Aramco-SUMED pact could create a hub for exports to Europe

El Sisi to hold second ‘civil society’ meeting: President Abdel Fattah El Sisi will meet today with a number of members of parliament, representatives of the National Human Rights Council, heads of professional syndicates, labour representatives and our sainted fellow members of the press corps to discuss “issues of national importance,” a source at Ittihadiya said, according to Al Shorouk. El Sisi began the series of meetings with civil society types on 22 March, telling them at the time they needed to engage and help make a difference: “I am the one who stands at the face of the canon, I am the one with 90 mn Egyptian lives in my hands, you can’t just come here, talk and walk away,”

Also today: The three-day café / restaurant equipment and furniture exhibition Cafex kicks off in Cairo, and in Cambridge, MA, Harvard Law School is playing host to “As Goes Egypt, So Goes the Middle East.”

Garhy, Nasr, Amer heading to D.C. for IMF, World Bank spring meetings: International Cooperation Minister Sahar Nasr will be in Washington, DC, to take part in the World Bank and International Monetary Fund’s spring meetings of from 15-17 April, Al Shorouk reports. Nasr is paving the way for the arrival of Finance Minister Amr El Garhy and CBE Governor Tarek Amer. While it is unclear if they will request an IMF facility, Nasr said she would discuss the status of the World Bank’s USD 8 bn loan package. The agendas for the meetings are here.

Foreign Minister Sameh Shoukry will head an Egyptian delegation attending this week’s Organisation of Islamic Cooperation summit in Istanbul, according Ahram Online. Egypt’s invitation to the summit, which will conclude on Friday, is one of the first signs of possibly thawing relations between Egypt and Turkey.

Orascom Development Holding expects to announce its FY2015 results on Thursday, 14 April and will hold an analyst call at 1:30 pm CLT, according to a statement.

French President François Hollande is expected in Cairo on Monday, 18 April, according to Ahram Online. The French president, who will head a delegation of around 60 businessmen and two ministers, is expected to sign 30 cooperation agreements with Egypt, said French ambassador André Parant, Al Borsa reports. Look for about EUR 1 bn in arms agreements and others in energy, transportation, and tourism.

The day before, German Minister for Economic Affairs and Energy Sigmar Gabriel kicks off a two-day visit to Cairo at the head of a delegation of representatives from 100 German companies and financial institutions. The group will meet President Abdel Fattah Al-Sisi and the ministers of industry, finance, foreign affairs and investments, according to DNE.

The Aramco-SUMED agreement “could turn the Sidi Kerir port on the Mediterranean coast into a regional hub for the sale of Saudi crude to Europe,” the Oil Ministry said, according to Reuters’ Arabic service. Egypt signed an MoU with Saudi Arabia increasing the volume of crude pumped through the SUMED pipeline without giving current or future volumes nor providing any financial details. The agreement, which also involves using Egyptian storage capabilities “could frustrate Iran, whose oil flows to Europe have begun to pick up from a slow start since sanctions were lifted in January,” Reuters adds. The SUMED pipeline is 320 km and connects the Ain Sokhna terminal on the Gulf of Suez to offshore Sidi Kerir, west of Alexandria. EGPC has a 50% stake in the pipeline, with the remainder spread between Saudi Arabia, Kuwait, and the UAE who each have a 15% share, and Qatar with 5%.

IMF cuts global growth forecast, sees Egypt growth at 3.3% this year, accelerating in 2017. The International Monetary Fund’s latest World Economic Outlook forecasts global growth at 3.2% in 2016 and 3.5% in 2017, down from its January forecasts. Egypt’s GDP will grow by 3.3% this year (compared with 4.2% last year) and growth could accelerate to 4.3% in 2017, it said. Unemployment will reach 13% by the end of this year, only to drop to 12.7% in 2017. Egypt’s GDP growth rates are more than double what GCC countries should expect, according to the IMF. EM champions China, Brazil, India, and Turkey will grow 2% below the average of the last decade, the IMF says.

Read the whole report here(as a pdf download), or tap here for both a written summary of the report and for videos of the IMF’s press briefing in English, press briefing in Arabic and an interview with IMF chief economist Maury Obstfeld. Coverage of the report is front-page news in the business press today: See the Wall Street Journal, Reuters or the Financial Times.

We have financiers for EUR 3.5 bn in new power plants: Deutsche Bank, HSBC, and KfW IPEX-Bank have jointly structured and arranged the Hermes-underwritten financing for the Beni Suef, Borollos, and New Capital combined-cycle plants in Egypt, Deutsche Bank announced in a statement. A 17-bank consortium will raise EUR 3.5 bn for Siemens. The power plant order is the biggest in Siemens’ history, according to the release, and has a total investment cost of EUR 6 bn. Deutsche Bank, HSBC, and KfW IPEX-Bank are acting as coordinating initial mandated lead arrangers and co-bookrunners for the syndication of the Hermes-covered finance, with Deutsche Bank acting as coordinating bookrunner.

Has your electricity bill gone up? Al Mal thinks it has uncovered why electricity bills have increased recently, and the gist of their investigation is that the government could be conning consumers. When agents go to collect electricity meter readings, the electricity distribution companies sometimes defer part of one month’s consumption to future months, sources told Al Mal. This moves consumers into higher consumption brackets and, by sometimes delaying taking the readings in the summer months, it also defers charging them until price increases are enacted (usually from 1 July with the new fiscal year).

Abdul Latif Jameel to exit Egyptian renewables market: The renewable energy arm of Saudi-based giant Abdul Latif Jameel has halted all work on some USD 700 mn in investments in Egypt due to government bureaucracy — and has officially informed the Electricity Ministry of its decision, company sources tell Al Borsa. The decision would effectively shut down the development of renewable power facilities expected to have produced 700 MW, including 500 MW in solar capacity to have been installed in Benban, Kom Ombo, and the West Nile, and a 200 MW wind farm in the West Nile. The head of the Egyptian Electricity Transmission Company has confirmed that the company is pulling out. Company sources cite delays in readying projects tendered back in 2013 and foot-dragging in setting up a feed-in tariff framework as the primary reasons for the exit. The FX crunch was also reportedly as a contributing factor.

Pound unchanged at auction: The CBE sold USD 120 mn in its regular FX auction yesterday, keeping the exchange rate unchanged at USD 1 per EGP 8.78. The auction injected funds to cover foodstuff imports, according to Al Borsa. Reuters said the EGP was stronger on the parallel market, with USD 1 selling for EGP 10.25-10.28. Al Shorouk, puts the black market rate at EGP 10.30-10.35.

The CBE has added frozen and packaged meat to the list of goods exempt from import restrictions, including the 100% cash-cover requirement for letters of credit, Al Borsa reports. Frozen meat now joins good shipped by air cargo; birds and live animals; computer hardware software, and apps; production inputs; and essential goods on the exemption list.

Germany is apparently willing to conditionally lift travel bans imposed on Sharm El Sheikh, Al Borsa reports, citing a German embassy statement it appears to have obtained. Talks on lifting the ban are ongoing, the statement reportedly says, without disclosing Germany’s conditions. German air travel safety inspectors had investigated security protocols in the airports of Sharm, Hurghada and Marsa Alam on 10-14 March.

Russian tourists may not be following the Germans any time soon, but MCCDR hopes public market investors may flock here. Misr for Central Clearing, Depository and Registry (MCCDR) has signed an MoU on settlement and data interchange with its Russian counterpart that it says could make it easier for Russians to access the EGX and for Egyptian investors to tap Russian opportunities. Longtime MCCDR chairman Mohamed Abdelsalam said during the signing that the agency will sign similar MoUs with Abu Dhabi, Nigeria, South Africa, Kenya, and Sudan in 2016, Al Borsa reports.

Could it be? Is the single-window land allocation process working? We’ve been writing variations on this headline for 15 years now, so please forgive us for not holding our collective breath. The land sale committee at the General Authority for Investment and Free zones (GAFI) has officially been launched, GAFI’s Alaa Omar announced. The launch of the committee, which is charged with tendering land to investors, is being touted by Omar as the first concrete step toward a one-stop shop system for land allocation, Al Shorouk reports. Omar thanked the New Urban Communities Authority (NUCA) and the Tourism Development Authority (TDA) for cooperating with GAFI and allowing it to tender land under their respective control. GAFI and NUCA had established a placeholder system to jointly tender land to clear a backlog of requests until the single window system under the 2015 investment act came into effect. Things have not gone so smoothly with the TDA (which sought cabinet approval to tender land on its own) or with the Industrial Development Authority (which announced late last month that it would independently issue regular land tenders, a violation of the Investment Act).

Wait — what? Communications and Information Technology Minister Yasser Al Qady says TE Data cannot be a monopoly as it only has a 30% market share, dropping cold water on any notion that the ministry is somehow an impartial mediator in the private internet providers’ dispute with the state-owned ISP. The statement contradicts reports going back to last year that TE Data’s market share is north of 70%. The statement also does not mention the numerous complaints by its private-sector competitors and customers of TE Data poaching customers while parent company TE upgrades network infrastructure to fiber optic cables from copper wire.

On a lighter note, Al Qady did announce that the ministry is planning to release more 3G spectrum to mobile network operators this month, Al Mal quotes the minister as saying at a forum hosted by Information Technology Industry Development Agency. Al Qady added that the ministry is still working out the framework for regional ISP licenses, stating that it is still mulling over whether to charge 6-10% of annual revenues as payment for the licenses or a flat fee. Coverage of Al Qady’s various statements in the past few days makes no mention of when we might see upgrades to 4G / LTE kicking off. MCIT has previously said existing mobile operators would have 4G spectrum by year’s end — and that we may have a fourth mobile network operator this year, too.

The World Bank is waiting on the Egyptian parliament to sign off on the government’s national plan before handing over the USD 1 bn first tranche of the USD 3 bn development loan it agreed to last year, said Hafez Ghanem, the WBG Vice President of for MENA, reiterating previous statements. Ghanem made sure to mention that the value-added tax was a crucial element (read: deal breaker) in the plan at a World Bank preliminary session on supporting growth in the MENA region ahead of the spring meetings of the IMF and World Bank, Al Borsa reports. The meetings begin on Friday. As we noted yesterday, Egypt’s International Cooperation Minister Sahar Nasr is in DC laying the groundwork for the arrival of the Egyptian delegation, which will include Finance Minister Amr El Garhy and CBE Governor Tarek Amer. Ghanem also stated that the growth forecast for the Middle East would be 3% in 2016 despite conflicts and lower oil revenues.

National Authority for Tunnels Chief Financial Officer Hisham Helmy was arrested after allegedly being caught red handed taking a bribe from a private firm to expedite the payment of its overdue checks. The story, broken by Al Mal late last night, has no further details.

The grousing over Tiran and Sanafir continues: Israel gave Egypt its blessing on Tuesday to return the islands of Tiran and Sanafir to Saudi Arabia, Reuters reports, and Saudis are apparently delighted to get the islands back, but the move still isn’t playing as well in Egypt. Members of the House of Representatives demanded that the government present documents proving the islands did in fact belong to Saudi Arabia, as did former Prime Minister (turned self-imposed exile) Ahmed Shafik. The cabinet’s Information and Decision Support Center was happy to comply, providing historical documents as proof. The statement also pointed to a New York Times piece from 1982 that we noted earlier this week and which read in part: “The two islands were transferred by Saudi Arabia to Egyptian control in 1950 because the Saudis feared an Israeli attempt to seize them. Along with the rest of Sinai, they fell under Israeli control in the 1967 war, but Saudi Arabia’s Crown Prince Fahd said recently that he would ask Egypt, after regaining them in April, to return them to Saudi sovereignty."

A separate statement on the IDSC’s Facebook page says President Abdel Fattah El Sisi will not hand over the islands until the House of Representatives has reviewed the documents pertaining to the agreement and approved it. The center’s statement addresses five purported “myths” surrounding the agreement, including the lack of transparency involved, historical rights of Egypt to the islands, lack of evidence on Saudi Arabia’s claim, the timing of the agreement, and similarities with similar disputed areas such as Halayeb and Shalatin.

Finally, Al-Ahram chief Ahmed El Naggar said in a Facebook post that the islands are unequivocally part of Egypt, adding that he would offer historical proof tomorrow in what we assume will be an op-ed.

Dare we dream? Top executives oil-trading executives say the worst is behind us, at least when it comes to oil prices, Bloomberg reports. Some even predict prices will hit USD 50 per barrel by next year. “The down market is behind us,” Torbjorn Tornqvist, CEO of Gunvor Group Ltd., said on Tuesday at the FT Global Commodities Summit in Lausanne. “It is the beginning of the end of that for sure.” The world’s largest oil traders were meeting in Switzerland as OPEC and other producers are set to meet in Doha on April 17 to discuss an output freeze. “A ‘rebalancing’ of global crude oil supply and demand could take place by the end of the third quarter as production cuts by cash-strapped producers start to curb the current glut,” according to Trafigura Group Pte CEO Jeremy Weir.

Meanwhile, Fitch downgraded Saudi Arabia for the first time since at least 2004, lowering it one level to AA- on Tuesday, according to a statement. The cut reflects the “revision of our oil price assumptions for 2016 and 2017” to USD 35 a barrel and USD 45 a barrel respectively, it said.

Negative rates are not the fault of central banks is the headline that sits atop yet another FT (paywall) piece on the contentious policy. “Some will object that the decline in real interest rates is solely the result of monetary policy, not real forces. This is wrong. Monetary policy does indeed determine short-term nominal rates and influences longer-term ones. But the objective of price stability means that policy is aimed at balancing aggregate demand with potential supply. The central banks have merely discovered that ultra-low rates are needed to achieve this objective,” writes Martin Wolf.

Foreign Minister Sameh Shoukry told reporters in Cairo on Tuesday that Egypt has agreed to examine phone records in the Giulio Regeni case and report any findings to the Italians, according to AP. Shoukry reiterated the deputy prosecutor’s claim that handing over individual records would be unconstitutional, making it unclear how Egypt plans to hand over information in a form that could be useful to investigators. Meanwhile, the UK government is adding even more pressure, saying it has raised the case with Egyptian authorities in London and Cairo and called for a full and transparent investigation, according to The Guardian.

Meanwhile: Unnamed Italian sources told Al Shorouk yesterday that Rome plans to return its ambassador to Egypt early next week with a loaded message. The move to recall Maurizio Massari on Friday will be followed by harsher steps if Egypt does not provide Italy with all the details it needs to close the case, the source tells Al Shorouk. Speaking anonymously, a foreign ministry official told Reuters that without a breakthrough, “Italy could advise against tourist travel to Egypt and halt cultural or educational exchanges.” An Italian cabinet source told La Repubblica yesterday that Egypt has emerged as “a necessary but dangerous” ally. Silvia Colombo, a senior fellow at the Istituto Affari Internazionali in Rome agrees, telling Reuters: “I don’t think Italy will jeopardise trade ties, not in the current economic climate.”

Young Arabs see Daesh as the biggest threat in the region, with some blaming a lack of job opportunities for the group’s rise, according to the annual Asda’a Burson-Marsteller Arab youth survey, Reuters reports. Many couldn’t even explain why anyone would join the group, with three-quarters saying they don’t believe Daesh will establish an Islamic state, according to the FT (paywall). Some 36% of respondents said the Arab world was better off after Arab Spring revolts, down from 72% 2012. It was only in Egypt that most young people believe the country to be in a better place. The survey, published on Tuesday, polled people in the 18-24 age bracket across 16 Arab countries.

The UN Refugee Agency UNHCR issued a report about Yemeni nationals stranded in Egypt, a population it says is as large as 6,000-8,000 people. They are in Egypt “either because they were in the country when the war erupted in March 2015, or because they have fled here for safety.”

Russia is back at the center of the Middle East geostrategic game, and its “calculated” intervention in Syria resulted in a major diplomatic shakeup, Shlomo Ben-Ami writes for Project Syndicate. Ben-Ami believes Russia’s “limited” intervention in Syria succeeded in creating the “deadlock” required for a more serious engagement in peace talks, compared to the US decision not to intervene meaningfully. Caveating his statements with noting that peace is “not yet around the corner,” Ben-Ami says one political settlement could be “a federal system,” something which Moscow has championed. Most importantly, Russia “has consolidated its position as a power to be reckoned with in the Middle East.”

President Abdel Fattah El Sisi met with Nabih Berri, the speaker of Lebanon’s parliament, yesterday. Berri updated El Sisi on the most recent developments of the efforts to end the political vacuum in Lebanon, with El Sisi stressing on Egypt’s support of Beirut and his hopes of having a new Lebanese president elected soon.

Prime Minister Sherif Ismail met with Cypriot House of Representatives chief Yiannakis Omirou yesterday, SIS said. Ismail expressed Egypt’s support for a unified Cyprus and praised mutual cooperation between Cairo and Nicosia.

Egypt, Burundi talk Nile Basin issues: President Abdel Fattah El Sisi met with the Minister of External Relations and International Cooperation of Burundi, Alain Aime Nyamitwe, yesterday to talk cooperation between the two countries, particularly to “realize mutual benefit and joint interests for all Nile Basin countries,” according to an Ittihadiya statement. Nyamitwe reiterated Burundi’s desire to reach a consensus on "The Cooperative Framework Agreement for the River Nile Basin".

BP has begun the build-out of a a 600-700 mcf per day natural-gas processing plant in Rashid to bring the second phase of the North Alexandria facility onstream, an unnamed source at EGAS told Al Borsa. Work is expected to wrap-up by the end of 2020, 11 months after the date BP had set originally. The EGAS source said delays will activate fines clauses in the contract between BP and the government. (Read in Arabic)

A tender for turbines and boilers designated for the West Cairo Power Station have been pushed to the start of May rather than this week at the request of bidders, an unnamed source at the Cairo Electricity Production Company said. (Read in Arabic)

Egypt has reached an agreement with Saudi Arabia to allocate 500k feddans of arable land for Saudi agricultural investors. Saudi Agriculture Minister Abdulrahman bin Abdulmuhsen Al Fadhly said an MoU was signed to promote agriculture investment in Egypt. The MoU will also pave the way to resolve investment disputes, Al Fadhly added. (Read in Arabic)

The General Authority for Supply Commodities bought 175k tons of Romanian and Ukrainian wheat at an average price of USD 192 per ton in an international tender it announced on Monday, Al Masry Al Youm reports. (Read in Arabic)

As many as 22 investors have submitted requests to build private universities in various governorates across the country, a top official at the Higher Education Ministry said yesterday. Higher Education Minister Ashraf El Shihy approved nine universities during the first three months of 2016 with the rest to be approved throughout the year, adding that more government universities need to be built to advance higher education under the government’s strategy. Meanwhile, some EGP 95 mn has been allocated to prop up university hospitals in Mansoura, Damietta, and Ain Shams universities, among others, he said. (Read in Arabic)

Pharmacists’ Union head Mohie El Din Ebeid has agreed with the General Secretary of Administrative Control Authority to put a stop to surprise inspections of pharmacies without a representative from the union or industry body present, according to Al Mal. (Read in Arabic).

Wrapping up CityScape 2016: Four Pioneers Holding real estate subsidiaries are in negotiations with the Alexandria governorate to build residential units on land owned by United Company for Housing and Development, according to Al Borsa. Meanwhile, Memar Al Morshedy, a private real estate developer, announced 13 residential complexes, all in Greater Cairo, according to Al Mal. The projects will range from youth housing to luxury units from 80-300 sqm. Al Ahly Real Estate Development also has seven luxury housing projects in the Fifth Settlement and North Coast in the works, well as in Dubai. Al Moez Holding Group have announced three residential projects in the North Coast, Sharm El Sheikh, and Sheikh Zayed, Al Mal reports, offering a combined 1,000 residential units in addition to commercial spaces.

The Tahrir hotel will be inaugurated on 30 June 2016, Public Business Sector Affairs Ashraf El Sharkawy announced. Work on the four-star, 295-room hotel began in March 2013, Al Masry Al Youm reports. The total investment cost of the hotel is EGP 270 mn and will be managed by German hoteliers Steigenberger. (Read in Arabic)

The government plans to build Upper Egypt’s first technology park over 250k sqm in Assiut’s industrial district in partnership with private electronics assembly firm Al Araby Group, according to Assiut Governor Yasser El Desouky. The park will provide 3,000 direct and indirect job opportunities for Assiut residents. (Read in Arabic)

HP plans to establish a tech innovation center in New Assiut City in the Assiut governorate as the first phase of its investment plan for Egypt, according to information coming out of meetings CIT Minister Yasser El-Qady had with high-ranking HP executives. (Read in Arabic).

The Red Sea Ports Authority is assessing constructing a yacht marina in Dahab, South Sinai. The marina would be built by the armed forces, a source at the authority told Al Borsa. The source added that the project would speed up transfer between Dahab and Maqna in Saudi Arabia. (Read in Arabic)

Transportation Minister Galal Saeed met with representatives of Singapore-based shipping carrier X-Press Feeders to discuss opening a high-speed shipping route to Russia, specifically to Novorossiysk, Russia’s main Black Sea port. The route would be used to transport agriculture exports with a low shelf life, Al Mal reports. The company expressed an interest in connecting the ports of Alexandria, Port Said, and Damietta with Russian ports. As we noted earlier this month, the Ismail government is studying the feasibility of direct maritime routes to Russia in a bid to boost Egyptian exports, according to statements by the Trade and Industry Ministry.

Swedish automotive manufacturer Volvo Buses has been named a partner on all city bus upgrades in Alexandria after the company delivered 150 buses in 2015 and a second order of 90 Volvo buses has this year, according to an emailed statement. “‎We are also guaranteed ‎‏strong after-sales ‎support ‎through Volvo Buses’ ‎Egyptian partner, ‎Ghabbour Auto, which is key to maintaining ‎a strong and efficient fleet to serve ‎the community,”‎ said Khalid Ibrahim Badawy, CEO of Alexandria Public Transport Authority.

Prime Minister Sherif Ismail formed a committee to formulate a comprehensive strategy to develop and better utilize the country’s water resources. The committee — made up of the ministries of irrigation, agriculture, planning, housing, and investment — is tasked with developing projects and timelines to achieve this strategy. Its goals and targets: identifying Egypt’s water needs; upgrading irrigation systems; preventing run-off water in agriculture irrigation; tapping into groundwater resources; developing reservoirs for collecting rainwater; and developing desalination plants. (Read in Arabic)

President Abdel Fattah El Sisi issued a decree allocating land in industrial zones to be tendered without fees as part of the incentives mandated by the Investment Act, Al Borsa reports. El Sisi’s decree backs a decision taken by the Ismail cabinet back in February.

The US military has notified Egypt and Israel that it is reviewing its operations in Sinai, including ways to use technology replace some of the 700 US troops deployed there, Reuters reports. “I don’t think anyone’s talking about a [complete] withdrawal. I think we’re just going to look at the number of people we have there and see if there are functions that can be automated or done through remote monitoring,” said Navy Captain Jeff Davis, a Pentagon spokesman, on Tuesday. US officials told Reuters on condition of anonymity that using remote surveillance technology could allow the US to withdraw hundreds of troops. “The US commitment to this treaty and this mission has never been stronger,” White House spokesman Josh Earnest said at a news briefing.

High interest rates beginning to crowd-out borrowers? Plastics manufacturer Rubex sent the EGX a statement confirming it is seeking an EGP 90 mn to finance expansion, but that it was unable to agree to any of the offers presented to it because of the high interest rates they came with.

EgyptAir has inaugurated a new office in Addis Ababa as part of its plan to expand its network of African routes. In celebration, the airline is offering a 13% discount on tickets to Ethiopia through the end of April.

Is the government backtracking on the Hussein Salem settlement? That’s what the exiled businessman’s attorney would have us believe. He says the government is renegotiating the agreement even after Salem deposited EGP 5.5 bn in the state’s coffers, Al Mal reports.