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Airlines tighten security precautions

Travelers and security officials have been on edge since August 10 when British police foiled a daring plot to attack up to 10 US-bound airliners using liquid explosives hidden in water bottles. As a result, authorities have been taking all threats extremely seriously and several flights have been grounded in recent weeks due to security concerns.

On August 19, an Excel Airways flight from London Gatwick to Hurghada International Airport was diverted to Italy after a note claiming that a bomb was aboard was found. Italian police declared the incident a false alarm after searching the plane.

Security has also been beefed up at airports around the world, causing significant delays. Regulations on carry-on luggage have changed dramatically to and from the UK and US. EgyptAir requires all carry-on baggage for all flights heading to London and New York to be checked.

BAA, the company managing London’s major airports, has revised its initial ban on carry-on luggage, which was first put into effect on August 10. Currently, electronic equipment such as laptops and music players are permitted on flights to and from the UK if they fit in one small bag. All liquids, gels and pastes are still banned except for goods purchased after security. These substances are banned on flights to the US regardless of where they were purchased.

The American Transportation Security Agency (TSA) has announced that electronic items will be allowed in carry-ons but all liquids, gels and pastes are prohibited. A full list of prohibited items is available on its website.

Surprise cabinet shuffle

President Hosni Mubarak issued a presidential decree on August 27 to make minor changes to his cabinet.

Long-time Alexandria governor Abdel Salam Al Mahgoub was appointed as minister of state for local development, replacing Osman Mohamed Osman, who was appointed to the newly created post of minister of state for economic development. Mean-while, Mamdouh Marei, head of the Supreme Constitutional Court, replaces Mahmoud Aboul Leil as minister of justice.

The decree also named three new governors: Adel Labib has been appointed as governor of Alexandria, Mohamed Sayed Abdel Hamid Sha’rawi as governor of Beheira and Mohsen El Noemani Hafez as the governor of Sohag.

The last cabinet shuffle was in December, following legislative elections that ended earlier that month.

Court ruling relieves Egyptian exchange houses

The Higher Administrative Court has overruled a decision by the Central Bank of Egypt (CBE) to require foreign exchange bureaus to raise their capital above LE 5 million or face closure. The CBE had shut down 40 non-compliant forex bureaus for failing to meet its June 6 deadline.

The court ordered the CBE to reopen these companies, though the CBE may still challenge the August 1 ruling.

Six finalists in bid for Bank of Alexandria

The Central Bank of Egypt (CBE) has released a shortlist of banks bidding on a 75-80 percent stake in Bank of Alexandria. The four individual finalists are Egypt’s Commercial International Bank (CIB), France’s BNP Paribas, Italy’s Sanpaolo IMI and Greece’s EFG Eurobank. Two joint bids come from Jordan’s Arab Bank Group and Saudi Arabia’s Arab National Bank, and UAE-based Mashreq Bank and Dubai Investment Group.

Final bids are due by October and the winner is to be announced in November. The CBE will offer 5 percent of shares to employees and sell the remainder on the stock exchange.

Consortium to develop $30 billion projects

Financiers in the UAE and Bahrain have signed an agreement with the Egyptian government to develop $30 billion worth of projects in Egypt. The partnership consists of the Egyptian government, Bahrain-based investment bank Gulf Finance House, Abu Dhabi investment firm National Holding, Abu Dhabi Investment House and newly formed Egyptian company Global Developments & Investments.

The consortium will establish a holding company to fund transportation infrastructure projects such as the building of roads, bridges, ports and rail networks. The first projects are expected to start within six months.

Missing students found

Eleven Egyptian students who failed to show up for a scheduled month-long academic program at Montana State University have been located and taken into US custody. American law enforcement agencies conducted a nationwide search for the 11 Egyptians, part of a group of 17 students, after university officials registered them as no-shows with the Student & Exchange Visitor Information System (SEVIS), a system set up by the department of Homeland Security after the 9/11 terrorist attacks to track foreign students. Some of the apprehended missing students told US officials they had intended to work in the US. While authorities do not believe the students pose a terrorist threat, they said they would deport them for immigration violations.

Holding company paves way for insurance privatization

President Hosni Mubarak has announced the launch of the Holding Company for Insurance, which will bring five major public insurance companies under the Ministry of Investment’s asset management program. The holding company will manage the insurers’ investments to increase the public companies’ value before restructuring and privatization begin.

Under the new holding company, Misr Insurance is preparing to sell its 10.02-percent stake in El-Nasr for Clothing & Textiles (KABO) and its 18.1-percent stake of Alexandria Spinning & Weaving Company.

IDSC study puts price on avian flu

The cost of restructuring the Egyptian poultry market to cope with bird flu could reach LE 1.27 billion, a Cabinet Information & Decision Support Center (IDSC) report estimates. The estimate is based on the cost of building 49 new slaughterhouses, improving distribution, and launching a large-scale marketing campaign. These improvements are intended to strengthen the poultry industry rather than combat bird flu directly.

According to independent estimates, the H5N1 avian flu virus has already cost the industry LE 272.7 million.

Developer wins prime tourism real estate

Emaar Properties has successfully bid for a seven-kilometer strip of beachfront property near Sidi Abdel Rahman on Egypt’s Mediterranean coast. The Dubai-based developer, which beat Egyptian rivals Orascom Hotels and Talaat Mustafa Group, intends to turn the site into a major tourism project. The auction for the 6.2 million square meter plot fetched LE 10 billion.

ADB loans $500 million to financial sector reform

The African Development Bank has loaned the Egyptian government $500 million to fund the two-year Financial Sector Reform Program, which will be launched this month at a cost of $8.7 billion (LE 50 billion). The program aims to improve financial regulation, restructure public finance companies and support privatization efforts. Financing will also come from privatization revenues and taxes, as well as assistance from the World Bank and USAID.

New rules ease company exit strategies

The General Authority for Investment & Free Zones (GAFI) has simplified the rules governing the withdrawal of foreign companies from Egypt. Previously a company could not liquidate its assets until GAFI had examined debt owed to public institutions. Now, it only requires letters from the customs and tax departments that indicate the company has no outstanding debts with sovereign institutions. GAFI will not concern itself with companies’ private debts.

GAFI reported a 63-percent increase in new company approvals in Q3 FY 2005-06 over the same period in the previous year, bringing the total to 5,692. It reported only 45 companies applied for liquidation during that period, though this number should increase once the new rules come into effect.

Ampal buys stake in Egypt-Israel gas firm

Tel Aviv-based Ampal – American Israel Corp. has purchased $100 million (LE 575 million) worth of shares in the East Mediterranean Gas Company (EMG), increasing its stake to 6.6 percent. EMG is an Egyptian-Israeli company that plans to open an underwater natural gas pipeline between Al Arish and Ashkelon, Israel by the first quarter of 2008.

Ampal purchased the shares from Israeli Merhav MFN Ltd. and will pay with a combination of $50 million in cash and 10,248,002 shares, pending shareholder approval. Ampal will be allowed to purchase an additional 5.9 percent of EMG’s outstanding shares.

ISP sale fetches $130 million

British Morgan Group has acquired Egyptian Internet service provider TheWayOut for $130 million. TheWayOut has 13 branches in Europe and the Middle East providing wireless Internet services to 8,000 hotels. The company claims to control 98 percent of Egypt’s hotel Wi-Fi market.

Gaza border reopens

The EU-monitored border between Egypt and Gaza was opened on August 25 allowing more than 900 people trapped on the Egypt side to cross back into Gaza, while allowing another 1,700 to cross into Egypt. Many Palestinians were trapped in Egypt when the Rafah boarder crossing was closed following the abduction of an Israeli soldier by militants in Gaza on June 25. The crossing has only been opened for a few hours on five days since the incident. Israel defended its decision to close the border on grounds that it fears the captors will flee into Egypt.

PC companies ordered to raise capital

The Ministry of Communications & Information Technology (MCIT) raised the minimum capital requirement to LE 5 million for companies bidding on the ministry’s PC for Every Home initiative. The program, a public-private partnership, aims to expand PC ownership by offering affordable hardware for low monthly payments.

Opponents of the capital raise argue it is too high and sudden, and may put non-compliant companies that rely on PC-initiative contracts out of business. MCIT has said it will select seven of the current 23 competitors for the project, and the new rules will trim down the list of bidders.

Kia imports banned over contract dispute

An Egyptian court has suspended imports of South Korea’s Kia automobiles pending a decision on a civil lawsuit. Kia motors sparked conflict when it withdrew a contract with its agent in Egypt, Walid Tawfiq, and entered into a new contract with Mohammad Nosair of Egypt Company for Trade & Agencies. Tawfiq sued Kia for $220 million for canceling the original contract in 2005.

Kia sales fell from 400 units during the second quarter of 2005 to 250 units in the second quarter of 2006. The import ban favors Tawfiq as Kia is now pressed to settle in order to resume sales.

Plans to develop 2,000 acres

Qatari developer Barwa Real Estate has agreed to develop land in the Qatamiya region of Cairo, in cooperation with Egyptian and other Gulf investors. As part of the deal, Barwa purchased 2,000 acres of land for LE 5 billion. The project is expected to cost up to LE 8 billion.

Ramses finds a new home

Tens of thousands gathered to see the 83-ton statue of Ramses II transported from the crowded downtown square that has borne his name since 1953 to a site near the Giza Pyramids. The 3,200-year-old statue was moved for its own protection as heavy exhaust pollution and vibrations from rail and road traffic were causing it to deteriorate. Engineers moved the statue in one piece, upright, on a flatbed truck as the city’s residents said their emotional farewells to the landmark. The entire 10-hour journey was broadcast live on Egyptian national television and radio.

Third mobile license signed

The LE 16.7 billion contract between the Etisalat consortium and the National Telecommunication Regulatory Authority (NTRA) for Egypt’s third mobile license was signed on August 22. UAE-based Etisalat Group controls 66 percent of the consortium, while its three Egyptian partners – the National Post, National Bank of Egypt and Commercial International Bank (CIB) hold a total of 34 percent.

According to the license secured by the consortium on July 4, the new network will have to be both 2G and 3G compliant. The new operator, which has yet to announce its commercial name in the market, will have an exclusivity over 3G services for six months following the launch of the service after which the current two operators can apply for and receive 3G licenses. Etisalat has said it will kick off 2G service in February 2007 before adding 3G service.

Carmaker unveils new model

Daewoo Motors Egypt (DME) has begun assembling cars with its partner, Chery, the state-owned Chinese automaker. The cars will be sold in Egypt under a new brand, Esperanza. DME plans to roll out 25,000 cars over the next year and says it could double capacity in the future.

Under the agreement, signed last November, Chery provides car parts and technical support to DME, which assembles the vehicles from complete knock-down (CKD) kits.

DME is a former subsidiary of Daewoo Motors. Chery, established in 1997, is China’s eighth-largest carmaker.

Oil and gas field yields surprise

Melrose Resources expects cash flows to increase by more than 150 percent over the next 18 months after finding unexpected oil and gas at the West Dikirnis well in the northern Nile Delta. Melrose, an Edinburgh-based exploration and production company, said there was the potential to increase production of gas from 100 million to 140 million cubic feet and oil from 10,000 to 20,000 barrels per day by year-end.

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