EGP slides against the greenback following CBE rate cut. TE loses arbitration case against Vodafone Egypt. GAFI targets USD 110 bn for renewables over 12 years. PHD gross sales surge 166% in FY14. Egypt still owes IOCs USD 3 bn. Ezz Elarab launches 2015 Volvo lineup. Suez Canal tolls to rise in May?

WHAT WE’RE TRACKING TODAY

Sometimes, four piasters makes all the difference: As we figured yesterday morning following its surprise move to cut interest rates, the Central Bank of Egypt is indeed backing away (somewhat) from its defense of the Egyptian pound. The CBE allowed the pound to weaken 4 pt against the greenback to EGP 7.19, selling USD 38.5 mn at the Sunday currency auction. Analysts are reading the move as aiming to spur investment ahead of the Sharm conference by cutting borrowing costs, eliminating doubts about the nation’s FX policy and sharply curbing the black market. Our bank was offering EGP 7.20 / 7.2301, and the parallel market was quoting EGP 7.84 late yesterday. Read more in Reuters or have a skim through the package of stories in Al-Mal, with takeaways including:

• The expectation the EGP will sag to 7.50 by March and 7.75-8.00 by year’s end
• No benefit to the EGX until the EGP hits a market-clearing rate against the USD
• Imported cars are going to cost more
• Drug companies will be hit hardest by devaluation

WHAT WE’RE TRACKING THIS WEEK

World Future Energy Summit, Abu Dhabi. President Abdel Fattah El Sisi is in attendance, marking his first official state visit as president. Gathering runs Today through Thursday.

The EFSA Microfinance Conference will drive news for those with an interest in the sector. It takes place at the Fairmont Heliopolis, tomorrow and Wednesday. Register online here.

ECB to announce quantitative easing? The European Central Bank is widely expected to announce on Thursday a bond-buying program in a bid to stave off deflation.

Also Thursday: Erdoğan will visit Addis Ababa on 22 January and is set to meet with Ethiopian President Mulatu Teshome Wirtu and Prime Minister Hailemariam Desalegn. Want to bet whether the cast of Hareem El-Sultan his palace warriors travel with him in costume?

WHAT WE’RE TRACKING THIS MONTH

At some point this month, Israel’s Antitrust Commissioner David Gilo will hold a hearing to determine if the holdings in the Tamar and Leviathan offshore gas fields constitute a cartel. Noble Energy has already threatened international litigation. (Read in Bloomberg Businessweek)

LAST NIGHT’S TALK SHOWS

The majority of talk shows last night, including Lamees El Hadidy and Amr Adeeb, continued with their tributes to the late actress Faten Hamama, who passed away on Saturday.

In the prologue to Al Kahera Al Yawm, Khaled Abu Bakr expressed his hopes for President Abdelfattah El Sisi’s participation in Davos.

“It is my sincere hope that the President’s visit to Davos will have the maximum impact and that we are clear on the messages and the way in which they are conveyed to the audience at Davos. The language and the dialogue must be very different in nature when addressing the global business community. They don’t care about feelings and emotions like we do in the Arab world. The dialogue has to be very results oriented,” saidAbu Bakr. “We hope that the President’s team has prepared him for this.”

Two things were really bothering Amr Adeeb last night:

The first was the dollar exchange rate. He took note of the fact that the “official dollar exchange rate,” as he put it, has gone up to 7.23. “Between now and the March investment conference, it is expected that the dollar will go up to 7.5, which some say is a good thing because it is approaching the black market — but what impact will this have on prices?”

The second was Faten Hamama’s funeral. He was appalled at the chaos that took place during the funeral and burial blaming the government that they did not provide the proper crowd control.

“We don’t know how to plan a proper funeral. What a shame that a cinema icon like Faten Hamama had to be laid to rest in such a manner. There was pushing and shoving, fights broke out, people were hurt and the coffin was dropped several times. I couldn’t believe what I was seeing. Who were all these people and why were there? A selfie at a funeral? Did you go there just to spot celebrities and post on your Facebook page? This was certainly not the dignified farewell that this lady deserved.”

SPEED ROUND

Developing story: Sources at the Suez Canal Authority confirmed early this morning the partial collapse of a sedimentation basin at the New Suez Canal. Suez Canal Authority head Admiral Mohab Mamish said there were no casualties and that dredging work is ongoing; the collapse had no effect on operations at the Suez Canal or the New Suez Canal. (Read in Arabic)

Telecom Egypt has lost its arbitration case against Vodafone Egypt, Al Mal reports. TE had accused Vodafone of deliberately increasing prices for services provided to TE in 2007. Al Masry Al Youm is reporting that the fixed-line monopoly — which holds a stake in Vodafone that it must divest to become the nation’s fourth mobile network operator — is not accepting the arbitration decision, citing “inconsistencies” in the formation of the arbitration committee. The partially privatized company is will appeal the decision in court.

During his ongoing visit to the UAE, President Abdel Fattah El Sisi sat down with Sky News Arabia for a wide-ranging interview mainly focusing on his take regarding domestic Egyptian as well as regional issues. Following the news last week that the European Parliament demanded that Egypt immediately release all its political detainees, the interviewer asked the President about the issue of political prisoners. The President replied that there are no political prisoners in Egypt; that the state’s institutions must be preserved, which includes non-interference in the judiciary. He noted that there was a third round of early release reviews ongoing, but again reiterated that there are no political prisoners. The exchange has been widely picked up in the foreign press, as noted below.

Asked about terrorism in Sinai, the President replied that underdevelopment leaves people vulnerable to the appeal of terrorists, but that this mistake will not be repeated, and that, not only Sinai will be developed but all marginalized regions of Egypt. He echoed previous statements that there cannot only be a security solution to terrorism, which prompted the interviewer to ask to clarify his remarks during his Azhar address where the President called for a “religious revolution.” The interviewer noted that President El Sisi’s statement had raised a lot of question marks, to which El Sisi replied, [paraphrasing]: “Simply put … take a look at us [Muslims]. There is something in us, in our thinking, that needs to change. Namely, the kind of thinking that leads us to kill one another.” Running time: 36:16. (Watch or read the brief SIS summary or the lengthier take in Ahram Online)

The new unified investment law should be passed by the Sharm investment summit in mid-March, the president also suggested during the interview.

Sensationalist headline aside, there’s value to be found in Patrick Kingsley’s latest for the Guardian, which looks at the economics of growing cotton in Egypt and notes that from 400,000 tonnes of cotton lint two decades ago, Egypt now grows c. 127,000 tonnes — a figure one international industry observer thinks will fall to 60,000 by 2020 because “Egypt is a very urban country, and cotton is just not the best use of its land.Other crops have a better economic return than cotton does.” (Read)

Mashreq, which Reuters notes as Dubai’s third-largest lender by assets, has confirmed it is bidding for Citi’s Egyptian retail business. Bloomberg carries the same news.

The Middle East’s largest listed company reports 29% slump in profits. Sabic’s earnings were off nearly a third on the back of lower petrochemicals prices that were only partially offset but easing feedstock costs. Sabic is getting out of the guidance game for now, the WSJ‘s Ahmed Al-Omran reports, quoting CEO Mohammed Al Mady as saying that it would be “‘very difficult to judge 2015 just by looking at the crude oil situation today’” and adding that “the company can cope and is looking at ways to protect itself from market volatility.”

Windows 10 to be unveiled on Wednesday. We’re Mac people here going back to the 512k Fat Mac (well, most of us are; and only one of us is old enough to remember the Fat Mac). But still: Microsoft — the company at which “Optimism is a renewable resource” out of necessity — will unveil its latest operating system this week, skipping over the number 9 in a bid to “save the company’s moribund smartphone business,” the New York Times reports. The desktop version will doubtless win market share, but on the mobile front? We have a message for Chief Executive Satya Nadella: 0.2% of all Enterprise subscribers read us on Windows Phone. Compare that to 51% on an iOS device and 22% on some flavor of Outlook. At least the Start menu is coming back…

Charlie Hebdo protests in Niger leave at least 10 dead: The AP has a roundup of the reactions throughout the Muslim world to the publication of the post-attack issue of Charlie Hebdo featuring a depiction of the Prophet Muhammad on its cover. 10 people in Niger burned to death after the churches and bars they were in were set alight by Muslim protesters. Protesters in Yemen and Gaza vandalized French embassies and cultural centers (Read)

Correction: In yesterday’s note on the closing of the Kellogg-BiscoMisr deal, we misstated the value of the transaction. The correct figure is EGP 888 mn. Thanks to Omar for the note. Patrick takes the bullet on this one.

WORTH READING

Human beings: Not so good for planet Earth? 2014 was the “hottest on earth since record-keeping began in 1880, scientists reported on Friday,” notes New York Times. Think we’re not at fault? TheWashington Post chimes in with comments from 21 scientists who say the results of the survey “underscore the ‘undeniable fact’ of human-caused climate change.” If by the time you’re done reading those links you’re not paralyzed by self-loathing at the mess we’re handing our kids, go hit up Science for news that “loss of species in marine environments has been slower than in terrestrial systems, but appears to be increasing rapidly.” Or as the non-science press summarizes it: “Ocean life faces mass extinction.”

Now, go do something about it. Or at least read the Economist’s take in “Seize the day: The fall in the price of oil and gas provides a once-in-a-generation opportunity to fix bad energy policies.”

WORTH TRYING

Struggling to find just the right piece of corporate-speak to round out that PowerPoint deck? Running low on inspiration? It’s the Corporate B.S. Generator to the rescue. (In convenient graphical and non-graphical iterations; the letters B.S. stand for what you think they stand for, we just can’t use the word here if we want to be delivered to your inboxes today.)

WORTH WATCHING

7-year old surprised with gift of 3D-printed prosthetic arm made for USD 300 vs. USD 9,000 for those manufactured by conventional means: A seven-year old boy in the United States was surprised on his way out of a movie theater to find the 501st — a group of volunteers who dress like Stormtroopers and usually appear at charitable events — along with a gift of a 3D printed prosthetic arm in Stormtrooper design. The gift was made possible through an organization called e-NABLE which aims at matching those with 3D printers to individuals who need prosthetic limbs. (Read and or watch the video)

The history-eraser button, from the Ren and Stimpy episode “Space Madness.” Running time: 2:02. (Watch)

DIPLOMACY

President El Sisi begins first official visit to the UAE: President Abdel Fattah El Sisi arrived in Abu Dhabi Saturday night, commencing his first official visit to the United Arab Emirates, according to a statement issued by Ittihadiya. The President was greeted by the Crown Prince of Abu Dhabi and Deputy Commander of the UAE, H.H. General Sheikh Mohammed bin Zayed Al Nahayan; Minister of State and Chief Executive Officer of Abu Dhabi Future Energy Company (Masdar), Dr. Sultan Ahmed Al Jaber as well as Egypt’s Ambassador to the United Arab Emirates Ehab Hammouda. The president is accompanied by a large ministerial delegation, and according to his schedule met with “a group of leading Emirati companies, a group of Egyptian businessmen and … the National Marine Dredging Company that will give an overview of the operations it is conducting on the new Suez Canal project.” (Read an abridged version of this release by SIS)

El-Sisi sits for interview with Abu Dhabi Channel: Highlights of the appearance, which includes a look at historical ties between the two nations, include thanks the UAE for its support of the Egyptian economy in the past year and a half and El-Sisi’s broad approval of the UAE’s handling of Islamic extremism, stressing that terrorism gives Islam a bad name, and Egypt is taking the same road the UAE. (Read the transcript in Arabic and / or watch the interview)

National Security Advisor Fayza Aboul Naga met with Ethiopian Prime Minister Hailermariam Desalegn last Friday, 16 January, as reported by the Ethiopian News Agency, which said that the Ethiopian State Minister of Foreign Affairs Ambassador Birhane Gebrekristos “told reporters that the countries have reached agreement to increase their trade and investment ties.” Aboul Naga confirmed PM Desalegn’s attendance at the Egypt Economic Development Conference in March. (Read)

EGYPT IN THE NEWS

The top four stories on Egypt in the international press last night and into this morning included news on the Access-Infra alliance building renewable energy projects in Egypt, former president Mohamed Morsi’s comments from yesterday’s session of his trial, the passing of prominent film actress Faten Hamama, and President Abdel Fattah El Sisi’s first visit as president to the United Arab Emirates.

Mamdouh Hamza’s driver, President Abdelfattah El-Sisi’s call for a religious revolution, and a Lebanese suggestion to make Al-Azhar “more like the Vatican” all make appearances in the WSJ this morning as it makes a cursory search for the “ideological roots that underpin radical behavior.” The story may not have found those roots, but the final paragraphs on Hamza’s driver ring true. (Read)

The Christian Science Monitor picked up on the remark regarding the lack of political detainees from the SIS release (see Speed Round, above) in an article published yesterday titled ‘Egypt’s President Sisi declares freedom of speech sacrosanct,’ which goes on with a summary of recent events, including the Al Jazeera case. (Read)

European Parliament calls on Egypt to release all political detainees; Egypt’s Foreign Ministry responds: The EU Parliament last Wednesday issued a statement calling on Egypt to release all political detainees, including the 167 former MPs from the former parliament. In response, the MOFA issued a release stating its “astonishment” at the “claims” and “faulty assumptions” that reflect a misunderstanding about internal issues in Egypt. (Read)

The Japan Times reported on the recent visit of Japanese Prime Minister Shinzo Abe to Cairo, the first leg on his current tour of the Middle East which witnessed his visit to Jordan, Israel and which will conclude in the Palestinian territories. The article notes that President Abdelfattah El Sisi has accepted Abe’s invitation to visit Japan before the end of the year. (Read)

Did Al Jazeera buy RT? This 2-minute news brief on Egypt is cartoonishly aggressive. (Watch: Egyptian regime allegedly kills 1,400 political opponents, UK sends trade delegation)

ENERGY, RENEWABLE ENERGY & SUBSIDY REFORM

Access Infra to invest USD 350 – USD 400 mn in Egyptian solar, wind energy stations
Daily News Egypt | 18 Jan 2015
Access Infra plans to invest USD 350-400 mn in new and renewable energy projects in Egypt over the next two to three years. Reda El-Chaar, Access Power Chairman, told Daily News Egypt the alliance plans to produce 300 MW of electricity in the first phase of projects generating electricity from solar (two-thirds) and wind energy (one-third) in Egypt. El-Chaar says the alliance has allocated an investment portfolio of USD 500 mn to implement energy projects in Africa, and Egypt apparently has the lion’s share of this portfolio. He added that the company will consider financial mechanisms through local and global banks for its projects in Egypt, with the funding structure including 70%-80% of bank loans and 20%-30% of capital financing. The company is waiting until purchase agreements and the feed-in tariff are approved, as they will determine the extent to which these projects may be financed. The company seeks to invest between USD 100 mn – USD 150 mn in Egypt annually for five years. (Read)

Investments worth USD 10 bn targeted in 2015, USD 110 bn in renewable energy over 12 years – GAFI
Al Masry Al Youm, Al Mal | 17 Jan 2015
The Egyptian government is aiming to attract USD 10 bn in FDI in the current FY2014-15, according to GAFI head Hassan Fahmy. Fahmy’s comments were made during a symposium on Egyptian-Japanese business relations where he revealed that 60 Japanese companies are actively operating in the local market with investments of USD 257 mn, accounting for 31% of all Asian investments in Egypt. Fahmy also announced that the Egyptian government is seeking USD 110 bn in investments in renewables through 2027. This comes as part of the government’s target to produce 30 GW of electricity from both traditional and renewable sources over the next ten years. (Read in Arabic and here)

Beltone Capital joins forces with Total to build a solar power station
Al Mal | 18 Jan 2015
Beltone Capital, through its subsidiary Beltone Solar Venture, has partnered with France’s Total to build a 50 MW solar power station. The project has a projected investment value of USD 130 mn, with Beltone providing 50% of the investment cost. The consortium has already taken steps to begin the project, but still awaits signing the agreement with the Ministry of Electricity. Al Mal noted that Beltone owns 20% of Total Egypt as it financed its capital increase in 2013, which was used to acquire downstream operations from Shell and Caltex. (Read in Arabic)

Infinity Solar Systems in negotiations for a EGP 210 mn loan with NBE
Al Borsa | 18 Jan 2015
Infinity Solar Systems is currently negotiating a EGP 210 mn loan with NBE to finance the construction of a 20 MW solar power station. Infinity is seeking the loan to finance 70% of the cost of the project and it is also in negotiations with Saudi businessman Abdullah Shahin to fund part of the project. Infinity plans on investing EGP 500 mn during the next two years. (Read in Arabic)

OIL & GAS

Egypt still owes IOCs USD 3 bn
Zawya | 17 Jan 2015
The Egyptian government still owes USD 3 bn to foreign energy firms, despite having repaid USD 2.1 bn recently, revealed EGAS Chairman Khaled Abdel Badie during an Egyptian-Japanese business symposium. EGAS also signed 156 new E&P agreements recently to help meet the growing local demand. Abdel Badie also noted that a strategy is currently in place to address the gap between the demand for petrochemicals, which grew by 24% y-o-y to 35 mn tons annually at present, and the 22 mn tons supplied domestically. (Read in Arabic)

BG awaiting government approval to begin importing gas from Israel
Al Borsa | 18 Jan 2015
BG is waiting for approval from the Egyptian government to proceed with importing natural gas from Israel, according to a senior company official. The imported gas would be used for the company’s liquefaction plant in Idku. BG had previously signed a Letter of Intent with partners in the Leviathan gas field to import seven tcf of gas annually over a 15-year period (a deal currently jeopardized by an antitrust inquiry about Noble and Delek’s activities in Israel). (Read in Arabic)

EGPC’s agreement with ADNOC now 30% cheaper due to the oil price drop
Al Borsa | 18 Jan 2015
A source at EGPC said that the company’s agreement with ADNOC to have it supply Egypt with fuel has now become 30% cheaper. The agreement determined fuel quantities and not prices, thus making the agreement’s value drop from the initial USD 9 bn to USD 6.5-7 bn. The source at EGPC said it’ll negotiate extra fuel shipments during the Minister of Petroleum’s visit to the UAE. (Read in Arabic)

MANUFACTURING

Oriental Weavers borrows USD 10 mn from Bank Audi
Al Mal | 18 Jan 2015
Oriental Weavers reached an agreement to borrow USD 10 mn from Bank Audi, says Al-Mal. The loan will cover the addition of 11 new looms – an investment expected to increase by 11% and is in response to increasing demand. (Read in Arabic)

HEALTHCARE

EGP 600 mn Saudi-Egyptian medical complex project in the pipeline – SEBA
Al Ahram | 18 Jan 2015
A EGP 600 mn project to build a medical complex will be announced by the end of the month, according to the head of the Saudi Egyptian Businessmen Association. The project, a 100-bed hospital, will be announced at SEBA’s annual conference on 31 January. (Read in Arabic)

REAL ESTATE

Palm Hills Developments reports 166% increase in FY14 gross sales
Sales Flash Note | 18 Jan 2015
Palm Hills Developments reported yesterday its Gross Sales (reservations) figures for the year ending 31 December 2014 showing a 166% y-o-y increase to EGP 3,936 mn compared to an FY13 figure of EGP 1,479 mn. Total Net Sales for FY14 grew by more than 200% y-o-y to EGP 3,574 mn. The note cited that the strong growth was mainly driven by a hike in unit sales in West Cairo projects, recording a year-on-year increase of 584% and 181% respectively. Management attributes sales growth to the sales strategy, successful marketing campaign launched in 2Q14. Total New Contracts signed in FY14 were valued at EGP 2,979 mn, up 167% from FY13, while Cancellations were up just 3.5% over the same period. Net Contracts rose 257% to EGP 2,567 mn y-o-y in FY14.

Units in Sheikh Zayed City to be included in second phase of Dar Misr
Al Shorouk | 18 Jan 2015
The second phase of the Dar Misr project will include units in Sheikh Zayed City along with others in Borg El Arab, New Cairo, and New Minya, according to the Minister of Housing. The Sheikh Zayed City council is allocated 12-30 feddans for the project. Applications for the second phase of the project are set to open in February and land reserved for the first phase of the project to be delivered in April. (Read in Arabic)

TRANSPORTATION

DP World begins work on EGP 5 bn terminal at Ain Sokhna Port
Egypt Independent | 19 Jan 2015
Construction of the terminal, which was originally announced in 2010, was postponed following the 2011 Revolution. During a visit by Minister of Transport Hany Dahy on Saturday, DP World confirmed the facility would be inaugurated in October 2017, cutting construction time to less than three years from an originally forecast four, the paper notes, citing sister publication Al-Masry Al-Youm. (Read)

BANKING & FINANCE

Sectors allowed to benefit from SME funding determined by law
Al Ahram | 18 Jan 2015
The potential beneficiaries of SME funding have been specifically defined in the Official Gazette. Broadly, SME funding can only be directed to production, services, or commercial sectors. Specifically, the money, which is capped at EGP 100,000 per client, can only go businesses operating in: farming, manual crafts, spinning and weaving, furniture, food, plastics, metals, glass, and recycling. Along with retail, funding can also go to sectors including: contracting, transport, storage, repairs, and restaurant along with a few others. (Read in Arabic)

AUTOMOTIVE

Ezz Elarab launches 2015 Volvo Lineup
News Release | 18 Jan 2015
The sole agent for Volvo in Egypt announced yesterday that it is launching sales of 2015 models, with entries including the S60 and S80 sedans, the V40 compact and the XC60 crossover. (Read)

OTHER BUSINESS NEWS OF NOTE

Ministry of Transport engaged in projects worth EGP 154 bn
Al Shorouk | 17 Jan 2015
In his talk during the symposium on Egyptian-Japanese business relations, the Minister of Transport noted that the ministry is currently engaged in multiple projects with a total value of EGP 154 bn. The projects include a EGP 34 bn development of the country’s road network, EGP 50 bn for railways, and EGP 70 bn to build the third and fourth metro lines. The Minister also highlighted the ministry’s cooperation with the Japan International Cooperation Agency to build the new metro lines as well as adding 3,700km to the road network. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Suez Canal tolls to be increased in May?
Al Shorouk | 18 Jan 2015
The Suez Canal Authority (SCA) is mulling increasing the tolls paid to pass through the canal. The decision could be imposed as early as May, but the head of the SCA said that the drop in oil prices and concerns over international trade volumes are a concern. The idea is driven by an to utilize the canal’s revenue generation ability fully. On a separate issue, SCA chief Mohamed Mamish announced that 20% of the amounts raised to finance the Suez Canal Development Project have been spent on the construction process so far. (Read in Arabic)

Delegation of Sinai tribesmen meets with minister of interior
Al Masry Al Youm | 19 Jan 2015
Interior Minister Maj. Gen. Mohamed Ibrahim met with a delegation prominent Sinai tribal leaders yesterday. Tribal leaders vented frustration with security checkpoints cross the peninsula. Sheikh Eissa Al-Kharafin, who represented the tribesmen during the sit-down, noted that some tribe members have been killed by terrorists for having cooperated with the army and the police. Al-Kharafin stressed that the tribes need the Ministry of Interior to continue to provide security. (Read in Arabic)

ON YOUR WAY OUT

Russian news agency TASS confirms that Cairo and Moscow are discussing the use of the ruble for settlements. (Read)

Dina Ezzat of Ahram Online writes that despite President El Sisi’s exhortations for political parties to unify, that there are three distinct non-Islamist electoral blocs heading into the upcoming parliamentary elections: the Ganzouri bloc in alliance with Ahmed Shafiq’s party; Al Wafd’s bloc; and that headed by the Free Egyptians. However, Ezzat notes that despite this particular outcome, the “objective of the president’s meeting with party leaders was not to appeal for a solid non-Islamist list, but rather to touch base with top political faces and to share concerns and hopes on state management, agreed some of the politicians who took part in the meeting.” (Read)

BY THE NUMBERS

USD (CBE auction): 7.1901 (+0.05)
USD (parallel market): 7.84 (down 1 pt)

EGX30 (Sunday): 9,530.92 (-0.26%)
Turnover: EGP 391.9 mn (43% below the 90-day average)

WTI: USD 48.26 (-0.88%)
Brent: USD 49.80 (-0.74%)

TASI: 8,535.8 (+0.9%)
ADX: 4,555.3 (+1.7%)
DFM: 3,899.5 (+1.5%)
KSE: 445.3 (+0.2%)
QE: 11,916.4 (+0.5%)
MSM: 6,591.1 (+1.1%)