Black market FX traders are going to jail, cabinet says

Ras Sidr is getting an airport: The Tourism Development Authority is leading the charge to build an airport in Ras Sidr airport, Al Mal reports. TDA is tendering a contract to build and operate the facility, and real estate developer Tabarak Holding is leading a consortium that has put together an EGP 10 bn bid provided it is allowed to manage the airport under 40-year usufruct agreement. The consortium is also requesting that the land allocated for the airport be increased to 6,000 feddans from 4,700. The consortium, which includes Misr Italia Group, Egypto for Tourism Investments, Daghash Group, and Al Alamia Resorts, plans to list 25% of its shares in the company on the EGX.

When do we eat? Iftar will be at 6:56pm CLT today, while the cut-off for sohour will be at 3:08am CLT, according to Islamic Finder.

As we break our fasts during this holy month, it seems appropriate that Hollywood chooses to announce that a Rumi biopic is in the works to “challenge Muslim stereotypes.” Hollywood being Hollywood, it will challenge stereotypes about Muslims by hiring white actors to play them: Oscar-winning writer David Franzoni tells the Guardian that he’s looking to hire Leonardo DiCaprio to play the part of the Persian poet and Robert Downey Jr to star as Shams of Tabriz.

U.S. Federal Open Market Committee meets to discuss interest rates on 14-15 June (Tuesday-Wednesday). Fed Chair Janet Yellen will hold a press conference on Wednesday after the meeting.

Right after, the Central Bank of Egypt’s Monetary Policy Committee meets to discuss interest rates on 16 June (Thursday).

Remember our warning at the beginning of last month that Cabinet would reinstate daylight savings time, forcing us to change the clocks on Friday, 8 July? It’s happening. Cabinet approved the change at its meeting yesterday. It’s about the 100th time we’ve changed our mind on daylight savings time since the Revolution.

The Ismail cabinet approved yesterday prison sentences for traders selling foreign currency at anything other than the official exchange rate, escalating the Central Bank of Egypt’s crackdown on the black market, Reuters reported. According to a statement issued after its regularly scheduled Wednesday meeting, cabinet passed draft amendments to a law regulating the foreign exchange market, including the imposition of prison sentences for those breaking the foreign exchange law, with jail terms of six months to three years and fines of EGP 1-5 mn. The amendments also give CBE Governor Tarek Amer the authority to suspend exchange bureau licenses for a year and the power to levy a similar fine, with repeat offenders facing the permanent revocation of their licenses. The cabinet also introduced a three-to-ten-year prison sentence for anyone caught dealing in FX who isn’t part of a licensed financial institution. More on the cabinet meeting at the end of Speed Round.

The latest victim of the FX crunch to go public: LG Egypt’s TV factory in Tenth of Ramadan reduced its production levels by 60% in April and May due to USD shortages at the four banks the company works with, according to Al Borsa, which points the finger at Banque Misr, the National Bank of Egypt, Banque du Caire, and CIB. Production fell to 70k units from 120k in March this year. The company received just USD 10 mn in letters of credit from Banque Misr in April and May and is currently in negotiations with CIB and NBE for a USD-denominated loan, an official at LG Egypt said. The company was instructed not to resort to the parallel market by LG in Korea even if it has to shut down the factory, he added.

EFG Hermes has completed the sale of a 40% stake in Credit Libanais for USD 310 mn before associated fees, according to a bourse statement. The stake was sold to Arab and Lebanese investors at USD 33.00 per share and EFG Hermes plans to sell its remaining stake (estimated at a little under 24%) by May 2017, according to Reuters. Among other things, the firm will use the proceeds to reshape itself as a frontier house and expand its product range, with Group CEO Karim Awad writing in his note for the firm’s recently released 2015 annual report (pdf) that the CL sale will allow the firm to accelerate its “transformation into a firm that comprehensively covers some of the world’s most exciting emerging and frontier markets,” describing the move as “natural evolution for EFG Hermes.” As we noted back in March, EFG is doing due diligence on the acquisition of a 51% stake in Pakistan’sInvest and Finance Securities Limited (IFS), a transaction valued at c. USD 3.3 mn.

The government is not going to reduce the price of natural gas supplied to steel factories to USD 4.5 mmBtu from USD 7 mmBtu, claiming producers had “failed to meet set conditions,” a senior official tells Al Shorouk. Those conditions included reducing steel prices by EGP 500-800 per ton and operating at full capacity, he said. Meanwhile, Al Borsa is reporting that the Electricity Ministry has requested 3.9 bcf per day of natural gas from EGAS for August, representing more than 100% of domestic production. EGAS has said it will stop supplying heavy industry in August as demand from power stations peaks and ensure imports of 1.3 bcf per day through the FSRU program (about 1.1 bcf/d) and from Jordan (0.2 bcf/d) continue uninterrupted.

The natural gas market in the Eastern Mediterranean needs to developed, Royal Dutch Shell’s CFO Simon Henry said, according to Natural Gas Europe. Yesterday, we noted that Shell announced plans to cut its investment plan in Egypt by USD 100 mn. While not sounding too optimistic about Egypt, Henry says “the politics surrounding the ‘major gas reserves’ in the eastern Mediterranean, such as Cyprus and Israel as well as Egypt, had to be dealt with before gas could flow into its idle Idku liquefaction plant — part of the BG legacy — in Egypt: ‘The most logical solution would be to take gas to the empty LNG plant from there, but it is too early to say what the solution might be’.”

All three mobile network operators appear set to join Telecom Egypt in bidding for 4G licenses, according to statements by ICT Minister Yasser El Kady, Al Mal reports. The ministry will launch the tender for the licenses after Eid break, according to a ministry source, who added that the National Telecommunications Regulatory Authority has already signed with a consultancy to finalize the terms and conditions for the tender.

Endeavour selected 41 entrepreneurs from 25 companies and 14 countries at its latest international selection panel. From Egypt, Endeavour selected Jalal Abu-Gazaleh and Amgad Sultan’s Gourmet Investment Group (owners of the upscale Gourmet Egypt chain) and Aly Mazhar’s BeFit, the health and fitness services provider. Endeavor’s statement on the selection doesn’t talk about BeFit’s growth plans, but notes that Gourmet aims “to become the region’s leading exporter of premium foods and ingredients designed, developed and manufactured in Egypt.”

Renaissance Capital initiated coverage of leading cheese maker Domty, according to an emailed statement. It assigned a hold recommendation on the stock citing “too many uncertainties” and an expectation that cheese consumption growth will slow down. Rencap says the current market price is not cheap enough to compensate for risks Domty faces. In assigning a target price of EGP 8.80 per share, Rencap writes, “We believe that cheese, which makes up c. 85% of revenue, will experience a slowdown in growth given the already high rates of per-capita consumption in Egypt. We also expect the highly-competitive juice category to face volume and pricing pressure. Lastly, we believe the new strategy of trying to bring distribution in-house and entering the snack foods category could put pressure on margins.” Domty shares closed yesterday at EGP 8.85 per share, down 0.67%. Tap here to read Renaissance Capital’s statement on the initiation.

Manufacturers and farmers participating in the Central Bank of Egypt’s EGP 5 bn SME financing initiative will be allowed to borrow up to EGP 20 mn under regulations the CBE released yesterday, Al Mal reports. The CBE will provide banks with liquidity to lend to qualifying enterprises at 7% interest and with tenors of up to 10 years.

An EgyptAir flight was forced to make an emergency landing in Uzbekistan due to a false bomb threat, BBC reported, citing Uzbekistan Airways. The plane was en route to Beijing from Cairo. “All 118 passengers and 17 crew on board the Airbus A330-220 were evacuated at Urgench International Airport, in the east of [Uzbekistan],” where the plane was searched and no explosives were found. Unnamed Egyptian officials reportedly said that an anonymous caller had telephoned security agents at Cairo International to say a bomb was on board the flight to Beijing; agents immediately contacted the aircraft and instructed it to land at the nearest airport. One official told Reuters it was a false threat, “the plane is preparing to resume its journey. It was a hoax, thank God." An EgyptAir spokesperson confirmed to Bloomberg it was “false alarm.”

Meanwhile, the team leading the search for the EgyptAir MS804 black boxes banned a ship carrying an Egyptian ROV (remotely operated vehicle) submarine deployed last month from approaching the search area, a source close to the search team told Al Borsa on Wednesday. It returned to Abu Qir port Tuesday and no reason was given as to why it was booted from the search. The ROV, owned by Deeptech Oil Services, an Oil Ministry partner, had completed a search within the designated area in the Mediterranean Sea of a 75-feet length and a 25-feet width. The ROV costs approximately USD 53,000 per day to rent, an unnamed source told DNE last month. Batteries in the black box could last as many as eight more days, a source said.

With debate over this year’s thanaweya amma exam leak ongoing, Cabinet moved at its meeting yesterday to change the format of exams and the way in which they’re circulated to schools, Al Mal reported on Wednesday, tasking a committee comprised of the ministers of education, justice, interior, and ICT with forming a plan of attack. Other measures to be taken in the near future include taking a closer look at social media and amending acceptance requirements at Egyptian universities, among others. The cabinet announced that 127 cheating cases have been investigated regarding the Arabic language examinations; all wrongdoers have been referred to the Prosecutor General’s Office, it said.

Ministers also set a two-year deadline for relocating 18 ministries to the new capital city, said Housing Minister Moustafa Madbouly. These include the foreign, interior, transport, justice, power, supply, higher education, and health ministries. Construction is expected to begin at the end of June. The move will also include the cabinet’s offices and the House of Representatives, Amwal Al Ghad reports. Other key decisions taken at the meeting include:

• Approved the draft Food Safety Authority Act, which would create a new body responsible for food safety. The new agency, which was 12 years in the making, will report to the prime minister and will assume responsibility for a number of existing government authorities, according to Al Masry Al Youm.
• Authorizing the Petroleum Minister to amend three exploration concession agreements with BP and Ieoc Productions B.V, according to Al Mal.
• Approved EUR 75 mn in funding from the European Investment Bank to purchase 13 trains for the Cairo Metro Line 2, according to Al Ahram.
• Approved amending the criminal code to punish those who disseminate terrorist propaganda with imprisonment and a fine of EGP 10k- 30k, according to Al Ahram.
• Approved reinstating daylight savings from 8 July to 27 October, according to Al Masry Al Youm.
• Approved raising the minimum age of assistant ministers to 35 from 30, according to Al Shorouk. Take that, youts.

Security of your personal information was high on your collective minds this week, it seems. The most-clicked links in Enterprise in the period 4-8 June were:

• Was your password compromised in a recent data breach? Enter your email address to find out. (have i been pwned?)
• Fasting times around the world (Infographic by Huffington Post)
• Boxing great Muhammad Ali at the Egyptian Iron and Steel Company, Helwan, 1964 (Getty Images)
• Find out whether Google was recording snippets of your conversations without your knowledge. (Google History)
• Six signs you will be rejected when you apply for a job at Goldman Sachs (and how to overcome them) (efinancialcareers)

Bloomberg picked up on the reemergence of Egypt’s battle with ergotyesterday, when cargoes totaling 40,000 tonnes of Canadian and Polish wheat rejected by quarantine authorities. “This is very worrying,” said Mahmoud El-Shorbagi, chairman of Five Star. “If the country continues to reject more vessels, that might be a little bit bearish to the market,” said Stefan Vogel, head of agricultural commodities research at Rabobank International in London.

Yet another news piece on Egypt’s gold potential: Alexander Nubia’s CEO Mark Campbell gives Reuters’ Eric Knecht his now-standard and very-polished line, having breathed life back into the “Egypt as a gold producer” story. An Alexander Nubia geologist believes “the ancient continental crust upon which the company’s two concessions sit is chock full of potentially recoverable mineral wealth.” Centamin Chairman Josef El-Raghy chimes in saying the production-sharing agreement model does not work as well in mining as it does in oil and gas, he is calling for a tax and royalty system as Egypt is one of the countries that “don’t have any information about their lands.”

India’s Economic Times is picking up on Egypt’s first Yoga Championship, noting that popularity of yoga and the number of yoga schools in Egypt has tripled from last year. "Over the last few years, we have noticed that the interest in yoga has grown enormously in Egypt. Last year we found that they were 14 yoga schools in Cairo and this year we believe that they are over 40," Ambassador of India to Egypt Sanjay Bhattacharyya said yesterday while inaugurating the championship.

News that Egypt’s House of Representatives beginning work on a cybercrime law is being picked up by Al-Monitor in an article titled Will Egypt’s cybercrime law overstep its boundaries? The proposed law would mandate a life sentence for anyone who creates or uses a website with the purpose of establishing a terrorist entity, promoting its ideology, exchanging its messages and assignments, or funding, owning, wiring and providing money, arms, ammunition, or explosives to the benefit of such entities. The proposed legislation include many of the same clauses found in the counterterrorism law, said one observer: “As per the new bill, users of social media could be jailed for any post the government deems dissent. As a result, any post could be considered a threat to national security.”

Why has the Obama administration been “passive” on the human rights situation in Egypt? Neil Hicks for the Huffington Post believes “Egypt has just never been a priority concern within the administration’s broader regional policy. The administration has always had greater ambitions — like the Iran nuclear deal or Arab-Israeli peace — or more urgent crises to deal with, like Syria, and has viewed Egypt primarily in terms of how it can be helpful to achieving these other priority objectives.”

Egyptian MPs told their Israeli counterparts that President Abdel Fattah El Sisi’s peace proposal was still on the table, said Zionist Union MK Ksenia Svetlova, who met with Arab lawmakers in Geneva last week on talks about the Middle East water crisis, according to Times of Israel. “The message the Egyptians wanted to convey, in my impression, is that the [peace] initiative of Abdel-Fattah el-Sissi is still on the table,” Svetlova told the paper on Wednesday.

MENA advertisers slow to catch on to time spent by consumers on mobile devices: While they are hardly neutral on the issue, Google’s marketing research unit Think with Google makes a valid point: “MENA marketers and advertisers have yet to catch up with user behavior. The vast majority of ad budgets are still devoted to TV, print and outdoor advertising rather than new digital options,” despite that consumers in Saudi spend on average 87 more minutes on average per day looking at their mobile device screens as opposed to television, and despite 84% of the UAE population using their mobile device as often as a desktop computer. The brief report casts a very critical eye at how much marketers spend on television advertising, as well as focusing on what has driven successful Ramadan marketing campaigns by brands such as Al Marai and Coca-Cola. (Read Ramadan in MENA: The Digital Opportunity for Brands -Google, pdf)

Ramadan consumer behaviour in MENA -YouGov survey results: YouGov surveyed residents in the UAE, Saudi Arabia and Egypt on consumer behaviour and associated spending habits during Ramadan. (View image)

If you’re reading us from Saudi Arabia and you happen to be an expat, income tax may be in your future. The kingdom is looking to boost non-oil revenues and cut spending to fund its USD 72 bn plan to diversify the economy, according to the FT (paywall). But while taxing the one third of non-Saudi residents could rake in a significant amount for the government, it may make it more difficult to lure expats in the future. “The allure of Gulf countries for many expatriates is how much they can save, not spend, and how much they can remit back to their countries,” said Talal Malik, a Saudi-based consultant. However, Saudi finance minister Ibrahim Alassaf downplayed the possibility on Tuesday, saying “There will be no tax on citizens. As for residents [expats], it is a proposal and nothing has been approved yet, and it will be examined,” Alassaf said, adding rightly “It is an old proposal.”

The European Central Bank’s corporate-bond buying program kicked off yesterday. The bank bought debt issued by Anheuser-Busch InBev NV, Telefonica SA, Siemens AG, and Renault SA, among others. But there’s a significant amount riding on its credibility, say analysts. “The perception is that if they can’t buy at least [EUR 5 bn] of bonds a month, the program will be seen as unsuccessful,” said Victoria Whitehead, a Paris-based senior portfolio manager at BNP Paribas Investment Partners.

The Egypt Home Textile Export Council (HTEC) will establish a company in Russia to import and market Egyptian products, a move to take advantage of Russia’s ban on Turkish imports, Chairman Saeed Ahmed said, Youm7 reported on Wednesday. HTEC will open offices and showrooms to exhibit their products, Egypt will also be participating in the upcoming Heimtex exhibition, which will further penetrate Egyptian products in the Russian market.

Arab Contractors is set to deliver USD 25 mn worth of projects in Uganda by the end of this year, Chairman Mohamed Salah tells Amwal Al Ghad on Wednesday. The projects include work on government buildings, universities, and shopping malls as well as renovating old embassies. The outfit is now bidding on infrastructure projects in the East African nation.

Belgian trade delegation concluded its three-day trip to Egypt yesterday, AMAY reported. Representatives of food, healthcare, steel, and energy firms met with Egyptian companies to explore investment opportunities.

Cooperation between Egyptian and Italian authorities on the Giulio Regeni case has been moving smoothly, with both sides exchanging updates on recent developments, according to statements by Foreign Ministry spokesperson Ahmed Abu Zayd, Al Shorouk reports. The same apparently could not be said of Cambridge University, which is refusing to disclose details of Regeni’s PHD research on independent trade unions to the authorities, according to Italian news agency Il Sole 24 Ore. Cambridge is relying on a legal statute that allows it to withhold this information, a statute apparently used by Cambridge academic Maha Abdel Rahman to also withhold details on the research. The newspaper questions what “sensitive” material is on there to prompt the university to not cooperate.

EGAS is launching an international bid round for nine onshore and offshore sites for E&P in 4Q2016, a source told Al Shorouk. The source added that EGAS could tender more blocks. UK Trade & Investment’s Exporting is Great portal says the international bidding round includes 11 blocks in total in the Western Desert and the Gulf of Suez. The blocks are being tendered on under production sharing agreement.

Despite rapid expansion in the rest of the world, the present climate is “not conducive to investment and is preventing the sector from expanding,” the head of the Solar Energy Development Association Khaled Gasser told Daily News Egypt. Investors being unable to convert receipts into USD to satisfy FCY obligations, unclear legislation, and the lack of an independent governing body are among the challenges facing the sector, he added. Small- and midsized operators are also being squeezed out, he said, because the tariffs the government have set so far work only for large companies.

Ten renewable energy companies are negotiating with Siemens to import wind turbines, a senior Siemens official told Al Mal. The companies will build projects with a combined capacity of around 500 MW and an investment value of over EUR 500 mn, most in the Gulf of Suez or West and East Nile areas, he added. Siemens are building a EUR 100 mn self-financed turbine blade factory in Ain Al Sokhna that will produce 300 blades annually for 100 turbines, implying the ability to deliver components with an aggregate generation capacity of 340 MW, he said. The factory will be able to supply turbine blades for up to 2,000 MW worth of turbines within seven years, he added.

India’s Aditya Birla Carbon is planning to invest in new and renewable energy in Egypt, Al Borsa reported. Company officials met with the New and Renewable Energy Authority head Mohamed El-Sobky last week to explore investment opportunities in solar energy, said Ayman Ateyya, managing director of Alexandria Carbon Black, which is owned by Aditya Birla. There was no word on the size of the investment.

Eni plans to drill deeper than initially planned in well five of the Shorouk concession, a move expected to see the company raise its estimate of the field’s reserves by as much as 20%, according to an official from EGAS. Eni had provided EGAS with its drilling plans Shorouk well five on Wednesday, the source tells Al Shorouk. He adds that the Saipem 10000 deepwater drillship working the concession will be temporarily taken to work on BP’s East Mediterranean concession.

An Orascom Construction–Arab Contractors consortium has signed a EGP 5.9 bn agreement to work on the second part of Cairo Metro Line 3’s fourth phase, according to an email statement from cabinet. The agreement with the National Authority for Tunnels gives the consortium 34 months to complete all the civil and electromechanical engineering and signalling work for the line and its stations. The line, which will serve areas of Heliopolis, Gesr El Suez, and Medinat Al Salam, will be entirely funded by the government.

The New Urban Communities Authority (NUCA) will tender 170 plots of land across Egypt and is expecting to rake in EGP 3 bn from the land sale. This will be the third tender that NUCA will run in partnership with the General Authority for Investment and Free zones as part of the single-window system. The land, which will range in size from three to 70 feddans, will be used to develop education, healthcare, recreation, office, and commercial buildings, Al Borsa reports.

Eskan Global Egypt, a subsidiary of Kuwait-based Eskan Global, is eying a partial listing on the EGX in 2017 and plans to invest up to EGP 2 bn in Egypt, Eskan Global Egypt chairman Mahmoud Afifi tells Al Mal. Eskan Global Egypt plans to expand its acquisitions pipeline from five companies to 12 companies, he added. Part of the EGP 2 bn injection will be in real estate through its subsidiary Amwal Kuwait, which is interested in buying land in 6 October, New Cairo and the new administrative capital. Amwal Kuwait recently acquired 98% of Universal Company which owns resort in Sharm El-Sheikh. It also acquired 50% of Kuwait-based Makaseb-PM, for which it plans to open an a branch in Egypt as a vehicle through which to invest as much as USD 100 mn in real estate.

The Tourism Development Authority and Qatari Diar are expected to reach an agreement today to resume work on developing the 29 mn sqm resort in Hurghada, said authority chief Serag El Din Saad. Diar first signed an agreement for the project back in 2006. Last we heard of the project was late last month, when we noted that Diar was filing an arbitration case against Egypt. Diar had reportedly paid EGP 1 bn to set up a company for the project, but saw part of the land confiscated by the Defense Ministry, which then attempted to resell the plot at a higher price than was originally agreed. The ministry appears to have granted Diar the approvals it needed last year, according to Al Mal.

The supply ministry is considering using river transport to move imported cooking oil and sugar from Alexandria and Damietta ports to refineries, Supply Minister Khaled Hanafy said, Al Shorouk reported. A system of transporting food commodities, grains, and wheat will be developed soon between governorates through railways and river transport, in coordination between the Transport Ministry and the Supply Ministry, Hanafy said. River transport represents only 0.2% of the cargo transport on a national level, and railway transport only 1.6%, while road transport makes up the rest, said Transport Minister Galal Saeed.

Prime Minister Sherif Ismail tasked the Legal and Parliamentary Affairs Ministry with amending the protest law, Legal and Parliamentary Affairs Minister Magdy El Agaty told Al Mal. There’s no word on what amendments might be in the cards.

Apparently, eating in public during the daytime in Ramadan constitutes an attack on Islam, according to a statement by Dar El Ifta issued on Sunday on its official Facebook page. In fact, it’s not just attack on Muslim society, but an act of poor manners and bad taste, the institution said. Thank you Dar El Ifta once again for showing us the light and sticking up for the downtrodden 89% of the country.

Former Al Jazeera English Cairo bureau chief Mohamed Fahmy is once again an Egyptian citizen. Fahmy, a dual Egyptian-Canadian national who renounced his citizenship in a bid to win release from prison as part of the “Marriott Cell” case, was restored his Egyptian passport by order of the interior minister, according to a note in the Egyptian Gazette picked up by Al Masry Al Youm.

Former CIA agent Sabrina De Sousa will be extradited to Italy for her involvement in the kidnapping of Egyptian cleric Hassan Mustafa Osama Nasr under the US "extraordinary rendition" program, Reuters reported on Wednesday. De Sousa “was one of 26 people convicted in absentia on charges of snatching from a street in Milan in 2003 and taking him to be questioned in Egypt.”