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Soaring cement prices capped

The government is struggling to enforce a price cap on cement announced on July 17 by Minister of Trade and Industry Rachid Mohamed Rachid. The price cap, set at LE 290 per ton for producers and LE 330 per ton for retailers, is intended to protect the local construction and real estate industries from skyrocketing input costs. The minister has threatened non-compliant cement firms with export tariffs and unspecified penalties.

As of press time, however, only a handful of cement firms have complied with the price cap, which was set in response to rapidly increasing prices. Cement prices rose from an average of LE 242 per ton in 2004 to LE 390 per ton just before the cap. The price increase pushed up input costs in the construction industry, indirectly increasing the cost of real estate and public works.

Reform efforts have paid off, says Nazif

Renewed reform efforts have given Egypt its second wind, Prime Minister Ahmed Nazif said during his keynote speech at this year’s Euromoney conference in Cairo. He praised the state of the Egyptian economy, its growth rates and the level of foreign direct investment, attributing the positive development to the government’s renewed reform efforts. “Last year was a very eventful year in Egypt – we had presidential elections, we had parliamentary elections, we have a new parliament and a new government; but, more importantly, we had our second wind,” he said.

According to Nazif, Egypt’s growth rate rose to 6.9 percent at the end of the last fiscal year compared to 4.9 percent the previoud year. Meanwhile, FDI now stands at $6.1 billion compared to $4.1 billion for fiscal year 2004-05, which he attributed to investor confidence due to the government’s renewed reform efforts.

The prime minister announced the government’s intention to work with the private sector to improve health care, education facilities and transportation infrastructure, as well as further development of industry to reduce unemployment. “We rely on partnerships: partnerships with the private sector, partnerships with our people and partnerships among ourselves,” he said, stressing that Egypt’s most valuable resource is its people and that continued growth and development would rely on human capital.

Bird flu makes comeback

Officials from the Ministry of Health and the World Health Organization (WHO) confirmed a new case of bird flu among domestic poultry near Aswan on September 27. Earlier in the month, the health ministry reported five new cases of bird flu were found during a survey conducted of bird stock in nine governorates. Three of the cases were in Nasr City, one in Boulak and one in Sohag.

The impact of the new cases on poultry production is expected to be smaller than last year because most commercial poultry, and about 20 percent of privately-owned birds, have been vaccinated, according to WHO and agriculture ministry officials.

The risk is deemed greatest amongst domestically raised birds despite government efforts to control this practice. Experts express concern that government compensation for culling birds is too low to encourage compliance with the laws. To date, the government has only provided LE 50 million for 30 million culled birds.

Meanwhile, the price of live poultry has fallen to LE 9 per kilo, from LE 12 in May. Producers attribute the drop to increased supply, dismissing claims that the new bird flu cases have slackened demand. The government opened up the poultry market to imports in July to ease inflationary pressure caused by low supply as a result of culling campaigns.

Metro bidders get on board

The National Authority for Tunnels has accepted technical proposals for construction of Cairo’s highly anticipated third metro line from Spanish OHL and French VINCI group. The two companies have submitted financial proposals for the third and largest phase of the project, which accounts for 52 percent of the estimated cost of $631.6 million.

The metro line will run for 30 kilometers, mostly underground, and will pass below two branches of the Nile. The line will extend from Imbaba in northwest Cairo to Heliopolis and Cairo International Airport in the northeast.

A partnership between Mitsubishi of Japan and a French company won the bid for the mechanical and electrical aspects of the project. Proposals from German, French, Japanese and Chinese wagon suppliers are still under review.

Gaza powered up

A 1.5-kilometer cable connecting the electricity grids of Egypt and the Gaza Strip at the border town of Rafah was inaugurated on September 11. The cable will initially supply 5 megawatts of power to Rafah, which has gone without electricity since an Israeli air strike destroyed the only plant in Gaza last June.

Last June, the Egyptian government and the Palestinean Authority agreed on a plan to increase the capacity of Al Arish power plant and connect it to the Palestinian power grid. The project will remove Gaza’s dependence on Israeli energy and provide a more secure power source for the 1.3 million residents of Gaza.

Mobinil to give up marketing edge

Mobinil has agreed to halt its EDGE service until it has resolved its differences with the National Telecommunication Regulatory Authority (NTRA) over the classification and licensing of the mobile service, government sources have said. EDGE is a technology that allows acccess to high-speed mobile phone applications such as video transmission and Internet access with only minor upgrades to existing GSM infrastructure. Mobinil began testing the service in early 2006.

Mobinil maintains, citing the International GSM Association, that EDGE is 2.75G, not 3G technology, and therefore it does not require a seperate approval. The NTRA disagrees, arguing that the service is 3G and that a LE 3.3 billion license must be obtained before Mobinil can legally market EDGE.

Steel firm acquires stake in Suez

Egyptian steel company Misr National Steel (Ataqa) has won the bid to purchase an 82-percent stake in Suez Steel from the Egyptian government for some LE 1.1 billion. Of that, LE 300 million will be paid directly to Banque du Caire, the state-owned bank and majority stakeholder, and LE 800 million will be used to service the company’s debt. There were 27 local and international competitors for the bid.

Suez Steel was founded in 1997 in an industrial zone in Suez governorate and began operations in 2000. The company uses scrap metal and iron pellets to produce 600,000 tons of steel billets every year.

Ship accidents cause Canal closures

It was a bad month for the Suez Canal, with at least three incidents involving ships reported. On September 12, the waterway was temporarily closed when a northbound Tunisian cargo ship ran aground in the canal. The following day, two crew were killed and two were missing and feared dead after a dredger sank in the canal. Just a week later, on September 20, a Liberian oil tanker carrying 84,000 tons of crude oil crashed into the canal’s banks, spilling 5,000 tons of oil. The ship was reportedly trying to moor to avoid a collision with a supertanker that had already run aground. Clean-up crews were called in to contain the spill while divers repaired the hull.

Tensions ease on Nile Basin Initiative

The irrigation ministers of Egypt, Sudan and Ethiopia have announced that they have secured loans and grants worth $750 million to fund the Nile Basin Initiative (NBI), which was created to increase cooperation among its 10 member countries on water use. Some $250 million of the funding is to be used for project feasibility studies with the remainder for development of public-private partnerships.

The Nile is a vital resource and conflict has arisen in the past over proposed changes in usage. Egypt relies on the Nile for 98 percent of its freshwater supply and considers any diversion of Nile water a potential threat to national security. The NBI seeks to assuage such concerns and ease tensions over this scarce resource, while simultaneously encouraging responsible water use.

Border opens for Ramadan travelers

The Rafah border crossing between Gaza and Egypt was opened for two days prior to Ramadan. Nearly 4,000 humanitarian cases, pilgrims and students were allowed to leave Gaza on the first day, while on the second it was opened to all Palestinians.

The Egypt-Gaza border has been open for only seven days since June, when Gazan militants killed two Israeli soldiers and captured another. Thousands have been unable to return home as a result.

Etisalat to list third telecom company

Nile Telecom, the newly named company formed by the Etisilat-led consortium after winning the third telecom license in July, is considering selling 30 percent of its shares on the Cairo and UAE bourses. The shares will be listed once regulatory requirements have been met, which may take up to two years.

Nile Telecom, 66 percent owned by Dubai’s Etisalat, will begin operations in early 2007. The company aims to control 30 percent of Egypt’s mobile phone market within five years.

Sand for sale

The Ministry of Electricity is studying the feasibility of extracting minerals from the black sands of Al-Bourollus on the northern Delta coast. The study will be used to determine the operations of a processing plant that will be built at an estimated initial investment of $120 million.

The state-owned plant is expected to process 450,000 tons of sand per year to extract minerals such as magnetite, garnetite, zircon, rutile and ilmenite used in electronics, chemicals and ceramics industries. Exports of these minerals could reach $45 million per year.

Plan to fire up nuclear energy program

President Hosni Mubarak called for the resumption of Egypt’s civilian nuclear energy program following the annual meeting of the National Democratic Party (NDP) last month. US ambassador to Egypt Francis Ricciardone said that Washington would have no problem with such a program and offered support through the US Global Nuclear Energy Program, which supplies civilian nuclear technologies to friendly states.

Energy minister Hassan Younis announced a $1.5 billion project to develop a nuclear power plant at Al Dabaa on the North Coast within 10 years to be partially funded by foreign investors. The government had halted its original nuclear energy program 20 years ago. However, it has continued with small-scale nuclear research since then at two reactors in Inshas, 60 kilometers northeast of Cairo.

Egypt has been a signatory of the Nuclear Non-Proliferation Treaty since 1981 and has agreed to monitoring by the International Atomic Energy Agency.

Literary giant mourned

Egyptian author Naguib Mahfouz died in hospital on August 30 of complications from a head injury sustained when he fell during a walk in July. He was 94 years old.

Mahfouz wrote over 30 novels and a wide variety of other literary works, his most important being the Cairo Trilogy, which earned him the 1988 Nobel Prize for literature. Some of his writings were controversial. His 1959 novel Children of Gebelawi, for instance, was deemed as blasphemous by many Islamic groups. In 1994, he was stabbed in the neck by an incensed Islamic fundamentalist, an injury that affected the nerves in his right arm and severely limited his ability to write.

Mahfouz was widely regarded as a leading Arab intellectual and icon. He was honored with a state funeral.

Power project gains steam

US-based General Electric has been awarded a contract to provide gas-powered generators to the Koraymat power facility, over its German rival Siemens. The Koraymat project has a production capacity of 2,800 megawatts using a combination of gas- and steam-powered generators. The generators will produce 500 megawatts and 250 megawatts respectively.

The project will cost $360 million, including major loans from the African Bank for Development, as well as contributions from the Egyptian Electricity Holding Company. Operations are expected to begin in 2008.

Siemens, meanwhile, has landed a $28.7 million contract to modernize equipment at a power plant in Shobra Al Kheima on the northern outskirts of Cairo. The project will raise the efficiency of the 1,260-megawatt facility by reducing its fuel use.

Omar Effendi sale finalized

The Trade Holding Company reached a final agreement on September 25 with Saudi clothing retailer Anwal Group for the sale of state-owned retail department store chain Omar Effendi. Anwal has agreed to pay LE 965.4 million, of which LE 655 million is paid for a 90-percent stake in the chain, LE 200 million is guaranteed as investment in the chain and another LE 50 million is to be paid for the early retirement of 1,200 workers.

Anwal plans to streamline operations by closing unprofitable branches and trimming the payroll to 4,800 from the current 6,000 employees. The company has agreed to keep 58 of the chain’s 82 stores open, and will not close any branches with historic or architectural value.

The sale comes over a decade since Omar Effendi was first put up for privatization.

Tourism policy attracts dollars

Lands allocated by the Tourism Promotion Authority will continue to be valued in US dollars instead of Egyptian pounds, the Ministry of Tourism has announced. Hospitality firms had complained that the 20-year-old policy burdens investments with unnecessary currency risk. The ministry, however, argues that exchange rates have been fairly stable lately. As the US dollar is widely used by Arab and other international investors, the policy encourages foreign investment, it said.

Foreign investment in the tourism industry was LE 6.2 billion in FY 2005-06.

Vodafone takes stake in Raya

Raya Holdings has approved Vodafone Egypt’s bid to obtain a majority stake of 51 percent in Raya Telecommuncations for LE 104 million. Raya believes Vodafone’s size and experience should help it compete for various telecom licenses such as international calls and WiMax.

Raya Telcommunications has provided Internet and networking services since 2001, but has not yet earned back the cost of its initial LE 160 million investment.

Meanwhile, Telecom Egypt has offered to purchase an additional 24.4-percent stake in Vodafone Egypt for LE 5.9 billion, which would increase its stake to 49.9 percent. The proposal is under consideration by Vodafone.

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