estate projects. Second, the OECD has formally named the operations-and-maintenance (O&M) budget gap that\u2019s been hollowing out the contracts that should sustain assets after construction \u2014 and that gap is already trapping contractor liquidity at flagship projects like Abu Rawash. Third, geographic expansion into Africa has shifted from a diversification play to a financing-led survival tactic. The slowdown in national projects, driven by the EGP 1 tn public spending cap<\/a>, is making the rewire structurally permanent.<\/p>\n

Egypt\u2019s infrastructure management has a serious accounting blind spot<\/strong>, the OECD said in a recent report (pdf)<\/a>. \u201cThe lack of sufficient budgeted operational expenditure (opex) by public entities, including state-owned enterprises and holding companies involved in infrastructure has contributed to the deterioration of assets,\u201d the report notes, adding that asset maintenance is often funded through sovereign debt while depreciation is typically not recorded in the government\u2019s operating statements. The OECD also flagged the absence of lifecycle costing, saying \u201cenhancing operational expenditure planning\u201d for public entities and SOEs is critical to maintaining infrastructure assets and preventing their deterioration and \u201cincreased ad hoc pressure on state budget.\u201d<\/p>\n

\n

The liquidity trap<\/p>\n

The government has begun folding long-term operations and maintenance clauses into contracts<\/strong> \u2014 but selectively, and mostly for major tech-heavy projects, founder and chairman of Redcon Construction Tarek El Gammal tells EnterpriseAM. These include smart transport projects such as the monorail, the metro, and the high-speed rail network, where operators carry strict legislative and technical responsibilities to keep the assets safe and running. That is why the state has required extended maintenance contracts with global and local consortia, including Siemens and Alstom.<\/p>\n

The real problem is whether the state can keep paying. <\/strong>Contractors face a liquidity trap on more standard infrastructure assets, El Gammal says, pointing to major wastewater treatment projects including the Abu Rawash plant, whose operations and maintenance were awarded to a consortium of Orascom Construction and a Spanish firm. \u201cThe problem with projects like Abu Rawash and others is that [contractors] secured O&M contracts, but did not receive [their dues] for two or three years,\u201d El Gammal says. The delay speaks directly to the OECD\u2019s warning that under-budgeted opex at public entities can contribute to asset deterioration and create ad hoc pressure on the state budget.<\/p>\n

For new projects, the workaround is taking shape through take-or-pay contracts under the amended PPP framework. <\/strong>Desalination plants are the prototype, El Gammal says. \u201cThe new system has eased cost pressures on contractors and no longer ties up their liquidity for long periods. The sovereign guarantee is now granted only against the value of the monthly service purchased, not the massive construction cost of the project, making these projects bankable.\u201d<\/p>\n

\n

The order-book flip<\/p>\n

Redcon Construction was previously 80% government work and 20% private-sector projects \u2014 the coming period will see the opposite<\/strong>, El Gammal says. El Hazek Construction<\/a> is already there: private-sector projects now account for 90% of the company's portfolio, Business Development Director Karim Hussein tells us. The pattern is structural, not anecdotal.<\/p>\n

Contractors are also leaning harder on contract discipline to hedge against market volatility. Hussein stresses the need for explicit clauses compensating for raw material price differentials. \u201cThe contractor will certainly not bear the risk alone,\u201d he says. To offset the slowdown in government awards, contractors are turning more aggressively at home toward industrial, logistics, and private real estate projects, El Gammal says \u2014 the main drivers of demand and the safer alternative for keeping pipelines moving.<\/p>\n

REMEMBER- <\/strong>Mohamed Sami Saad, head of the Egyptian Federation for Construction and Building Contractors, recently told EnterpriseAM<\/a> that the federation advises contractors \u201cto move from contracting into maintenance and operations. Construction will slow, but maintenance and operations contracts are sustainable and include large amounts over long periods.\u201d<\/p>\n

\n

Africa as financing-led survival<\/p>\n

Geographic expansion abroad is the bigger lifeline. <\/strong>That is already showing up in the record numbers posted by major players including Orascom Construction, whose projects under execution climbed to USD 9 bn, driven largely by geographic diversification outside Egypt. <\/p>\n

The rules of the game in Africa have changed. <\/strong>Governments there are no longer looking for a build-only contractor, but for consortia that can bring financing with them, Egyptian African Arab Development Co. CEO Reda Boulos tells EnterpriseAM. \u201cThe pivot to Africa is no longer theoretical. The slowdown in the national projects cycle at home, and the growing need for FX revenues, have made African expansion for many major contractors \u2014 particularly EPC players \u2014 a survival strategy and a necessary path to growth,\u201d Boulos says. <\/p>\n

The challenge now is not finding projects, but \u201caligning financing, execution capacity, local partnerships, and political support into one bankable structure<\/strong>,\u201d he adds. In the absence of a well-capitalized Egyptian export credit institution, that means connecting Egyptian contractors with international and Arab financing institutions to present African governments with full-package offers.<\/p>\n

\n

What\u2019s next<\/p>\n

Who comes out on top in this next phase will not be contractors waiting for government awards, but those who finance, operate, and structure around tighter public spending. <\/strong>Survival and growth will go to companies that can engineer complex financing alliances to secure African contracts \u2014 and to those staying one step ahead at home, either by protecting margins in private industrial and logistics projects through tighter hedging clauses, as El Hazek is doing, or by securing O&M contracts with protected payment structures such as take-or-pay to avoid the Abu Rawash-style liquidity trap.<\/p>\n","protected":false},"excerpt":{"rendered":"

Two of the country\u2019s largest contractors, Redcon and El Hazek, have already shifted to 80-90% private-sector work<\/p>\n","protected":false},"featured_media":709007,"menu_order":0,"template":"","categories":[7235],"tags":[130,72,7116,7111],"class_list":["post-709006","hardhat","type-hardhat","status-publish","has-post-thumbnail","hentry","category-hardhat","tag-construction","tag-enterpriseam","tag-hardhat","tag-infrastructure","wpautop","entry"],"acf":{"mongo_id":"97d39ace-6619-4841-8298-d8ae23ffbefb","order":"11","is_powered_by":false,"story_type":"2","photo_url":"https:\/\/ent.news\/2025\/5\/1092.jpg","photo_position":"above","homepage_title":"","full_issue_title":"The rewiring","related_issue":[708987],"teaser":"Two of the country\u2019s largest contractors, Redcon and El Hazek, have already shifted to 80-90% private-sector work"},"yoast_head":"\nHow Egypt\u2019s contracting market is being rewired around three structural shifts - EnterpriseAM Egypt<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterpriseam.com\/egypt\/hardhats\/how-egypts-contracting-market-is-being-rewired-around-three-structural-shifts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Egypt\u2019s contracting market is being rewired around three structural shifts\" \/>\n<meta property=\"og:description\" content=\"Two of the country\u2019s largest contractors, Redcon and El Hazek, have already shifted to 80-90% private-sector work\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterpriseam.com\/egypt\/hardhats\/how-egypts-contracting-market-is-being-rewired-around-three-structural-shifts\/\" \/>\n<meta property=\"og:site_name\" content=\"EnterpriseAM Egypt\" \/>\n<meta property=\"article:modified_time\" content=\"2026-06-10T02:43:37+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/ent.news\/2025\/5\/1092.jpg?fit=%2C&ssl=1\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/enterpriseam.com\/egypt\/hardhats\/how-egypts-contracting-market-is-being-rewired-around-three-structural-shifts\/\",\"url\":\"https:\/\/enterpriseam.com\/egypt\/hardhats\/how-egypts-contracting-market-is-being-rewired-around-three-structural-shifts\/\",\"name\":\"How Egypt\u2019s contracting market is being rewired around three structural shifts - 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