EgyptAir pilots threaten mass resignation. Food price controversy continues. El Sisi meets with T20. Oil prices are on the rebound, but for how long? President, PM see approval ratings inch up. Hazemoon leader acquitted. IDH shares up 20.6% on LSE.

WHAT WE’RE TRACKING TODAY

The UK General election is set to take place today in what pundits are claiming could be the closest contest in a generation.

Minister of Industry and Trade Mounir Fakhry Abdel Nour is in Milan, Italy’s industrial heartland, to promote trade and investment. Al Masry Al Youm reports that minister will be following up on projects pledged at EEDC, adding that trade talks will be supplemented by a discussion with Emanuele Grimaldi, chairman of the shipping and logistics group by the same name, about restoring the sea route between the two nations.

THE WEEK AHEAD

Verdicts are expected on Saturday in two separate trials against former president Mohamed Morsi: one for espionage and the other for his escape from prison in 2011.

LAST NIGHT’S TALK SHOWS

The rise in domestic food prices continued to be a primary topic of discussion on all the talk shows. Khairy Ramadan and Youssef El Housseiny picked up where Amr Adeeb left off a couple of days ago with rants about out of control prices that are causing serious problems for the average Egyptian as the country heads into Ramadan, ironically a month when food becomes particularly important. The price of okra (kilo bamia, a traditionally affordable Egyptian favorite), which now sells for EGP 28, was a particularly sore point.

Youssef El Housseiny took offence to a statement made by Atef Yacuob, the Head of the Consumer Protection Authority, in which he said, “If okra is too expensive, eat potatoes” and invited him to go on air and explain himself.

“I am simply saying that consumers should take matters into their own hands. They should not accept to pay EGP 28 for a kilo of okra. We can temporarily boycott certain products until prices go down to a more reasonable level,” said Yacoub. “We must also learn to be more economical in our consumption patterns. Abroad, when people make a salad they buy, for example, two tomatoes, three cucumbers etc. Whereas we buy per kilo and it often goes to waste.”

“This is all well and good, but what you are saying applies to affluent consumers not the majority of the Egyptian population that can barely make ends meet,” said El Houssieny. “Changing consumption patterns of a population will take months and maybe years, we don’t have that luxury. The government must act now to control prices by offering the same products at government outlets are market cost. I’m not saying they have to subsidize but they can certainly forgo the high profit margins.”

Khairy Ramadan was highly critical of the local media for the unwarranted attention that they have given over the past few days to a video that went viral on the internet of what has become known as the “airport lady,” a woman who assaulted a police officer after being detained for the alleged possession of marijuana at Cairo airport. “Was it really necessary for this to become front page news in all of our major newspapers and was it really necessary to drag the woman’s family and friends into it? Why has the media turned this into a social class issue?” [Editor’s Note: Seeing no news or other value in the story, we have not previously picked this story up, nor will we be naming the individual involved.”

Ramadan also covered the news of the 224 Egypt Air pilots who have submitted their resignations over financial and administrative disputes that include 14-hour workdays. Minister of Civil Aviation Hossam Kamal said in a telephone interview with Ramadan that the new regulations do not decrease their pay. “There is only a change in the schedule of payments. At the end of the day we do not want to lose any of our pilots, but this is not the time to be making such demands. The country is going through a very critical period and the company has been making losses for the past four years, but we are, however, now on the right track. If the negotiations don’t work we may have no choice but to accept their resignations.”

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SPEED ROUND

224 of the 850 or so pilots employed by EgyptAir have submitted their resignations following the airline’s refusal to amend it compensation policies, Al Ahram reports. (Ahram Online has the story for those who would prefer to read in English.) The company said the “sudden escalation” came after the pilots issued more financial demands that were not being negotiated as part of an ongoing dispute. The airline is now looking to implement the necessary legal procedures to review the resignations. EgyptAir promised that all flights will continue to operate normally without delays and reiterated its loyalty towards its pilots. Aviation Minister Hossam Kamal appears to be calling the pilots’ bluff, saying the ministry won’t stand in the way of anyone who wants to resign (he also played hard ball on television — see our talk show roundup, above). Al-Masry Al-Youm is saying Prime Minister Ibrahim Mahlab will meet with the pilots’ union today to try to head-off the crisis.

IDH shares up 20.6% in LSE debut: ‘Egyptian medical company defies London listing standstill‘ declares the Telegraph in its coverage of Integrated Diagnostics Holdings’ London Stock Exchange IPO. The listing has been priced at USD 668 mn, the paper notes, saying, “IDH’s owners, Dubai-based private equity firm Abraaj Group, sold around 43.5pc of the company, or 65.2m shares at an offer price of USD 4.45 – at the top of the previous guided price range of between USD 3.85 to USD 4.45. Shares in the company, which is the first Egyptian listing in London for seven years, are already 20.6pc higher to USD 5.37 in conditional trading.” Al-Borsa, meanwhile, has the story in Arabic, while the LSE’s press release is here. EFG Hermes and Deutsche Bank were joint global coordinators for the transaction; EFG, Deutsche and Citi served as bookrunners.

T20 has the government’s ear: An Egyptian volunteer organization made up of the graduates of the world’s top 20 universities held yesterday an extended meeting with President Abdel Fattah El Sisi to brief on key initiatives. The group, which aims to work for positive change in Egypt, has worked hand-in-hand with the Sisi administration over the past eight month, posting volunteer teams to work in the ministries of Planning and Transportation, where they’ve have worked with civil servants to develop critical national products and bring them into the execution phase. Part of their work was on display at the EEDC in Sharm El-Sheikh, including a three-minute video expressing Egypt’s Vision 2030. State television carried a clip on the meeting last night.

Sawiris, public debate and autocracy in the FT: The Financial Times has three pieces touching on Egypt and the MENA region worth reading / listening to this morning, whether you agree with their viewpoint or not:

• Heba Saleh, the paper’s veteran Cairo correspondent, has posted a c. 7 min audio interview with Naguib Sawiris headlined ‘It’s time to reinvest in Egypt, says tycoon Naguib Sawiris‘
• In ‘Middle East: Taking liberties,’ correspondent Borzou Daragahi uses atheism to take a very long look at “a broader debate about freedom of conscience in an Arab world teeming with change, turmoil and violence rooted in religion. Buoyed by repressive laws and conservative clerical establishments, Arab societies stigmatise religious minorities and punish those who challenge religious doctrine, according to human rights groups.”
• And columnist David Gardner takes his usual swipes at Egypt in ‘Autocracy is the cause, not the cure, of the Middle East’s ills‘

The CBE’s foreign currency reserves jumped to USD 20.525 bn at the end of April from USD 15.291 bn a month earlier, Reuters reported. This followed the receiving of USD 6 bn in deposits from Saudi Arabia, the UAE, and Kuwait. Without the deposits the reserves would have fallen to USD 14.525 bn.

There was no cabinet meeting yesterday, with the emergency session held Sunday apparently having taken care of business. Prime Minister Ibrahim Mahlab was away inaugurating the Ain Sokhna Power Station. The power station has a capacity of 1,300MW and will use natural gas as its primary input and diesel as an alternative. Al Masry Al Youm report that the station is the most ultra-supercritical power station in the Middle East (yeah, the report is just about that breathless). The Ain Sokhna power station cost USD 1.3 bn, Ahram Online reported, and took about six years to complete. Al-Shorouk, meanwhile, notes that Electricity Minister Mohamed Shaker, in Sokhna for the inauguration, expects Egypt to make its target of deriving 20% of its power needs from renewable sources well ahead of China (because, yeah, that’s a useful benchmark, right?).

The World Bank Group has approved a USD 500 mn loan to provide financing for the government’s one mn homes project, Moustafa Madbouli the housing minister said. The minister said the WBG praised the project and stressed on its importance in providing affordable housing. Madbouli said a 25-40% tranche of the loan will be disbursed “immediately” and will be directed towards providing the units.

GB Auto plans to establish a tire factory in the Sultanate of  Oman and a motorcycle assembly line in Egypt using funds from its EGP 958.672 mn capital increase, reports Dostor.

Subsidies benefit the rich, not the poor: Veteran finance writer and long-time Egypt hand Patrick Werr, who now pens a weekly column on Egypt for the UAE’s The National, writes this week that with a long train of new production contracts now lined up, Egypt cannot “squander the new [natural gas] production on fuel subsidies for consumers and sweetheart deals for favoured industries as it did during the previous boom in gas supply a decade ago.” The piece provides a solid recap of recently struck E&P deals and reminds lay readers of the key issue on fuel and energy subsidies — one the government would do well to use in its campaign to sell subsidy reform to the skeptical masses: “The task is politically delicate, but in the end it is the rich who consume the biggest amount of subsidised goods and not the poor.”

According to survey by poll outfit Baseera claims 89% of Egyptians are satisfied with President Sisi’s performance ten months after his election, reports Al Borsa. This is a slight rise from the 86% who reported satisfaction with the president’s performance six months after his election. Ahram Online provides a detailed overview of the poll results, which also show that Prime Minister Ibrahim Mahlab’s popularity is on the rise, despite the recent wave of criticism he has faced from nighttime talkshow hosts.

xx Rogues’ gallery: Zombie death cult Salafist leader and one-time presidential candidate Hazem Salah Abu Ismail was acquitted yesterday of charges he insulted police. The verdict came on re-trial. Meanwhile, Sada El-Balad talk show, uh, host Ahmed Moussa was sentenced to three months in jail and an EGP 500 fine for insulting Central Auditing Organization head Hisham Geneina, Ahram Online reports.

United Group sends letter to Sisi urging him to back anti-torture legislation: United Group, a legal counsel, research and human rights advocacy group, sent a letter to President Sisi urging him to adopt anti-torture legislation (which they enclosed a draft of) at the soonest possible time, in light of persistent use and allegations of torture at the state level. The draft of the law, which was prepared by a group of judges, lawyers and human rights activists over three years, seeks to enforce stringent and swift punishment on perpetrators of torture compensation for the victims. (Read in Arabic)

In other news, the Sisi administration has apparently approved a plan to rebuild the Pharos Lighthouse, one of the seven wonders of the ancient world, reports BBC.

Oil prices rebounding? A plunge in U.S. drilling capacity, disruptions in Libya and a move by KSA to raise prices appear to be behind a sustained rally in oil prices that have seen crude cross the USD 60 per barrel mark for the first time since December. The rally, which began around St. Patrick’s Day, the WSJ tells us, could mark a “full-blown recovery” as “Demand is going up, supply growth is coming down.…This should lead to stronger prices.” We’ll stick with coverage from the WSJ and the FT on this one, but click here if you’d like to see the Telegraph pretending to be Business Insider with ‘Why the oil price will keep rising – in five charts‘

Everyone and his / her dog is running for the Republican nomination: Following in the footsteps of GOP stalwarts Sarah Palin and Herman Cain, Ben Carson (a prominent neurosurgeon) and Carly Fiorina (former CEO of Hewlett-Packard) announced their nomination for the presidency of the United States, earlier this week. Neither of the two most recent candidates has ever held elected office. They join Ted Cruz, Mike Huckabee, Rand Paul, and Marco Rubio as contenders for the Republican ticket. CNN has a video roundup.

Should your kid study classics or coding? That’s the subject of a Financial Times debate between the former head of Britain’s MI5 spy agency and the head of Britain’s fastest-growing technology training outfits, both of whom are classics grads.

CORRECTION: In yesterday’s edition, we misspelled the name of the investment minister as Ashraf Suleiman. His name is Ashraf Salman, of course.

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A MESSAGE FROM PHAROS HOLDING

On FX Policy: The Time is Ripe for Change

Pharos Holding Research is urging the Central Bank of Egypt to abandon the “crawling-peg” policy, where regular level-shifts in the USD/EGP exchange rates are administered in response to balance of payment flows. The CBE’s latest level-shift took place in January 2015, which fixed the retail USD/EGP exchange rate at bid/ask rates of 7.58/7.63.

Pharos instead suggests the CBE adopt an implicit policy of maintaining the annual EGP depreciation rate against the USD at a level below the two currencies’ interest rate differential to contain depreciation expectations — in other words, a policy of two-way volatility with no predefined path. To learn more about Pharos’ reasoning, click here.

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EGYPT IN THE NEWS

It’s a quiet ending to a quiet week for Egypt in the global media. The BBC seems somewhat scandalized this morning that it’s ‘Business as usual for Egypt and the West‘, while CNBC is reporting that ‘Sainsbury’s Egypt woes should be removed soon‘ (text with autoplay video)

Finally: The Wordfolio interviewed Planning Minister Ashraf Al Araby who expressed his support of foreign investors and insistence on being able to attract more FDI to Egypt. He said the first results of the economic reforms should be visible from July noting that the country has “an investment map for different sectors, six or eight that [the ministry is] focusing on having identified them as the most relevant to ensure sustainable development.” Al Araby also singled out UK oil and gas investments in Egypt saying “investments such as BP and BG indeed prove the continued support from the [UK] and now we need to play our part to facilitate for more investments to arrive into the country.”

ENERGY, RENEWABLE ENERGY & SUBSIDY REFORM

Sites for coal-fired power stations chosen
Al Mal | 06 May 2015
Six sites to be used for establishing coal-fired power stations have been chosen, according to Khaled Fahmy, the Minister of Environmental Affairs. Four of the six sites are on the Red Sea’s coast and the other two will be on the Mediterranean. Fahmy said the ministry made sure that the sites picked are away from protectorates and industrial zones and they will be in close proximity to the port to which coal will be imported. The Minister added that the ministry is currently finalizing the regulations on using coal for industrial purposes. (Read in Arabic)

AIU looking into establishing 5 solar power stations in Sohag for GBP 500 mn
Al Borsa | 6 May 2015
The Arab Investors Union is current conducting feasibility studies as a precursor to obtaining government approval to establish five solar power stations in Sohag estimated to be worth a combined total of GBP 500 mn (USD 762 mn). According to Hoda Yas, who heads up the AIU, the size and scope of the project depends on how much land the government is willing to put up for the project. She added that the AIU will fund the first phase of the project will cost GBP 100 mn (USD 152 mn) in conjunction with a German firm for the right to operate and manage the project for 25 years. (Read in Arabic)

Details of meeting between World Bank and Ministry of Electricity on renewable energy investments
Al Borsa | 6 May 2015
The ministry of electricity held a meeting with investors and representatives of the World Bank to discuss investment in the renewable energy sector in addition to debating the obstacles and hurdles of feed-in tariff related projects. Among the concerns expressed was the issue of availability of foreign currency and liquidity, penalties on broken deadlines, payment guarantees by the government, and the restrictions on land use by the ministry. (Read in Arabic)

OIL & GAS

Natural gas regulatory entity to be completed in July, a source at EGAS says
Al Shorouk | 06 May 2015
The process to set an entity to regulate the domestic natural gas market will be completed in July, an unnamed source at EGAS to Al Shorouk. EGAS will assess the tariffs to use the national gas grid as well as the market prices. The oil ministry had set the price to use the grid at 62 cents per mmBtu. The new regulatory entity will allow the private sector to purchase gas directly while using the existing pipeline infrastructure. (Read in Arabic)

3.2 bcf of gas was pumped through the FSRU, EGAS says
Youm7 | 05 May 2015
A total of 3.2 bcf of natural gas was pumped into the national grid through the FSRU, Khaled Abdel Badie, the head of EGAS, told Youm7. The amount came from the LNG that arrived with the FSRU, he added. Abdel Badie also said that 3.0 bcf from regasifying the second LNG shipment is getting injecting into the national gas grid now. The second shipment arrived from Noble Clean Fuels and was deposited at the FSRU two days ago. (Read in Arabic)

Oil ministry looking to develop a mineral resources PSA
Amwal Al Ghad | 06 May 2015
The Ministry of Petroleum is looking into creating a model for mineral resources’ production sharing agreements (PSA), minister Sherif Ismail said. The aim is to have a model that incentivizes investors and generates a largest return to the state. The mineral resources sector is still at its infancy and would be very attractive to potential investors, Ismail said. (Read in Arabic)

BASIC MATERIALS & COMMODITIES

Sugar prices up EGP 0.25 per kg after increasing import duties
Al Masry Al Youm | 06 May 2015
A kilogram of sugar now costs EGP 4.75 on average up from EGP 4.5, the Vice Chairman of the Alexandria Chamber of Commerce said. The price increase followed the import duties slapped on sugar imports setting them at a minimum EGP 700 per tonne. The Chairman of the Food Export Council warned against adverse effects to industries depending on sugar as input as the price per tonne has increased to EGP 4,250 from EGP 3,900. In contrast, sugar producers have welcomed the new tariff, with the Chairman of Delta Sugar praising the minister’s decision and saying that without the imports, his company had accumulated EGP 180 mn in losses this year compared to a profit of EGP 150 mn a year earlier. (Read in Arabic)

MANUFACTURING

Edita to borrow EGP 175 mn to finance new production lines
Al Mal | 06 May 2015
Edita has approved the borrowing of EGP 175 mn with a maturity of seven years to finance the installation of new production lines. The company said financing would not be restricted to Egyptian banks. Edita has delegated the CEO and the CFO of the company to negotiate the financing on behalf of the company. (Read in Arabic)

Egyptian companies submit offers for El Nasr Automotive Manufacturing
Al Mal | 6 May 2015
Two unnamed Egyptian companies have submitted separate offers to recommence operations of the El Nasr Automotive Manufacturing Company (El Nasr), Egypt’s state-owned automobile manufacturer. A government-appointed committee is currently assessing the offers. The offers, according to a member of the committee, are much better than those that were previously presented by foreign investors.   (Read in Arabic)

REAL ESTATE & HOUSING

Ministry of Housing and real estate developers agree on amendments to real estate regulations
Al Borsa | 6 May 2015
The ministry of housing has reached an agreement with real estate developers on amending some articles on the New Urban Communities Authority’s executive regulations, with a final draft having been prepared by the authority today. Among the real estate developers’ demands that were met were allowing for extended deadlines for construction, and breaking ground will be considered the first day of the construction timetable, while revoking land use license must come only if the developer had completely failed to meet his obligations. (Read in Arabic)

World Bank offers USD 500 mn loan for mass housing project
Al Borsa | 6 May 2015
The World Bank’s Board of Executive Directors unanimously agreed to provide the Egyptian government with a USD 500 mn loan for the development of its one mn homes project, said Minister of Housing, Mostafa Madbouly. Additionally, members of the board praised the project’s execution, with representatives from several African and Latin American requesting to learn from the government’s experience. The ministry expects to complete the construction of 175,000 units before the end of the year, bringing the total number of completed apartments to 250, 000, concluded Madbouly. (Read in Arabic)

TOURISM

UAE minister of culture met with Aswan’s governor to discuss promoting Egyptian tourism
WAM | 06 May 2015
Moustafa Yousri, the Governor of Aswan met with Sheikh Nahyan bin Mubarak Al Nahyan, the Minister of Culture, Youth, and Community Development to discuss promoting Egyptian tourism. “Sheikh Nahyan hailed the distinctive relations that the UAE and Egypt share, pointing to the ongoing cooperation between the two countries in all fields, especially in tourism and investment,” WAM reported. Sheikh Nahyan commended the opening of an Egyptian Tourism Authority office in Abu Dhabi saying it “has a significant impact in supporting Egyptian tourism.” (Read)

PwC issues report on hospitality sector in the Middle East
Al Mal | 6 May 2015
PricewaterhouseCoopers released its report analyzing the hospitality sector in the Middle East, and the prognosis is positive. Growth indicators for the region as whole remain excellent, buoyed by good utilization rates, and a growth in average daily spending by consumers. Despite the negative publicity around the region, it received 50 mn tourists in 2014. Among the cities that are expected to show significant growth in 2015 were Jeddah and Abu Dhabi. Among the challenges the report mentions is the collapse of oil prices and the drop in the Euro which had a significant effect on the flow of tourists from Europe, in particularly, Russia. (Read in Arabic)

TELECOMS & ICT

CIT ministry invests EGP 330 mn to enhance cyber security
Al Borsa | 06 May 2015
CIT ministry-related entities are investing EGP 190 mn to enhance the security of computer networks over the next three years, Al Borsa reported. The CIT ministry itself is investing EGP 140 mn to improve cyber security, bringing the total investment up to EGP 330 mn. The ministry said it has put it in place measures to ensure network security and data protection. (Read in Arabic)

ITIDA signs MoUs with several global companies; Looks to increase ICT services exports
CIT Ministry Press Release | 05 May 2015
Egypt’s Minister of Communications and Information Technology inaugurated the Premier Business & Technology Sourcing Forum on Tuesday. As per the ministry’s press release, the forum aims to “highlight the country’s  capabilities in the fields of exporting IT services through outsourcing.” According to a report by the Everest Group, 90,000 Egyptians work in the country’s IT sector, 50,000 of which offer services to clients outside Egypt.” Egypt’s ICT service export growth rate is 7.5%  per annum, adds the source. In related news, ITIDA, the IT arm of the Ministry of Communications, signed several MoUs with global companies – including Mobinil, Nestle, Proctor & Gamble, and Exceleria – that could create upwards of 6000 employment opportunities. (Read)

Eitesal to present a comprehensive ICT development strategy to El Sisi
Al Mal | 6 May 2015
Egyptian Information, Telecommunications, Electronics, and Software Alliance (EITESAL) plans to meet with President Abdel Fattah El Sisi in the coming says to present him with a comprehensive strategy to develop and inject vitality to the ailing ICT sector in Egypt. The ambitious plan, which outlines a development schedule ending in 2030, plans to have the ICT sector contribute USD 20 bn by 2020. (Read in Arabic)

BANKING & FINANCE

NUCA to borrow EGP 6 bn to finance part of the monorail project
Al Borsa | 06 May 2015
NUCA is set to begin negotiations with four banks to borrow EGP 6 bn. The loan will be to provide the domestic financing component of the USD 1.5 bn monorail project. A banking source told Al Borsa that NBE, Banque Misr, CIB, and AAIB are negotiating forming an alliance to provide the loan. NUCA will aim to secure the loan and have it repayable in 14 years. (Read in Arabic)

HC Securities and Investment inaugurates 3 brokerage branches
Al Borsa | 6 May 2015
As part of its countrywide expansion strategy, HC Securities and Investment announced its opening of 3 new brokerage branches. Two branches are located in the upper-class Cairene neighborhoods of Maadi and  Mohandessin, while the third is in Sohag, Upper Egypt. The company aims to have 12 operating brokerage branches by the end of 2016. (Read in Arabic)

HC seeks management firm to launch its USD 100 mn private equity fund
Al Borsa | 6 May 2015
HC Securities & Investment chairman, Hussein Shokry, announced that the company is seeking an experienced fund manager to administer a USD 100 mn private equity fund. The new fund, which individual investment will be capped at USD 10 mn, will primarily target investment in consumer markets. (Read in Arabic)

Minister of Investment: EEDC MoUs to be “converted” into contracts shortly
Al Borsa, Al-Masry Al-Youm | 6 May 2015
46 of the MoUs signed during the EEDC will be “converted” into contracts within 30 to 60 days, said Ashraf Salman, Egypt’s Minister of Investment. Salman attributed the delay in the signing of contracts to investors’ financial demands. That said, the minister remains confident that these obstacles will be resolved imminently. Salman also revealed that the committee formed to follow up on the MoUs, contracts, and letters of intent signed during the EEDC has met four times to date. (Read in Al-Borsa or Al-Masry Al-Youm

REGIONAL

Arabtec elects Al Rumaithi as BoD Chairman
DFM | 06 May 2015
In a statement sent to the DFM, Arabtec announced the election of Mohamed Al Rumaithi as Chairman of the board of directors. The company also appointed Mohamed Al Mehairi as Vice Chairman and created a strategy committee chaired by Saeed Al Mehairbi. According to the statement to committee will be tasked with “the consideration of Company and Group strategy, future vision, growth plans, current and future challenges.” (Read)

BY THE NUMBERS

USD CBE auction (Wednesday, 06 May): 7.5301 (unchanged since Monday, 02 Feb)
USD parallel market (Wednesday, 06 May): 7.67 (unchanged from Saturday, 02 May)

EGX30 (Wednesday): 8,756.31 (-0.82%)
Turnover: EGP 398.6 mn (29% below the 90-day average)

WTI: USD 60.53 (-0.66%)
Brent: USD 67.37 (-0.59%)

TASI: 9,781.7 (+0.3%)
ADX: 4,566.0 (-0.5%)
DFM: 4,114.7 (+1.1%)
KSE Weighted Index: 433.6 (+0.3%)
QE: 12,334.1 (+1.0%)
MSM: 6,352.6 (flat, +0.01%)