Monday, 29 December 2014

El-Sisi gives two-part interview to state-owned newspapers, Smart cards for fuel rolling out in Cairo by February?, KSA to open bourse to foreign ownership by April, year-end news drought continues…

WHAT WE’RE TRACKING TODAY

President Abdelfattah El Sisi’s interview with the heads of the three main state-owned newspapers was split into two parts, with part one published today. Our summary of the first appears in Egypt Politics + Economics section, below, and we’ll have tomorrow’s installment and reaction to the first tomorrow.

Today marks the one-year anniversary of Al-Jazeera English journalists being sentenced to 7-10 years in prison.Expect a flood of negative coverage throughout the day in foreign media, particularly in light of a Reuters report that suggests the release of the three (Mohamed Fahmy, Peter Greste and Baher Mohamed) ahead of their Thursday appeal hearing (a development widely hoped-for by journalists) may not come to pass.

The Israeli Knesset will debate today the Israeli Antitrust Authority’s revocation of Noble Energy and Delek Group’s drilling permit for the Leviathan offshore gas field.

Otherwise, yesterday was a very slow news day, as Sundays sometimes are, and as one would expect heading into New Year’s Day. Indeed, you know it’s a slow news day when front page stories in the major national dailies include reactions to Guardian stories about Egypt and recaps on the “Five worst global terror attacks of 2014.”

LAST NIGHT’S TALK SHOWS

Talk show hosts continued to feature lighter content last night as they bade farewell to the year. Al Qahera Al Yawm co-hostKhaled Abu Bakr gave the 2014 “Stupidity Prize” to the Ikhwan. Abu Bakr also thanked serving members of the Egyptian Army for risking their lives to fight terrorism, Prime Minister Ibrahim Mehleb for his proactive approach, Egyptians abroad who stood up for Egypt when it was under attack by the governments of the countries in which they now live, Egyptians who invested in the Suez Canal, and the Egyptian police force. “These are our 2014 heroes,” he said.

Unfortunately, Amr Adeeb did not choose to continue on a positive note and shifted gear to discuss road accidents, the dismal state of healthcare, and poverty in Egypt.

“We have 1,000 impoverished villages in Egypt. I commend the President for the meeting that he had today to tackle the issue of poverty in rural Egypt,” said Adeeb. “Bravo Mr. President. Let’s make a checklist to make sure that each and every one of these villages gets the aid and financial assistance that they need. How many millionaires do we have in this country who can help out? We can collect money for these villages.”

Lamees El Hadidy hosted Mohamed Shaheen, the 19-year old Egyptian winner of the tenth season of Star Academy, the popular Arab singing competition. The Munufeyya native from a humble background used to sing at shaa’by weddings while studying at a vocational school in his village. His experience with Star Academy in Lebanon was the first time he had ever travelled outside of Egypt.

SPEED ROUND

The Elections Commission issued a decree regulating election monitors. According to Daily News Egypt, NGOs seeking to monitor the elections must have a “good reputation, be credible for neutrality and transparency and also have previous experience in observing elections” with their representatives required to be registered voters with no prior felony convictions.

EFSA extended the deadline for bids to acquire Arab Dairy to 15 January and Bisco Misr to 11 January. The news comes as a new contender, Al-Nour company, launched a bid for Arab Dairy at EGP 58 per share.

Saudi Arabia will open its stock exchange to foreign investors by April, three people familiar with the plans told Bloomberg. Foreign ownership of a single stock is likely to be capped at 49%, in line with expectations. The Saudi Capital Market Authority said it expects the market to open up during 1H15, but did not mention a specific date. (Read)

An explosion heard early yesterday morning in Cairo turned out to be the result of a fire at the VACSERA center in Agouza. Al Ahram reports the fire left at least five people were injured, with speculation it was caused by a butane gas cylinder exploding.  Meanwhile, security forces successfully defused a bomb on Gamaa Bridge in Giza with no reported injuries. (Read)

A look at the 2015 predictions of UK tour company managers by industry site TravelMole includes this: “The good news for 2015 is that Egypt is back on the map. After a difficult two years, Egypt is very much on the up again and the FCO is relaxing its travel advice as from January 2015.” (Read)

A half million deceased Egyptians have recently been removed from the subsidized food ration system, writes Daily News. (Read)

Islamists are eager to prove that they’re funny too, even as they stare at you, unblinking. There will be a pro-Ikhwan stand up comedy show in New York and New Jersey on 24 January 2015 titled “Stand-Up 4 Freedom.” (View the flyer) A comedy show is a very strange choice for the Ikhwan to have as their- well actually, it’s not entirely clear why the event is being held in the first place. No venue is given, but keeping in mind that this is an ikhwani comedy show, it probably won’t be held in a club, so we are guessing that it will be held as a side activity at a potluck in a community center.

Shin Bet’s assessment of the Middle East in 2015: Israel’s internal security service the Shin Bet have offered their take on the security situation for the MENA region in the coming year, according to ynet. In short, they see further disintegration of Syria, Libya and Iraq and that falling oil prices may precipitate the fall of one or more regimes in the region. Interestingly enough, thereport cites the recent and tenuous rapprochement between Egypt and Qatar as a possible “ray of light.” (Read)

The Israeli Knesset will debate today the cancellation of Noble and Delek’s drilling permit for the offshore gas field Leviathan by the antitrust authority on the grounds that the firms constitute a cartel. Former major general and Israeli National Security Advisor Yaakov Amidror weighs in an op-ed in Israel’s Hayom titled Not just a question of economics, in which he concedes that the Leviathan gas field partners are a monopoly, in his view, but that “the state has additional interests beyond monopolies, and that should be taken into account when dealing with the issue.” On Sunday, representatives of Delek were set to meet with Anti-Trust Authorit head David Gilo. No representatives of Noble Energy were expected to participate. Also, Indian company ONGC Videsh is looking at becoming a partner in the Leviathan field. (Read)

Bloomberg Businessweek explores how plummeting oil prices “upended the geopolitical chessboard.” In “What’s next for world oil as lower prices extend Into ‘15“, This piece briefly poses, although does not go into detail in answering, five basic questions:

  • Will OPEC Hold Together?
  • Will The Shale Boom Suffer?
  • Will Global Demand Recover?
  • Will The U.S. Allow More Exports?
  • Will Political Instability Disrupt Supply?

Expect stories speculating that the UAE and Egypt launched airstrikes on Misurata in Libya to support the internationally recognized government. The FT and the Telegraph have takes this morning on the widening of the seven-month-old conflict, with Borzou Daragahi clearly floating the idea of regional involvement in the first strikes on the port city, Libya’s third-largest.

Also in today’s FT, Daragahi pens the latest of the international media’s love letters to Morocco in “Morocco’s economy on track for growth“ and the paper’s 2014 Quiz of the Year has been released. The prize to one lucky winner? “36 bottles of Laurent-Perrier Cuvée Rosé, an elegant champagne to enliven any celebration.”

Germans balk at high-voltage lines carrying wind-generated power: “Germans have welcomed solar panels glinting on their rooftops and windmills looming over their fields, and they have even put up with a doubling of their electric bills. But enthusiasm for all things green appears to have reached a limit with a plan to string high-voltage transmission lines along the outskirts of cities like Fulda in the center of the country.” (Read)

WORTH READING

Qatar Scales Back Role in Middle East Conflicts: “Diplomats and analysts in the Qatari capital of Doha agree that the emirate will now focus more on domestic priorities. ‘The Qataris were a little bit shaken about how much blowback they have had,’ said Abdullah Baabood, director of the Gulf Studies Center at Qatar University. ‘The recent events show they have overstretched themselves. They will now pick their battles and focus on what serves best their strategic interests.’” (WSJ, paywalled)

One down, one to go. Speaking of which:

DIPLOMACY

Turkey says it has no problem with Egypt, its people — Prime Minister Ahmet Davutoğlu: Davutoğlu told reporters in Turkey yesterday that he hoped that a political process starts in Egypt that reflects the demands of its people, according to Zaman.  ”Then the picture [of Turkish-Egyptian relations] will change,” he said. However, Deputy Prime Minister Bülent Arınç [whose name is pronounced as a low, muffled cough] said over the weekend that, “We are against coups. However, we may need to take steps considering Turkey’s interests. I believe that we need to follow a new foreign policy on Egypt.” According to Zaman: “The Turkish Foreign Ministry had attempted to mend ties with Egypt over the past year but every attempt was undermined by President Recep Tayyip Erdoğan’s highly critical remarks about Sisi.” (Read)

Meanwhile, AMAY is running the following story in this morning’s edition: Egypt refuses Turkey’s terms for reconciliation. The article goes on to state that
Davutoğlu said his country is willing to make peace with Egypt, so long as the latter releases ex-president Mohamed Morsi. Davutoğlu reiterated that Turkey stands with democracy, and that Morsi was elected via a democratic process. Arınç, the paper says, claimed Egypt should be the one making the first move, and that is again to release Morsi, end political arrests, and hold proper elections — all while abiding by the democratic process. AMAY quotes Egyptian Minister of Foreign Affairs Sameh Shoukri as responding: “Turkey is boring us; some days they are positive, on others negative. We have more pressing matters to attend to than wasting our time with trivialities”. (Read in Arabic)

EGYPT IN THE NEWS

International media coverage of Egypt continued to focus on the decision to ban Exodus: Gods & Kings due to ‘historical errors.’ In the latest turn in this story, the Culture Ministry has at last issued a statement explaining its decision, which was picked up by AP and has been run in media outlets worldwide. “The ministry said the movie inaccurately depicts ancient Egyptians as ‘savages’ who kill and hang Jews, arguing that hanging did not exist in ancient Egypt. It said the film also presents a ‘racist’ depiction of Jews as a people who mounted an armed rebellion. The ministry said religious scriptures present Jews as weak and oppressed.” (Read inAP)

Al Jazeera English is maintaining its belligerent tone toward Egypt, albeit through an op-ed. We should be patient with Al Jazeera; one can’t expect an outlet that insisted for years that it maintained an independent editorial will change overnight. This will most likely be a gradual process that will be complete once there is some closure regarding the case of the imprisoned AJE journalists. The op-ed in question is Egypt’s freedom of repression by Khaled Diab, which claims, among other things, that Egypt’s economy is deteriorating. Diab’s main argument, however, is that there are increasing restrictions on the press but the revolution will live on etc. (Read, or do something better with your time.)

[Editor’s note: If you’re a child of the ‘80s, try that last link. It’s awesome.]

ENERGY, RENEWABLE ENERGY & SUBSIDY REFORM

Electricity ministry to pay EGP 500 mn in overdue debt this week
Al Borsa | 28 Dec 2014
The Ministry of Electricity will pay the Ministry of Petroleum EGP 500 mn this week. The payment, which is overdue, is part of the EGP 29 bn the MoP is owed by the MoE (Al Mal and Al Shorouk report that the MoE owes the MoP EGP 44 bn). The MoP is also owed EGP 27 bn from the Ministry of Finance for the subsidized portion of the fuel used to generate electricity. An official at the MoE told Al Borsa the ministry plans on paying the MoP EGP 500 mn a month to bring the accumulated debts down. (Read in Arabic)

Fuel smart card system to roll out in Cairo beginning February 2015 – Amwal Al Ghad
Amwal Al Ghad | 28 Dec 2014
Amwal Al Ghad claims to have obtained a timeline on the rollout of the smart card system for fuel subsidies. By the end of December, the system should be implemented completely in Port Said. The company running the pilot program, e-Finance, will then test the new five-stage system in there for a time, with Ismailia, Suez, and Damietta to follow. The second phase begins in January and includes Alexandria before the third phase sees Cairo get the system in February 2015. Amwal Al Ghad has been informed that no limits on quantities or no price increases will be imposed before a new government is formed after Parliamentary elections. (Read in Arabic)

OIL & GAS

EGAS: Al-Arish pipeline to resume operations next week
Vetogate | 25 Dec 2014
EGAS Vice President Faisal Abu El-Ezz said the armed forces are repairing the damaged gas pipeline in Arish, adding that the pipeline is expected to be fixed and operable by next week. He also said a team from GASCO was monitoring the repairs. Abu El-Ezz noted that this was the first time the armed forces became involved in repairing the pipeline. (Read in Arabic)

BANKING & FINANCE

Alex Bank mulls selling part of its EGP 650 mn stake of the loan to Vodafone Egypt
Al Mal | 28 Dec 2014
Bank of Alexandria is considering selling part of its EGP 650 mn stake of an EGP 4 bn loan to Vodafone Egypt, Al Mal claims. The loan was syndicated across seven banks head by HSBC and Banque Misr. The bank has not yet settled on the portion it seeks to divest. (Read in Arabic)

“QNB and Mobinil amongst 35 companies not abiding by EGX rules” — Mohamed Omran
Al Shorouk | 28 Dec 2014
In an interview with Al Shorouk, EGX chief Mohamed Omran noted that 35 listed companies, including QNB and Mobinil, are failing to abide EGX regulations that require at least 5% an EGX company’s shares to be listed on the exchange. Omran said the notice period handed to companies has been extended as the exchange is keen on having them remain listed on the EGX. He also noted that 2014 was a successful year with 13 new companies listed, including nine on the small-cap Nilex, as well as capital increases worth some EGP 11 bn for 72 companies. (Read in Arabic)

REAL ESTATE

Arabtec and the Ministry of Housing to reach an accord in the coming days on its 1 mn unit affordable housing project
Al Masry Al Youm | 28 Dec 2014
The Ministry of Housing and Arabtec will soon reach an agreement on their joint “1 mn homes” affordable housing project, the newspaper says. The project will begin its first phase in the cities of Al Obour, Badr, and New Minya, with some 120,000 units to be built, each ranging 85-125 sqm. The full project will cost c. EGP 280 bn, with units spread across 13 nationwide and demanding 1 mn sqm of land. (Read in Arabic)

41,500 allocated affordable housing under first phase of Dar Misr initiative, 30,000 new units to be provided in April
Al Borsa, Al Mal | 28 Dec 2014
Some 41,5000 Egyptians were allocated subsidized housing in the first phase of the Dar Misr affordable housing project, according to a representative of the Ministry of Housing. New Cairo, New Damietta, Shorouk, and Obour were the most attractive locations. The ministry also announced that a second round of units will be on offer in April 2015 with 30,000 new units available. (Read in Arabic in Al Borsa and Al Mal)

EGYPT POLITICS + ECONOMICS

El Sisi meets with chief editors of some of Egypt’s major newspapers
Ahram | 29 Dec 2014
The chief editors of Al Ahram, Al Akhbar, and Al Gomhouria newspapers spoke with President Abdelfatah El Sisi, with each outlet pledging to publish their takes in two installments, the first of which is out this morning. The President began by grading the performance of the ministries as well as their underlying government bodies and said that after 40 years, these government bodies suffered a lot. Today, after four years of revolutionary tug of war, these entities still have issues, but they are being worked on.

El-Sisi noted that he was honest with the people in explaining that the country is going through rough times — and reiterated that while things may yet get rougher, but the darkest hour is before dawn.

He mentioned that 75% of the country’s budget goes to subsidies, interest payments, and salaries, while the remaining 25% — just EGP 135 bn — for all of health, education, infrastructure, and services. He also noted that he doubled had the budget for research and development in a bid for the country to one day begin catching on a regional and global basis.

Regarding the security situation, military operations in Sinai have been ongoing for the past 25 days, with the result being thatEgypt’s border zone with Gaza is now secure.

The president is optimistic that the electricity situation will be more stable next year, saying the country secured pre-designed power plants at a sum of USD 2.65 bn and has allocated USD 3 bn for their fuel supply. A program to upgrade the national electricity infrastructure as a whole will cost USD 40 bn [including the emergency outlays noted above]; that and the Sino-Egyptian project should together add another 18,000 MW in generating capacity.

President El Sisi also mentioned that the 1 mn feddans reclamation program will begin next year, and a new administrative capital for the country will be established between Suez and Sokhna; a tender for the project should be issued next week.

In Tuesday’s issue, the President will be talking about Egypt in 2015, parliamentary elections, current political actors, the part youth should play, the March economic conference, and the regional situation. (Read the first half of the interview in Arabic)

Government mulls forcing private sector to abide by minimum wage
Amwal Al Ghad | 28 Dec 2014
The Minister of Planning said that the government is currently drafting a law that would force the private sector to apply the state-imposed minimum wage. The minister said the law won’t come into effect until social insurance deductions are amended to guarantee that the deductions are less than the 40% stipulated by the present law currently. (Read in Arabic)

Ministry of Civil Aviation is considering building three new airports
Amwal Al Ghad | 29 Dec 2014
Minister of Civil Aviation Hossam Kamal declared that the ministry is currently looking at the possibility of building three new airports, including Ras Sidr (Sinai), western Cairo and Mansoura. These projects will be offered on a Build, Operate and Transfer basis, and will be worked on jointly by both the private and public sectors. (Read in Arabic)

REGIONAL

Saudi finance minister says no need to create sovereign wealth fund
Reuters | 26 Dec 2014
Saudi Arabia’s finance minister said on Saudi television last Thursday that there is no need for the kingdom to create a sovereign wealth fund to manage its oil wealth, countering suggestions by Saudi billionaire Prince Alwaleed bin Talal, among others, as a policy response to declining oil prices. The advisory Shura Council is also said to have discussed such a proposal, although the body did not reach a recommendation. Most of the country’s surplus oil revenue is invested abroad by the central bank SAMA in what is assumed to be low-risk US Treasury bonds. (Read)

Algerian energy minister- OPEC must reduce production
Algeria Press Service | 28 Dec 2014
Other than the mention in the article’s title, a piece which ran in Algeria Press Service yesterday notes that  the Algerian Minister of Energy Youcef Yousfi made the remarks on Saturday, as he pointed out the USD 2 bn decline in oil export revenues. However, he said that despite declining prices in international oil and gas markets, Algeria will continue exploration of its mining resources and the development of discovered fields. (Read)

Foreign Ministry finalizes measures to airlift bodies of 2 Egyptians killed in Libya
SIS | 29 Dec 2014
The Egyptian embassy in Tunisia finalized measures to airlift the bodies of two Egyptians who were killed in Libya on Tuesday. “The embassy paid the fees for a funeral office in the western Libyan city of Misrata in preparation for transferring the two bodies to Egypt,” according to Spokesman for the Foreign Ministry Badr Abdel Atty. Unidentified assailants killed an Egyptian doctor and his wife in the central coastal city of Sirte and kidnapped their daughter. (Read)

ON YOUR WAY OUT

Hamas on Sunday denied reports that Qatar had told them it would be temporarily halting its financial support. (Read in Arutz Sheva)

The Ministry of Electricity said it completed studies to assess the optimal location to build a USD 140 mn hydroelectric power station with a capacity of 40 MW. (Read in Arabic)

Maybe it’s because we’re still mired in the twelfth month of the year, but December features prominently in Ahram Online’s wrap-up of the most bizarre news in Egypt in 2014.

BY THE NUMBERS

USD (CBE auction): 7.1401
USD (parallel market): 7.77

EGX30 (Sunday): 8,745.16 (+0.06)
Turnover: EGP 412.7 mn (40% below the 90-day average)

WTI: USD 55.28 (+1.00%)
Brent: USD 59.83 (+0.64%)

TASI: 8,856 (+1.2%)
ADX: 4,596 (+1.3%)
DFM: 3,987 (+2.6%)
KSE: 444 (+0.6%)
QE: 12,631 (+1.5%)
MSM: 6,436 (+0.04%)

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