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EgyptAir to use IPO proceeds to buy jets

National carrier EgyptAir will use the proceeds of an initial public offering (IPO) to raise money to purchase new aircraft, Minister of Civil Aviation Ahmed Shafik said. He gave no date for the public offering, but confirmed that it would be about a 20-percent stake in the company. The IPO is expected to raise $750 million, which will be used to purchase 22 new planes.

Shafik said a preparatory study for the privatization was nearly complete, but a second study by an international bank would be needed.

Egypt, EU fail to set action plan

Egypt and the European Union have failed to agree on a Neighborhood Action Plan (NAP) due to alleged differences over its wording on human rights issues and nuclear weapons.

Foreign Minister Ahmed Aboul Gheit led an Egyptian delegation to a one-day meeting in Luxembourg on June 13 with EU commissioner Benita Ferrero-Waldner. The negotiations, the first such talks at this level in two years, were expected to lead to an agreement on a document laying out how to implement the Egypt-EU Association Agreement, which came into force in 2004.

However, the two sides were reportedly unable to see eye to eye on the NAP’s phrasing of sensitive issues concerning human rights and weapons of mass destruction. Egyptian foreign ministry officials have denied any dispute over the issues, explaining that both the EU and Egypt agree that the reform process must continue and the Middle East should be free of weapons of mass destruction.

EU Neighborhood Action Plans are intended to foster closer economic, political and cultural ties, but are conditional on countries carrying out reforms in these areas. Agreement on the NAP would enable Egypt and the EU to make progress on a wide range of joint projects, including freer trade and possibly more aid.

US House defeats bill to slash foreign aid

The US House of Representatives approved $21.3 billion in foreign assistance spending for the 2007 fiscal year, beginning October 1, after defeating a proposal to reduce military aid to Egypt.

The bill earmarks $1.8 billion in military and economic aid to Egypt. Proponents of the aid cut wanted to divert $100 million to political reform programs and education initiatives to signal unease about Egypt’s human rights record. Opponents, however, argued that a reduction in aid would unfairly punish an important ally in the Middle East.

Tighter regulations for treasury stocks

The Capital Market Authority (CMA) has issued new regulations concerning the buyback of treasury stocks by listed companies.

The new regulations stipulate that listed companies should present a letter of intention to execute treasury stock trading activities on the Cairo & Alexandria Stock Exchanges (CASE). The brokerage firm that takes the order is obliged to present the transaction to the CMA before executing it. CASE must also notify the CMA, at the end of each week, of all executed transactions of treasury stocks for each company along with the prices at which transactions were executed.

CASE must disclose all transactions that were not executed along with the reasons for the cancellation, whether because of exceeding the permitted time or because of failure to agree on the price, or for any other reason. Finally, listed companies have to inform the CMA of the remaining treasury stocks available and their prices after they execute a buyback operation.

The new regulations are intended to increase the transparency of treasury stock trading.

Local firm to produce generic bird flu remedy

Nile Pharmaceuticals will begin making a generic form of Tamiflu, the only drug recommended by the World Health Organization (WHO) to treat the H5N1 bird flu virus. The first batch of the generic drug, to be called Taminil, is expected to be ready by November.

The production follows an agreement concluded in May between the Ministry of Health and Swiss drug maker Roche, which agreed to permit the licensed production of a generic form of its Tamiflu. Until now, Egypt has been purchasing Tamiflu at d12 euros per 10-pill course of treatment; instead of the wholesale price of d25. Roche will now supply Tamiflu’s main ingredient, Oseltamivir, at a cost of about d8.5 per course of treatment.

Nile Pharmaceuticals aims to produce 650,000 doses of Taminil annually for the next two years. The Ministry of Health is also examining ways to import additional Oseltamivir in order to sell Taminil to neighboring countries. According to the terms agreed upon between Roche and the government, however, the generic drug cannot be sold at a profit.

Chinese PM signals more trade

In the opening leg of a seven-nation trip through Africa, Chinese prime minister Wen Jiabao concluded a two-day visit to Cairo saying China was ready to increase trade and investment with Egypt. The announcement came following talks between Wen and President Hosni Mubarak.

Prime Minister Ahmed Nazif and Wen earlier signed 10 cooperation agreements covering oil and gas, telecommunications and citrus exports. China also agreed to provide a $50 million loan and a $10 million grant to help Egypt build an administrative center northwest of Suez to facilitate investment.

Trade between Egypt and China topped $2 billion in 2005, a 36-percent increase over the previous year. China has 186 projects in Egypt and total investments worth $220 million.

Misr Aluminum privatization foiled

The highly anticipated privatization of Misr Aluminum has been postponed until “an unspecified time,” Minister of Investment Mahmoud Mohieldin told parliament. The planned initial public offering (IPO) of the country’s largest producer of aluminum would have been among the largest sales of public assets since the public offering of a 20-percent stake in fixed-line operator Telecom Egypt last December.

Mohieldin did not give a reason for the decision to postpone the IPO, but analysts believe it is a response to the low investor interest generated during the public offering of a 17-percent stake in the company in February, which failed to cover the full allocation of shares. Mohieldin recently said he would shift away from using IPOs for privatization due to recent stock market declines in the Middle East.

Shura Council revises stamp duty

The Shura Council’s Financial and Economic Committee has approved a proposal to amend Stamp Duty Law No. 111 of 1980. The committee agreed to reduce the stamp duty tax rate on certain goods and services.

Advertisements published in printed materials, on television or in cinemas will be taxed at a rate of 15 percent, instead of 36 percent. Radio advertisements will be taxed at 15 percent, instead of 24 percent. And a new 15-percent stamp duty tax will be imposed on billboard advertisements.

The amendments will also affect insurance premiums. Life insurance premiums will be taxed at one percent, instead of 3 percent, while insurance on transportation will be charged 10 percent, instead of 15 percent.

In addition, the committee has agreed to reduce the tax on credit accounts and loans to 0.001 percent, from 0.01 percent.

Google adds Arabic interfaces

Google Inc., the company that owns and operates the world’s largest Internet search engine, has announced the launch of an Arabic-based news search engine, Google News in Arabic. The automated search interface enables Arabic-speaking Internet users to access online news clippings from a variety of Internet sources. Google has also introduced an Arabic-language interface for its web-based e-mail system, Gmail.

An estimated 23 million people in the Middle East use the Internet. This number is expected to double by 2008.

Israeli software compatible with QIZs

The Ministry of Trade & Industry’s qualifying industrial zone (QIZ) joint committee has approved a proposal to include Israeli software imports as part of the 11.7-percent Israeli component of the QIZ agreement. Companies will be able to use approved Israeli software programs to meet the component rule, the committee ruled.

The QIZ agreement gives Egyptian exports duty- and quota-free access to the US provided they contain 11.7-percent Israeli inputs.

Egypt to power Gaza Strip

Egypt and the Palestinian Authority (PA) have reached an agreement for Egypt to supply electricity to the Gaza Strip, cutting Israel out of the equation. According to sources, the Palestinian delegation that held talks in Cairo last month said it would allocate about $20 million to transmit power from its border to substations in the Gaza Strip, while Egypt agreed to shoulder the cost of extending its electricity network from Al-Arish to Rafah on the Gaza-Egyptian border, a distance of about 50 kilometers.

The Gaza Strip relied on a 100-megawatt power plant built in 2002, but was forced to import electricity at high costs from Israel when this plant was unable to meet demand. Israel has threatened to cut the power to 1.4 million Gazans in response to rocket attacks by Palestinian militants. By linking to Egypt’s power grid, the PA could shave over 40 percent off the Gaza Strip’s energy bill.

Kuwaiti firm to build container terminal

Kuwait Gulf Link Ports International (KGL) has signed a $1 billion, 40-year concession agreement to build, finance and operate a major container terminal in Damietta. The terminal is scheduled to start operations in April 2008 with a capacity of 1.5 million TEU per year and will reach a full capacity of 4 million TEU two years later.

Eni, Fenosa to expand LNG plant

Italian energy company Eni SpA and its Spanish partner, Union Fenosa SA, have announced plans to add a second production line to their liquefied natural gas (LNG) plant on Egypt’s Mediterranean coast at an estimated cost of $1.5 billion. The Damietta facility is the biggest single LNG unit in the world, with an annual output capacity of 5 million tons. The proposed second line, expected to be ready by 2009, will double capacity and serve customers in Europe and the US.

Int’l ferries back on schedule

Ferries are once again transporting passengers between Nuweiba in Egypt and Aqaba in Jordan following a disruption in service that created a bottleneck at the busy international crossing. Minister of Transport Mohamed Mansour announced that he had met with his Jordanian and Saudi counterparts to find ways of expediting travel after maintenance work put three ferries out of commission. “The company responsible for the ferries has now completed the maintenance work and has also boosted the number of ferry crossings,” he announced last month. He stressed that with the busy summer travel season here, particular attention will be paid to the safety of ferry transport.

Suitors gather for Bank of Alexandria sale

Competition to acquire an 80-percent share of Bank of Alexandria (BA), the fourth-largest Egyptian state bank, is heating up. Twelve European and Arab banks have presented bids for the the bank, though no date has been set for the selection process.

Suitors include Egypt’s Commercial International Bank, France’s BNP Paribas, Jordan’s Arab Bank, Britain’s Barclays, Dutch ABN Amro, Britain’s HSBC, Singapore’s Standard Chartered, Commercial Bank of Kuwait, United Arab Emirates’ Mashreq Bank, as well as three Greek banks: National Bank of Greece, EFG Eurobank Ergasias and Piraeus Bank. Banking experts have estimated that the final price will range from $880 million to $1.25 billion.

The Central Bank of Egypt plans to float between 15 percent and 20 percent of BA on the Cairo & Alexandria Stock Exchanges and reserve a 5-percent stake for the bank’s employees.

£E 1 billion offered in bond auction

The Central Bank of Egypt has announced that it accepted offers worth £E 1 billion in an auction for 10-year bonds with a fixed coupon of 9.3 percent. The bonds are due to mature in November 2015.

Pyramid scheme victims reimbursed

Central Bank of Egypt (CBE) governor Farouk El Okdah has announced that the CBE will refund the remaining portion of deposits in 11 money investment companies (MICs) that lured investors into sinking in their savings with unfulfilled promises of high returns during the 1980s. The companies defaulted on the repayments of some 61,000 depositors after the government restricted their activities.

In 2000, the government agreed to repay depositors out of its own pocket, if necessary

Small IMC investors who paid in less than £E 6,000 have already been refunded their money. Investors who deposited over £E 6,000 have received 65 percent of their deposits in instalments, with the final instalment scheduled to be distributed by the CBE within the next two months.

Canada opens chamber of commerce

The Canadian Chamber of Commerce in Egypt opened early June, with the aim of facilitating bilateral trade relations between Canada and Egypt and fostering their mutual dialogue and support. According to Fayez Ezzeddin, chairman of the newly founded entity, the first of its kind in the Middle East, the chamber will act as a facilitator on behalf of the business communities in both Canada and Egypt. Its objective will be to help them communicate in order to achieve successful business together.

In 2005, the trade balance between Egypt and Canada stood at $500 million. The figure is expected to rise to $3 billion in the next three years, according to Ezzeddin.

Women’s summit aims to empower

First Lady Suzanne Mubarak delivered the keynote speech at the opening of the Global Summit of Women in Cairo. The three-day summit brought together 900 delegates from 88 countries to “advance women’s economic and entrepreneurial progress worldwide” and to introduce a “more complex picture of the Arab woman.” It was only the second time the event has been held in an Arab country. Mrs. Mubarak also received the group’s 2006 Leadership Award.

Privatization amended

Prime Minister Ahmed Nazif announced that a new article would be added to the executive charter of the Public Enterprises Law that obligates the minister of investment to present the procedures of privatizing any public company to the cabinet’s economic group and the minister of manpower before taking any serious steps in the divestment of the company. Observers believe this is a step to calm growing criticism of the privatization process after a number of recent deals, particularly Omar Effendi and Yassin Glass, stirred a public firestorm over the evaluation process and protecting the rights of workers.

Meanwhile, Minister of Investment Mahmoud Mohieldin ruled out plans to privatize any of the state-owned spinning and weaving companies. He revealed to the Shura Council’s economic committee a plan to restructure some of these companies, namely Al-Mahalla and Kafr Al-Dawar for Spinning and Weaving companies.

Micro-projects to support employment drive

The government expects to halve the unemployment rate to 5 percent in the coming six years by creating 750,000 new jobs annually, said Minister of Planning and Local Development Osman Mohamed Osman. He indicated that one of the ways this would be accomplished is by providing more funding for micro-projects. “These projects will also be helped getting their licenses, while there will be training courses for their workers,” he said.

Osman also said the country’s gross national product (GNP) would increase by £E 626 billion during FY 2006-07, up from its current value of £E 558 billion. He added that the private sector’s contribution to GNP is expected to reach £E 400 billion in the upcoming period.

Private sector invited to participate in infrastructure

The Ministry of Finance has launched a new scheme designed to increase private sector participation in infrastructure projects, such as public transportation, education, health and housing plans. According to Minister of Finance Youssef Boutros-Ghali, the government will carry out infrastructure projects through public-private partnership (PPP) initiatives. “The private sector will be responsible for financing and fulfilling national and infrastructure projects enlisted in the national development plan and the government will lease these projects for 15 or 20 years,” Boutros-Ghali said.

Lower DSL prices could weed out ISPs, warn analysts

The National Telecommunication Regulatory Authority (NTRA) passed a decision on June 13 to slash DSL prices nearly 40 percent, in order to boost the number of broadband Internet service users, which amounted to 130,000 nationwide at the end of May 2006, according to data from the Ministry of Communications & Information Technology.

The price cuts could drive several operators out of the market and consolidate the near-monopoly status of certain service providers, ICT industry analysts warn. Four digital infrastructure companies control about 95 percent of the Egyptian broadband connectivity services market, topped by TE Data with 33 percent and LinkDotNet with 31 percent, EgyNet with 17 percent and Raya Holding with 15 percent.

Private recruiters eye Libya

The Ministry of Manpower & Immigration has approved a proposal to lift the ban on labor exports to Libya through private sector recruiters. Previously, only ministry agents could approve the recruitment of Egyptian workers for jobs in Libya.

Kuwait’s Hasibat eyes Centra stake

Kuwait’s Hasibat Holding Company has entered into talks on plans to take a 25-percent stake in Egyptian Centra Technologies, which is 51 percent owned by the Egyptian state-run Telecom Egypt. Centra is the main supplier of Egypt’s “PC for Every Home” program.

OHD commits to Oman development

Orascom Hotels & Development (OHD) signed a series of agreements with the Omani government for the construction of tourism destinations in four locations in Oman: Muscat, Siftah, Salalah and Al Soda Island. The agreements will govern rights and responsibilities of each party in a number of matters, including construction, service commitments, utilities and land concessions for the next 50 years.

OHD increased its capital from £E 590 million to £E 1 billion last year to fund its Omani venture, of which it owns 70 percent with the balance owned by the government of Oman.

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