Qatar closes Al-Jazeera Mubasher Misr • Leviathan gas deal threatened by Israeli regulator • BG denies resort to arbitration • low oil means extra 30% savings for Egypt subsidy bill • Egypt eyes China power deals • El-Sisi signs renewables incentives act

EGP:USD SNAPSHOT

CBE auction rate: 7.1401
(unchanged from Monday)

Parallel market: 7.80
(unchanged from Monday)

WHAT WE’RE TRACKING TODAY

The Leviathan gas deal between Delek Group and Noble Energy is in jeopardy of being revoked by Israel’s antitrust regulator. There are concerns within Israel that the two companies are monopolizing national resources. Talks have been underway between BG Group and Leviathan’s partners to supply Egypt and Jordan with gas. (Read in Reuters)

Al-Jazeera Mubasher Misr is closed. For now, at least, suggesting Qatar may be making good on reconciliation promises.

On a related note: 29 days remain on the Amr Adeeb-suggested moratorium on media criticism of Qatar. (Some of us here at Enterprise are counting the seconds.)

Beji Caid Essebsi won the Tunisian presidential elections run-off against Moncef Merzouki with 55.68% of the votes.

LAST NIGHT’S TALK SHOWS

Last night’s talk show hosts debated whether or not the final broadcast from Al Jazeera Mubasher Misr was a real act of good faith on the part of the Qatari government or merely a temporary ploy to win over Egyptians who are having a hard time forgetting the role that Qatar has played in supporting ikhwan.

Amr Adeeb acknowledged that we are witnessing real change in Egyptian-Qatari relations.

“The closure of Al Jazeera Mubasher Misr marks the closing of a dark chapter in our history, but even more significant is Al Jazeera’s airing of an interview with the Qatari envoy upon his return from Cairo. During the interview, he pledged that Qatar would play ball with Egypt and support the President. As for the political refugees that Qatar is harboring, the Qatari envoy said that they will be allowed to stay so long as they are not engaging in any political activity and not interfering in Egypt’s domestic affairs,” explained Adeeb. “Saying this on air with a backdrop of the Egyptian, Qatari and Saudi flags, is in my opinion a very positive step that should not be ignored.”

Adeeb also congratulated Tunisians on the victory of Essebsi and the successful conclusion of their transition to democracy.

“The foreign media considers the Tunisian elections to be the only example of democracy in the Arab World. Whether or not we agree with that isn’t important, but I think there are some very important lessons to be learned from Tunisia,” said Adeeb.

“Nidaa Tounes is a political coalition that is made up of Tunisian felool alongside the young revolutionaries who overthrew Ben Ali and Essebsi’s original supporters, who may be referred to as the Bourguiba felool. Keep in mind that the 88-year-old Essebsi served as minister three times between 1965 and 1986 under Bourguiba,” said Adeeb.

“These three very different groups of people who were able to put the past behind them and set aside their differences in order to achieve a common goal; saving their country from the Islamists.’

“This means that the Tunisian equivalent of an Ahmed Ezz is a member of Nidaa Tounes, the coalition that won the presidency.  How would we react to something similar in our country? Would this be acceptable to us? Thus far we have not been able look at the big picture. Even our liberal parties cannot agree,” said Adeeb.

SPEED ROUND

The EGX30 closed essentially flat yesterday: up 0.15% to close at 8,703.3 on turnover of EGP 608 mn, 13% below the 90-day average. Regional markets gained overall: Tadawul up by 0.3%, QE up 3.3%, DFM up 2.3%, MSM up 3.7% and the ADX down slightly by 0.9%.

Globally: DJIA and the S&P closed at all time highs for the fourth session in a row, while  European markets closed slightly up and Asian markets closed up.

Crude was trading up slightly as of early this morning: Brent up 0.14% at USD 60.25 per barrel and WTI up 0.36% at USD 55.62.

Naguib Sawiris, Basel El-Baz and former mufti Ali Gomaa are among the members of the board of Tahya Masrappointed yesterday by President Abdelfattah El-Sisi, per Al-Shorouk.

We have an electoral districts law: El-Sisi ratified the document just prior to his departure for China. The final breakdown: 567 parliamentary seats, of which 420 will be contested by independents and 120 for candidates on party lists. The final 27 members of parliament will be appointed by the presidency. (Read in Ahram Online)

Egypt expects 30% drop in gasoline subsidies should oil prices remain low: After slashing oil subsidies in July, which lead to gas prices rising by 78%, the Ministry of Petroleum expects a 30% decrease in the fuel subsidy bill in FY 2014/15 if oil prices continue to fall. “If low world oil prices continue during the second half (of the fiscal year) it is estimated that the year’s total petroleum subsidies bill will decrease by about 30 billion Egyptian pounds (USD 4.2 bn),” the ministry said in a statement on Monday. Egypt based the 2014-2015 budget on oil being at USD 109-110 per barrel. (Read in Reuters, Read in Arabic in Al Mal and in Shorouk)

Sea Dragon is reassessing its investment plans in Egypt in the wake of the drop in oil prices. Until then, the company will maintain its production levels from its concessions as contracted with EGPC. (Read in Arabic)

On something of a related note: Standard & Poor’s Ratings Services revised its outlook to negative for Royal Dutch Shell, Total and BP, and said it was eyeing similar moves regarding the ratings of Eni and BG Group. (Read in Bloomberg)

El-Sisi has signed a renewable energy incentives act, but no media outlet had details on the specifics as of 6am. See Al-Malas an example.

We’re nearing the end of the best year for M&A deals since 2007. “The need to stay competitive and strengthen the core business is the main catalyst,” Citi’s head of M&A for EMEA told Reuters, which figures that total M&A dealflow this year will be around USD 3.27 tn — a 40% rise from last year. The last time it was in this neighborhood: 2007, when it hit c. USD 4.12 tn in the LBO boom. The difference this time around, Reuters says: companies used shares, not debt, to fund their buying sprees. Downside risk to the boom continuing next year: Geopolitical risk, including Russia’s economic crisis and slumping oil prices that may knock MENA players off the field. Dark horses to watch: European (who need to expand beyond their slow-growing markets) and Chinese firms (which need to move beyond Africa and gain access to new technology). Best roundup is in Reuters. City AM also does a decent roundup (calling on FT and Reuters), and the FT is worth a look if you have a subscription.

2014 in four charts: The New Yorker plays at being Business Insider with “Four Charts That Defined the World in 2014“. In sum: We’re all going online; oil prices are plunging; China’s economy is probably bigger than America’s; income disparities in America are growing (because America defines the world, right?).
The Economist notes that Hong Kong-based HKND is set to build a USD 50 bn waterway in Nicaragua which could be a long term could rival to both the Panama and Suez Canals. The project has until recently languished in development hell, as Chinese surveyors flanked by Nicaraguan military and police have assessing the land along the proposed route. (Read)

Reminder: Nicaragua isn’t the only one looking to challenge the Suez Canal. Russia, Canada, Denmark and the United States (among other parties) are all vying for influence in the Arctic, where natural wealth aside, sea routes provide faster transits from Asia to Europe. For example: The Northern Sea Route provides 35-day transits to Europe from Asia vs. 48 days from the Suez Canal. Business Insider has more here and here. Or go for a reality check from the Globe and Mail, which suggests the northern routes will never rival the Suez Canal.

WORTH WATCHING

Stand-up comic Lenny Bruce reflects on his ex-wife: All Alone. Running time: 3:18. (Watch)

For a longer watch to come back to over the weekend: Whether one has an interest in American politics, the economics of income inequality, Jon Stewart of The Daily Show, or all of the above: Stewart’s extended interview with Edward Conard from back in 2012 should have something for nearly everyone. Edward Conard is a former partner at Bain Capital and a close associate of former (and future?) presidential candidate Mitt Romney. Watching Conard, who understands that he’ll be hated for who he is and what he espouses — and who furthermore embraces it — may make one wonder if he wouldn’t have been (would be) much better suited as a candidate than the robotic and slightly creepy Romney. The back-and-forth between Conard and the very leftist, borderline populist Stewart is definitely interesting to watch, despite Stewart’s observation mid-interview “There’s probably just like one business student out there somewhere who’s still watching us.” Part One, running time 6:51 (Watch part one), part two, running time 14:48 (Watch part two) and part three, running time 19:05 (Watch part three).

DIPLOMACY

President Abdel Fattah El Sisi arrived for his first official state visit in China yesterday, as reported by the Office of the Presidency. The President will meet with China’s political and business leadership, including President Xi Jinping, the Prime Minister, the Chairman of China’s National People’s Congress and the Minister of the International Department of the Chinese Communist Party Central Committee. With regards to heads of industry, President El Sisi will meet with the Egyptian-Chinese Business Council and heads of major Chinese tourism companies according to the statement. There’s little in the way of new coverage on the topic this morning (pending news from Ittihadiyya, we presume), but Gulf News does yeoman’s work with a take.

Al Jazeera Mubasher Misr halts broadcast, for now: Qatar’s capitulation to the new regional pecking order has claimed its latest (and possibly loudest) victim. Al Jazeera Mubasher Misr, the 24-hour Egypt-focused affiliate of the Al Jazeera Network based in Qatar, announced earlier today that it would cease broadcasting until “such time as necessary permits are issued for its return to Cairo in coordination with the Egyptian authorities.” David Kirkpatrick of The New York Times described the closure as “a major victory for President Abdel Fattah el-Sisi.” However, Qatari media coverage of the closure in The Peninsula emphasized that the closure was temporary until the outlet can be retooled and relaunched. (Read in Arabic in Al Mal and in-depth coverage in English on Ahram Online and Qatari treatment of the news in The Peninsula)

Meanwhile, Al Jazeera America has produced an hour-long special critical of Egypt’s detention of the Al Jazeera English journalists titled ‘Journalism is not a crime’ which is set to air on 29 December. (Read)

Speaking of the imprisoned journalists, the Canadian media has picked up on a slightly-more detailed version of a story we first reported on back on 19 October regarding Mohamed Fahmy, the former Al Jazeera English bureau chief in Cairo. The story is with regard to Fahmy having expressed his concerns multiple times to Al Jazeera’s management in Doha about continuing to operate in Egypt without licenses. The slightly more detailed account of the story that has re-emerged (based on internal Al Jazeera emails) adds that Fahmy became especially concerned when he found that his work for Al Jazeera English was being translated for use in Al Jazeera Mubasher Misr, infamous for its inflammatory statements and incitement. (Read in The Globe and Mail or City News Toronto)

The first hearing in the appeal of the Al-Jazeera English case is 1 January 2015 unless President El-Sisi were to intervene ahead of time and order the deportation of Fahmy and Peter Greste (an Australian national) while finding a way of setting-free Egyptian producer Baher Mohamed.

Haaretz offered some decent commentary on the regional implications of reconciliation between Egypt and Qatar on Monday: “Egypt, which should be the primary benefactor from the rapprochement, can now expect Qatar to end its assistance to the Muslim Brotherhood, at least officially,” [Note: the author was most likely specifying the Egyptian Muslim Brotherhood only as opposed to the international organization which by all indications Doha is continuing to support, such as in Libya]. “And the Doha-based Al-Jazeera, the most-watched television network in the Middle East, could be expected to end the kind of coverage that has been a daily thorn in Sissi’s [sic] side.” The piece goes on to speculate what kind of effect the potential thawing in relations might have on Hamas (Read)

Turkey is trying to get in on the act: Turkish Deputy Prime Minister Bülent Arınç said yesterday to the Turkish Al Jazeera affiliate that Turkey needs to mend its ties with Egypt, but that Egypt must make the first step. (Read)

Our take: A reconciliation with Turkey is far more problematic than healing the rift with Qatar, which was caused exclusively by the Gulf state’s appetite for meddling in the internal affairs of others. Given that securing Egypt’s energy needs are far more pressing than paying a visit to Planet Erdogan, and given Turkey’s belligerent stance with regard to Mediterranean energy developments, we’re probably going to have pass for now.

EGYPT IN THE NEWS

In what is being called a must-read by all of the less-intelligent people you know (and who you are unable to exorcise from your life for various reasons) 20-tweet-per-minute Twitter-spammer Iyad el-Baghdadi has lost his mind in FP, where he becomes the last person on Earth to discover: “ISIS is Sisi spelled backwards.” (That’s the actual title. Do you see what he did there? It has layers.)

Excerpts: “Supporters of and apologists for tyrants must be treated with the same severity as supporters of and apologists for terrorists” and “We need to understand that tyranny and terrorism feed off each other in an ever-worsening vicious cycle. Tyranny justifies terrorism through its oppression and injustice …” One does not simply string together a bunch of yin-yang fortune cookie statements and call that an article — unless, of course, you’re writing for FP. We see no need to provide a link to drive traffic to this tacky eyesore tabloid of a website that has all the aesthetic appeal of pulling into a seedy motel in the middle of the night. But here you are, if you must.

Congresswoman Michelle Bachman’s “10 most memorable moments” appeared in The Hill on Sunday, in a smile-worthy but not laugh out loud roast / retrospective of the lawmaker’s career as her term comes to an end next month. At number 8: “Accusing Huma Abedin of ties to the Muslim Brotherhood. Bachmann and four other House Republicans claimed that Hillary Clinton aide Huma Abedin’s family had connections with Egypt’s Muslim Brotherhood.” (Read)

France’s Alstom SA pleaded guilty to bribery charges and will pay USD 772 mn to settle with the US Justice Department. According to Reuters, the French firm is accused of paying USD 75 mn to secure USD 4 bn in projects in a widespread scheme of bribes around the world including Egypt and Saudi Arabia. (Read)

Al-Ahram has picked up the iMedia Ethics investigation of the reporting practices of The New York Times’ David Kirkpatrick that we first mentioned on Sunday. (Read in Arabic)

ENERGY, RENEWABLE ENERGY & SUBSIDY REFORM

Egypt to sign agreements with China in power generation
Al Mal | 22 Dec 2014
Egypt is set to sign three agreements with China during President El Sisi’s visit to Beijing, according to the spokesperson for the Ministry of Electricity. The agreements will involve cooperation in building coal-fired power stations, hydro-electricity generation along the Nile’s banks, and renewable energy projects. A source told Al Mal that Chinese investors have offered to engage in turnkey operations in Egypt to build four coal-fired power stations with total capacities exceeding 4,000 megawatts. (Read in Arabic)

70 companies qualify for renewable energy projects
Al Borsa, Al Mal | 21-22 Dec 2014
70 local and global companies are technically and financially qualified to launch renewable energy projects in accordance with recent renewable energy tariffs, according to a senior official with Egypt’s electricity ministry. The qualified companies will be eligible to build solar and wind power plants. Meanwhile, electricity ministry Mohamed Shaker has issued strict orders not to reveal any of the company names until his return from the state delegation’s visit to China, according to the source. Egypt has tendered renewable energy projects with a production capacity of 14,000 MW during the first phase of permitting new wind and solar power plants. Al Mal was informed that the expected tax rate that will be applied to the projects will be between 20-25%. (Read in Arabic in Al Borsa and Al Mal)

Solar Power Co. plans to build three new solar power plants in Egypt
Al Borsa | 22 Dec 2014
Solar Power Co. is negotiating with the Egyptian and Sudanese governments to establish three solar power plants at a total cost of EGP 4.7 bn, according to Abdallah Mahgoub, the general manager of Solar Power Co., an Egyptian firm established last year and which has gone on to emerge as a leading company in generating solar energy, as reported by Al Borsa. The three plants are expected to generate 510 MW. (Read in Arabic)

OIL & GAS

BG continues to expand its investments, denies reports of resorting to international arbitration against Egypt
Al Mal | 22 Dec 2014
BG Egypt is still proceeding with its plans to expand investments in Egypt according to its Vice President Heba Ayad, denying reports that BG is slowing down or stopping its E&P operations in the country. Ayad also denied that BG had resorted to international arbitration against Egypt following the government’s decision to divert natural gas production to the local market. She explained that BG’s decision to invoke force majeure was not directed at the Egyptian government, but was meant to explain the company’s position to overseas clients, noting that the growing gap between supply and demand was behind the company’s inability to resume natural gas exports. (Read in Arabic)

Drop in oil prices saves EGPC USD 250-400 per ton of butane shipments
Al Mal | 22 Dec 2014
Butane gas importing costs decreased by USD 250-400 to USD 620-650 per ton, according to a source at EGPC. The source told Al Mal that Egypt still imports 50% of its butane requirements and last year it consumed 4.2 mn tons. The UAE is contracted to provide 720 thousand tons of butane for a 12 months from August 2014. (Read in Arabic)

Fuel smart cards to be applied starting April 2015
Al Masry Al Youm | 23 Dec 2014
Fuel smart cards will be rolled out starting April next year across all governorates, Minister of Planning and Administrative Reform Ashraf Al Arabi confirmed again yesterday. Al-Arabi noted that the system is currently fully operational in Port Said. The use of the new smart cards are to be mandatory, according to the Minister, and drivers will not be able to fill up their cars [with subsidized product, we presume] without them. (Read in Arabic)

MANUFACTURING

EUR 70 mn agreement for industrial pollution control signed
Amwal Al Ghad | 22 Dec 2014
An EU 70 mn financing agreement for the third phase of a government-sponsored, EIB-backed industrial pollution control project was signed with Prime Minister Ibrahim Mehleb in attendance. The agreement was signed between the Ministry of Environmental Affairs, the Central Bank of Egypt, the Egyptian Environmental Affairs Agency, the National Bank of Egypt, and the European Investment Bank and will be financed through a loan from National Bank of Egypt. The agreement serves financial and technical support to industrial establishments so that they can adhere to the new environmental policies as set by government, as well as encourage the application of the newest technologies that reduces industrial pollution. (Read in Arabic and here)

BANKING & FINANCE

Volume of mortgage financing in Egypt to reach EGP 1 bn
Al Borsa | 22 Dec 2014
The volume of mortgage financing may exceed EGP 1 bn during the first year of implementing the amended real estate finance law, according to the chairman of Egypt’s Mortgage Finance Fund Mai Abdel Hamid. Abdel Hamid explained that new transaction types will now be covered under the new law, including murabaha, leasing, rent-to-own financing, and home improvement loans. The more diverse financing products are expected to expand the borrower market and attract new companies to the lending sector. (Read in Arabic)

TOURISM

20% increase y-o-y in tourism
Ahram | 23 Dec 2014
Tourism to Egypt increased by a solid 20% on a y-o-y basis. In the period leading up to November of this year, the country saw a total of 10 mn tourists, of which 3 mn were from Russia. According to Ambassador Nasser Hamdy, Head of the Egypt Tourism Authority, the organization has put together a series of marketing campaigns to boost tourism which will be implemented starting next year. These promotional campaigns will target countries traditionally associated with large inflows of tourists such as Russia, Germany, France, Italy, the UK, and Spain. However, the campaign will also focus on previously-untargeted countries such as China, India, Australia, the Balkans and Latin America. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Former Prime Minister Abdel-Aziz Hegazy dies at 91
Ahram Online | 22 Dec 2014
Former Prime Minister Abdel-Aziz Hegazy, who served under the administration of President Anwar Sadat, passed away yesterday at age 91. Before assuming his post as Prime Minister, Hegazy had previously served as treasury, finance, and foreign trade minister at different points during his career. (Read)

Sami Anan’s political party calls for election delay until decision issued on the formation of the party
Ahram Online | 22 Dec 2014
Sami Anan’s political party has called for parliamentary elections to be delayed to give time for an administrative court to make a ruling regarding his party’s formation. (Read)

REGIONAL

Circle Oil announces significant gas discovery in Morocco
Press release, Reuters | 22 Dec 2014
Circle Oil announced yesterday a significant gas discovery at the well KSR-12 in the Sebou Permit, onshore near the city of Kenitra in northern Morocco. The net gas pay encountered in the well from wireline log analysis is 19.5 meters in the main target Intra Hoot sands and 1 meter in the Upper Hoot, greater than pre-drill sand thickness expectation. (Read the release and the brief Reuters piece published two days prior to the company announcement here)

Abraaj Group exits leading Tunisian baked goods manufacturer Moulin d’Or
Press release | 22 Dec 2014
Abraaj Group announced yesterday its exit from Tunisian baked goods producer Moulin d’Or, in which the Group had originally in 2012. Moulin d’Or commands 47% market share in the cake food segment in Tunisia and a 67% market share in cupcakes. The release notes that Abraaj’s investment had enabled the company to expand into a JV in Algeria and increase exports to Libya. Abraaj has invested in 20 food & beverage businesses around the world.
(Read)

Jordanian Cabinet endorses gas deal with Shell
Zawya | 21 Dec 2014
Jordan’s cabinet has signed off an a deal to buy LNG from Royal Dutch Shell in a tender that witnessed an internationally competitive bidding process. Jordan is looking to diversify its sources of energy, and is currently exploring a number of options similar to Egypt, including nuclear energy and importing gas from Israel. (Read)

ON YOUR WAY OUT

Egyptians are discovering adventure tourism at home and (in particular) abroad, reports Ahram Online, with a nice feature-length piece on the various startups contesting the space. (Read)

Xavi Hernandez at the Pyramids of Giza: Spanish midfielder Xavi Hernandez is currently vacationing in Egypt this Christmas accompanied with his family. Palm Hills Sports Club is sponsoring the Hernandez family’s visit to Egypt in an effort by the club to showcase some of its talented youngsters. Xavi and co visited the pyramids of Giza, accompanied by another once young and spry Egyptian action hero Ahmad El Sakka. (Read in Arabic)

Bassem Youssef has been fined EGP 100 mn to compensate CBC for breach of contract. (Read)

Everyone here at Enterprise wishes all our readers a Merry Christmas and happy holidays. We’re off tomorrow and Thursday, back on Sunday, 28 December.