Wednesday, 3 December 2014

Renewable energy tender results due this week • Arla nixes Arab Dairy takeover • OW to invest EGP 1.2 bn in expansion • Cabinet to discuss electoral law • proposed mining law emphasizes value-add over exports • public sector wage reform in offing?

WHAT WE’RE TRACKING TODAY

Cabinet is expected to discuss a new draft law on electoral constituencies ‎during its weekly meeting today, the last step required before parliamentary elections. (Read)

Foreign minister Sameh Shoukry arrives in Khartoum today to attend the 2-day Arab-Russian Co-operation Forum. Foreign ministers of Arab countries, Russia and the secretary-general of the Arab League Nabil Al Araby will meet to discuss regional developments, including Sudan, Palestine, Syria and the unfolding chaos in Libya. Possible economic cooperation agreements will also be discussed. (Read in English in the Russian state news agency TASS).

The newly elected Tunisian parliament had its first session yesterdaywith incumbent president, Moncef Marzouki (who’s preparing for a run-off against Beji Caid Essebsi) being a notable absentee. (Read in Arabic)

France has become the fifth European state to symbolically recognize the Palestinian state following a vote by the lower house of the French parliament (Read)

WHAT WE’RE TRACKING THIS WEEK

HSBC’s purchasing managers’ index (PMI) for Egypt, Saudi Arabia and the UAE will be released tomorrow.

LAST NIGHT’S TALK SHOWS

The highlight of last night’s talk shows was Osama Kamal’s interview with Egyptian Foreign Minister Sameh Shoukry on El-Kahera wel Nas. Shoukrytalked about the fight against Islamist extremism, the situation in Libya in light of the upcoming foreign ministers’ meeting in Khartoum, and the West’s continued criticism of Egypt.

Asked what, if anything has changed about the European position towards Egypt,Shoukry said: “I think that Europe and the international community as a whole are now more aware of the threat that Islamist terrorism poses. They can see clearly now that terrorism is not restricted “to Al-Qaeda. The rise of Daesh and the events that we are witnessing in Iraq, Libya, Kenya, Nigeria and Somalia has made them realize the size of the problem that we are dealing with,” saidShoukry. “As far as I’m concerned, all these terrorist organizations are different names for the same ideology.

“Egypt, like any other country, has the right to do what it sees fit to combat terrorism and other countries have to respect that we are doing what we have to do to protect our national security. They have to respect our decisions, which are taken within the confines of our laws.

“I think that we are starting to see a shift in attitude on the part of western governments,” Shoukry concluded. “No one can pressure or force Egypt to do anything that we don’t want to do.”

Mohamed Sherdy interviewed the colorful politician and former parliamentarian Mostafa El-Guindy.

El-Guindy, who was in touch with his rural roots last night choosing to wear his galabeya (he alternates between galabeyas and designer suits on the talk shows), warned Egypt’s youth against getting involved with the ikhwan.

“Don’t fall into the same trap, the ikhwan sold you out multiple times and they will sell you out again,” said El-Guindy in a passionate speech.

Ibrahim Eissa took issue with a proposed law that seeks to protect the sacredness of the January 25th and June 30th Revolutions. The law would forbid anyone from speaking out against either of the two revolutions. Eissa decried the proposed legislation as a blatant violation of the principles of freedom of expression.

“It’s absurd! It goes against the very principles of these two revolutions,” said Eissa.

SPEED ROUND

The EGX30 fell 0.51% yesterday to 9,187 points with turnover of EGP 630 mn, about 8% below the 90-day average. The Saudi Tadawul closed flat, the DFM fell 2.23%, the ADX slipped by 0.19%, Kuwait Stock Exchange was essentially flat with a rise of 0.06%, the Qatar Exchange dropped by 0.77% and Oman’s bourse was up by 2.52%.

US and European markets were up yesterday (for the most part): The Dow was up 0.58%, S&P by 0.64% and NASDAQ by 0.50%, according to data by Bloomberg. In Europe, the FTSE was up by 1.29% while the Deutsche Boerse was down by 0.30%.

All major Asian markets started today’s trading session in the black after posting gains yesterday.

Brent crude closed the day yesterday at about USD 71 / bbl, down about 2%; oil was up in early morning trading in Asia on news that US oil supply was down slightly week-on-week.

Egypt is a “massive winner” from currently low oil prices, says the WSJ in an analysis piece that notes the Arab world is far better-positioned to absorb the blow of current prices than is Iran. Read “Analysis: Oil-Price Drop Adds New Element to Mideast Fray”

Meanwhile, Bloomberg has a great new interactive tool on its website that enables you to compare gasoline prices and their relative affordability across the world. Play with it here.

The international community needs to stop selling surveillance technology to countries including Egypt, Bahrain and Libya that have “purchased surveillance technologies from private companies, and have used them to facilitate a variety of human rights violations,” human rights organizations including Human Rights Watch said yesterday. Their Statement has been picked up by Ahram Online and you can read the original here.

Of potential relevance to those of you with GDR programs: BNY Mellon has become the latest US company to give in to so-called “activist funds,” it appears, handing a board seat to Trian Fund Management at the same time as another activist investor (Marcato Investment Management, whose shareholding is about half that of Trian) announced it has accumulated a significant chunk of stock in the 230-year-old institution. “We have had valuable discussions with … Trian over the past several months about our progress,” the WSJ quoted BNY Mellon Chief Executive Gerald Hassell as saying in a statement. Activist investors, the Journal remind us, “typically take stakes in companies and then agitate for changes such as asset sales or stock buybacks to bolster share prices.” (Read in theWSJ or in Reuters)

Stopping Daesh will demand the involvement of the business community, according to Foreign Affairs. The article analyzes the group’s financial management to demonstrate that diversification of its revenue streams helped Daesh become one of the most well-funded terrorist organizations in the world. (Read)

As the jockeying for position to replace Ban Ki Moon as secretary-general of the UN intensifies, UNESCO chief Irina Bokova is now actively courting the role, saying in a long sit-down with AP: “It’s time for a woman to become secretary-general. Definitely.” AP describes her eyes as “lighting up” as she delivers that line. The newswire looks at why Bokova appears to many to have the inside track on the job: “…she’s been acting more and more like a political leader in recent months. In November, she flew to Iraq to visit internal displacement camps for Sunni and Shia Muslims who have fled the Islamic State terrorist group. She has been negotiating with Interpol on trafficking from conflict zones. And she has pressured the International Criminal Court to pursue war crimes charges against extremists in Mali for destruction of cultural sites.” (Read)

If you’re as curious as we are about Zimbabwe and what will happen when the country’s 90-year old leader kicks-off, check out this morning’s WSJ for “Leadership Squabbles Take Toll on Zimbabwe’s Economy,” which notes that “an annual conclave that will shape Zimbabwe’s future is getting under way, and squabbling to succeed a nonagenarian president has already claimed one casualty: the economy.” Among the contenders for leadership is the president’s 49-year-old wife, who the piece describes as a former “typist” but who we had thought was an ex-airline stewardess. (We’ll be asking a good friend of Enterprise who happens to be something of an expert on all things “Zim” for a reading list and we’ll report back on his recommendations.)

EGYPT IN THE NEWS

The lead story on the FT’s website this morning was headlined “The Arab Spring idealist who died for Isis,” which warms up the story of “Ahmed al-Darawy, a one-time police officer turned revolutionary, had been a mainstay of Egypt’s uprising in Tahrir Square.” Borzou Daragahi’s lengthy piece rehashes a story first reported by WaPo’s Erin Cunningham (which we noted back in early November) and is primarily remarkable for the simple fact of appearing in the FT. Among his conclusions: “The same despair has driven some of the revolutionaries in Egypt into exile or depression, self-destruction and suicide, including Zainab al-Mahdi, a well-regarded activist who hanged herself in her Cairo flat in November. The loosely organised, spontaneous uprisings that felled longtime dictatorships ill-prepared their partisans for the long, fierce battles needed to bring about fundamental social change.”

Al-Monitor’s correspondent in Sinai discusses Ansar Beit Al Maqdis’ new evasive strategies after the Egyptian military tightened the noose on them in Northern Sinai. The article warns that pledging allegiance to Daesh helped them to recruit and expand beyond the peninsula. The piece, since picked up by USA Today (a newspaper recently described as a “hotel room accouterment”) under a syndication agreement, joins others including this one in The Nation and another in Bloomberg in looking the “insurgency” in the Sinai.

The Washington Post is one of dozens of news outlets this morning carrying an AP news report that the prosecutor general’s office will appeal this weekend’s court ruling tossing out murder charges against former president Hosni Mubarak. The report is straight down the middle. (Read)

The UN Office for the High Commissioner for Human Rights released a statement on Egypt yesterday, saying the usual. In sum: “We are deeply concerned about a number of recent developments in Egypt and their impact on freedom of expression, association and assembly. We are also concerned about the seriously damaging lack of accountability for human rights violations committed by security forces in the context of demonstrations.” The statement goes on to note that “five people, including two security officers” were killed in weekend clashes, the police need to exercise restraint; that the 78 teenager sentenced last week for protesting in Alexandria should be released; that the draft terrorist entities law probably falls short of international human rights norms; that civilians should not be tried before military courts; and that individuals, up to the “highest levels,” need to be brought to justice for the deaths that followed 30 June 2012. (Read)

It would appear that the statement was drafted and published before the announcement yesterday that Giza’s criminal court sentenced 188 defendants to death yesterday for a violent attack on a police station in 2013 which has become known as the Massacre of Kerdassa which left 11 police officers dead following a siege of their station by Morsi supporters. Their verdicts have been passed along to the Mufti for his non-binding advisory opinion. (Read in Ahram Online). The story is making wide international headlines today and has already been picked up by the New York Times, where David Kirkpatrick notes this is the “the third such mass sentencing in less than a year” and that the judge in the case is the same one who sentenced the three Al-Jazeera English journalists to prison. (Read)

Al-Azhar’s Ahmed El-Tayeb joined Pope Francis and religious leaders of all stripes in signing a declaration yesterday condemning modern slavery, prompting a commentator to note: “It is the first time in history that both Sunni and Shia have joined with the Catholic, Anglican and Orthodox as well as Jewish, Hindu and Buddhist faiths to publicly work together to eliminate slavery.” (Read)

Finally, the Voice of America’s website has a piece this morning letting us know that a “Lebanese American University Political Science Professor” (that’s apparently a Proper Noun Thing) and a “a veteran economist with Banque Pharaon & Chiha in Lebanon” think “continued insecurity makes the [tourism] sector in Egypt volatile, and not profitable enough to fix the country’s beleaguered economy.” We hope you find the analysis as trenchant we did. (Read)

THIS MORNING’S MUST READ

That lack of sleep you’re suffering through? It could literally be killing you. That’s the bottom-line conclusion of a National Geographic documentary, and with all due respect to the people at OSN, we’re not certain how to even begin figuring out when it might air in our little corner of the world. This recap from the Washington Post explains the damage we’re doing to ourselves — and to our teenagers — by not taking sleep seriously: No, you’re not sleeping enough, and it’s a problem: 15 scary facts in new NatGeo doc

ENERGY, RENEWABLE ENERGY & SUBSIDY REFORM

Results of tender process for renewable energy projects could be announced at week’s end — Shaker
Al Mal | 02 Dec 2014
Winners of recent tenders to generate electrical power could be announced “this week,” Minister of Electricity and Renewable Energy Mohamed Shaker said yesterday, according to Al-Mal. The paper also notes that Shaker estimates that the total investment required to generate 4,300 MW of electrical power and sell it the current feed-in tariff would top about USD 6 bn. The newly set tariff for solar and wind energy will stand at EGP1.025/kw and EGP 0.83/kw, respectively. (Read in Arabic)

Ministry of Finance signs agreement with e-Finance to use car registration data for fuel smart-card system
Ministry of Finance statement | 02 Dec 2014
The Ministry of Finance signed an agreement with e-Finance to facilitate cooperation and allow for access to motor vehicle registration data. The agreement will make issuing the fuel smart cards systems easier as it uses the existing registration database. The agreement will also allow for implementing the system across Egypt. (Read in Arabic)

OIL & GAS

New USD 24.2 mn project for BAPETCO in Western Desert
Al Bayan | 02 Dec 2014
A source with Badr El-Din Petroleum (BAPETCO), the local partner of Royal Dutch Shell, revealed the company is engaged in several projects related to its concessions in Egypt’s Western Desert. The source explained the company is building six storage units for crude oil and is building a centralized unit for its oil wells. The new projects are expected to have a production capacity of 8,500 barrels of crude oil and are meant to accommodate the company’s growing production and E&P operations. BAPETCO owns several concessions in different areas of the western desert, including Badr, Alam El Shawish and NEAG. The company also plans to operate the Karam and Aseel fields, which will increase the company’s total production of natural gas to 500 mcf and 40,000 barrels of crude oil per day. Royal Dutch Shell budgeted USD 555 mn to BAPETCO’s operations last year, a 68% increase from the year before.

BASIC MATERIALS & COMMODITIES

Arab Dairy accepts Pioneers’ takeover offer, allows Lactalis to go through with due diligence; Arla backs down after completing due diligence
Al-Mal, Ahram Online | 01-02 Dec 2014
Arab Dairy’s board of directors announced the acceptance of an offer presented by Pioneers Holding to acquire the company at EGP 56 / share. Arab Dairy also gave French giant Lactalis, which had submitted a rival bid of EGP 66 / share, the green light to conduct its due diligence. Denmark’s Arla Foods, after finishing its own due diligence process, announced it would not be submitting a takeover bid. (Read in Arabic here and here; Ahram Online has a summary in English here)

Government allocates 183,500 feddans for new sugar factory
Amwal Al Ghad | 02 Dec 2014
The Egyptian cabinet approved the allocation of 183,492 feddans in Minya governorate on a freehold basis for an undisclosed company to cultivate sugar beets and establish a new sugar factory with a total annual production capacity of 400,000 tons. The sugar factory is estimated to have an investment value of USD 370 mn, while land reclamation will cost the government EGP 2.5 bn. (Read in Arabic)

Mining open for investment when law changes — Oil minister
Amwal Al Ghad | 02 Dec 2014
Oil Minister Sherif Ismail said Egypt’s mineral resources remain relatively untapped and offer attractive investment opportunities, adding that the existing law does not provide an adequate economic return for the state. Ismail said a new mineral resources law will soon be issued for the purpose of maximizing the return from resources, especially in remote areas. In a symposium titled “Prospects for the Future of Mining in Egypt”, Sherif said a new law will increase the government’s share of fees and royalties from mining activities and will encourage value added activity and metallurgical practices, instead of exporting raw materials. The oil minister also said the new law will emphasizes the role of the Egyptian Mineral Resources Authority (EMRA) as a scientific and research entity. He also spoke about the possibility of creating an industrial zone in the “Golden Triangle” region to help develop the area and create new employment opportunities. (Read in Arabic)

Government considers iron, cement licences to meet local demand
Daily News Egypt | 01 Dec 2014
Investment Minister Ashraf Salman said the cabinet is mulling the introduction of new licences for iron and cement to meet local market needs by 2020. The minister said the potential licences will come into effect in accordance with studies undertaken, and may relieve pressure on the BoP and foreign reserves. The story adds nothing new to the pickup in the Arabic press we noted yesterday; we include it here today simply because the fact of it appearing in English could mean international trade journalists will pick it up and come calling asking certain among you for comment. (Read)

REAL ESTATE

Arabtec to present its final feasibility study for the “one million unit” project within two weeks
Amwal Al Ghad | 02 Dec 2014
Housing Minister Mustafa Madbouly said the UAE’s Arabtec will present a final feasibility study for the one million residential unit project within 10-14 days in an interview with Al Arabiya news channel, Madbouly explained that negotiations are underway regarding the price of the land on which the project will be built, explaining that the company is exploring the possibility of reducing the price of residential units in exchange for a below-market rate for the land. Madbouly further explained that an agreement will be signed later this year and construction will start early next year, adding that the project was delayed because of recent management changes in the company. (Read in Arabic)

Al-Futtaim Group to begin constructing phase two of Cairo Festival City in 2015; will include residential zone
Al-Mal | 01 Dec 2014
Mohamed Mekkawy, Al-Futtaim’s Managing Director, told Al-Mal that phase two of the construction of Cairo Festival City will begin construction in 2015. This comes after a settlement with the government was reached and the project’s expected delivery date is 2018. Phase two involves the construction of 240 villas, 300 residential units, and five executive buildings. (Read in Arabic)

SODIC will head to court to resolve Mansoura land dispute
Al Mal | 02 Dec 2014
SODIC CEO Ahmed Badrawy said that the company will resort to court to resolve a dispute over a plot of land in Mansoura, Al-Mal said. The escalation comes after negotiations with the local government there failed to resolve the issue. SODIC says it was awarded the land under a BOT agreement to develop shopping malls in the city. (Print)

BANKING & FINANCE

EFSA: Private insurance funds to top EGP 44 bn
Amwal Al-Ghad | 02 Dec 2014
Egyptian Financial Supervisory Authority head Sherif Samy said private insurance funds control a total asset base of EGP 44 bn, with annual payments reaching EGP 5 bn from approximately 4.6 million clients. Samy’s statement comes on the back of announcing the 6th Annual Private Insurance Funds Conference, which is set to take place the middle of this month under the theme “Modern Trends in Managing Private Insurance Funds”. Pay-outs of private insurance funds stood at EGP 4.7 bn during FY 2013/14, the story notes. (Read in Arabic)

OTHER BUSINESS NEWS OF NOTE

Oriental Weavers plans for two new factories, expects EGP 5.8 bn in FY14 revenues
Daily News Egypt, Al-Borsa | 01 Dec 2014
Oriental Weavers will look to build new plants in the Tenth of Ramadan city over the coming five years at a total investment cost just shy of EGP 1.2 bn to add both rug and thread manufacturing capacity, the company said in a statement to EGX. The company, meanwhile, expects to close FY14 with revenues in the EGP 5.8 bn range, according to founder. (Read in the Daily News or check out the EGX disclosure in pdf)

Egyptian Federation of Industries wants EGP 2.5 bn paper factory on Sharm investment menu
Al Borsa | 01 Dec 2014
Head of chamber of printing at the Federation of Egyptian Industries, Khaled Abdu, said that feasibility studies are currently underway to market an EGP 2.5 bn paper factory at the upcoming Egypt investment summit. The new facility would produce 130,000 tons per annum to reduce the current gap of 350,000 ton per annum, capitalizing on the abundance of raw materials needed to produce high quality paper, Al-Borsa said. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Criminal procedures law is amended in the aftermath of Mubarak’s acquittal
Aswat Masriya | 02 Dec 2014
Egypt’s cabinet approved a draft law extending the statute of limitations for bribery indefinitely as long as the crime has not been investigated. Given double jeopardy limitations, the amended law cannot be used against Mubarak for the same charge he was acquitted of. In a statement, the cabinet said this amendment is part of “improving the state’s legislative policy to protect public funds against aggression.” (Read)

Tourist arrivals grew by 69.7% in 3Q14, a full recovery expected in 2015 – Zaazou
CNBC Arabia | 02 Dec 2014
Hisham Zaazou, the Minister of Tourism, expects that the peak tourist arrival figures experienced in 2010 will be match in 2015. 3Q14 experienced a 69.7% y-o-y growth in arrivals as 2.77 mn tourists visited Egypt during the period. (Read in Arabic)

2013 stimulus package projects to conclude before the end of 1Q15 – Minister of Planning
Daily News Egypt | 01 Dec 2014
Minister of Planning Ashraf Al Araby said the projects that began as part of the 2013 stimulus packages will be delivered before the end of 1Q15. 75% of the first stimulus package’s projects are already completed and housing projects that were part of the second stimulus package will be delivered within the next two months. (Read)

Public sector wage structure reform in the offing?
Al Masry Al Youm | 02 Dec 2014
Minister of Planning Ashraf Al Araby announced the government is working on restructuring public sector wages so that they only include two components, namely, a fixed portion representing 80% of the total wage and a variable portion representing 20%, the latter of which is to be based on employee performance and overtime. Al Araby further added that wages will be subject to periodic raises that are adequate enough to counter inflation and at a minimum rate of 5% annually. The current system allows for only EGP 1.5 to EGP 6 of monthly wage raises. (Read in Arabic)

ON YOUR WAY OUT

Daesh released a video claiming responsibility for shooting and injuring Danish national Thomas Hopner, who was shot leaving his office in Riyadh (Read)

War of words between the Islamist Ottoman entity and Egypt: The Egyptian Foreign Ministry hit back at [first name unpronounceable] Erdogan’s remarks made during his joint press conference with Russian President Vladimir Putin where he criticized Egypt’s current government. The Egyptian Foreign Ministry responded on Monday, saying: “Despite Egypt’s reluctance and disregard for the reckless comments, Erdogan’s efforts to comment on Egypt entails ignorance, recklessness, lack of understanding of the realities and the determination to live in illusions tied with prioritising his personal stances and narrow ideologies …” Read the response from the Turkish foreign ministry.

Speaking of Turkey’s firm commitment to free speech: One of our favorite writers on Turkish affairs, Mustafa Akyol, reports in Al-Monitor on the recent shake-up of senior members of the Turkish press and on the widespread suspicion that they were dismissed for not being as pro-Erdogan as the new up-and-coming cadres of regime loyalists: Turkey’s pro-Erdogan media purge

Can’t get enough about the Islamist Ottoman entity? Check out WaPo’s “How Russia’s Putin and Turkey’s Erdogan were made for each other,” which is just out this morning. Or for an alternative view, visit the FT: “Putin and Erdogan: not quite kindred spirits”.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.