Verdict in bank chief term limits case expected today: The Administrative Court, a division of the State Council (Maglis El Dowla), is expected to hand down a verdict of in a lawsuit filed by shareholders in private banks against Central Bank of Egypt Governor Tarek Amer and the office of the president of the republic over a March decision to set a nine-year term limit for bank CEOs, Al Borsa reported. The lawsuit was filed on the grounds that the imposition of term limits was an abuse of power and is unconstitutional.

The Administrative Court will also hear today the government’s appeal against the court’s ruling annulling the agreement to handover the Tiran and Sanafir islands to Saudi Arabia. “The State Lawsuits Authority — the body representing the government in legal cases — was prompt to appeal the verdict hours later, and a higher administrative court decided Thursday to set Sunday for hearing the appeal,” Ahram Online says.

Meanwhile Investment Minister Dalia Khorshid has said that the ruling to nullify the border demarcation agreement will have no impact on the SAR 60 bn Saudi-Egyptian investment fund was agreed upon last April.

The House budget debate starts today and will run for four consecutive sessions, according to reports last week. Finance Minister Amr El Garhy presented an overview of the FY2016-17 budget to the House in May.

Telecom operators will be allowed to pay for 4G licenses in four annual instalments if the USD shortage persists, a corporate source told Al Mal. CIT Minister Yasser El Kady denied the statement to Reuters’ Arabic service, saying companies will be required to pay the fee in full upon signing the contracts. Besides the licensing fee, the companies will have to pay 6% directly to the state coffers, Al Mal’s source added, noting that the three active mobile operators already pay 5-6% of annual revenues to the state as a royalty. The pricing of 4G licenses depends on the number of subscribers each company has as well as the requirements for extra 3G bandwidth. Meanwhile, neither Vodafone nor Orange will be allowed to begin offering services through international gateway licenses for a period of two years after their purchase date, according to a CIT ministry source. Each of the two multinational operators is bidding for a gateway license.

The source also noted that China Telecom is among the contenders for the 4G license, but did not give any further details. Reuters quotes El Kady as saying the 4G licenses will be offered in an international auction if local operators reject the terms, as CIT officials had been saying for the past two weeks or so.

…TE will not have to get rid of Vodafone stake: Telecom Egypt (TE) will not have to sell its 45% stake in Vodafone Egypt if it obtains a 4G licence, two telecommunications sector sources told Reuters. “The telecommunications regulator is not forcing Telecom Egypt in official correspondence over its application to offer 4G services to get rid of its Vodafone stake,” one of the sources explained, with the other saying TE will sell only “when it gets an offer for a good price.” Applications for 4G licences have to be submitted by the first week of August. CEO Tamer Gadallah told Al Mal that TE has already begun negotiations with domestic banks as it will require funding to cover the USD-portion of the licence fee. The talks are still in the preliminary stages, Gadallah said.

Meanwhile, Etisalat Misr thinks the asking price is too expensive, CEO Hazem Metwally told Al Masry Al Youm, particularly as the company is struggling to find FX as roaming revenue dropped with the slump in tourism. Metwally also added that Etisalat Misr has not yet received the complete details of the 4G licence. He added that Etisalat Misr could be next on the IPO bandwagon, saying the company could float part of its shares on the EGX but is waiting for the right time. If we recall correctly, Etisalat Misr — 66% owned by the UAE’s Etisalat — was required to explore an IPO as a condition of the third mobile network operators’ license back in 2006. The company was said almost exactly two years ago to have been exploring a USD 500 mn offering on the EGX.

Finance Minister Amr El Garhy and Electricity Minister Mohamed Shaker travelled to Russia on Thursday on an unannounced visit to finalize contracts for the Daba’a nuclear power plant agreement, a source told Al Shorouk. No final date for signing the agreements has been set yet, but one or two contracts out the four preliminary pacts could be signed by the end of July. The Egyptian delegation is expected to present President Abdel Fattah El Sisi with a detailed report on their trip, the source adds, noting that the talks are being conducted behind closed doors.

… A little less secret is Washington Institute fellow Eric Trager’s disdain for the nuclear agreement, which he says is “expensive” and “will likely increase the country’s economic burden and susceptibility to Russian influence.” Trager says “while the new plant will help Cairo satisfy the country’s long-term energy needs to some extent, its high cost suggests additional motivations, such as bolstering the government’s domestic political standing and expanding its foreign relationships beyond Washington.” He compares the “cost-ineffective” plan to the agreement with Siemens to build power plants generating 16.4 GW of energy for USD 9 bn, as opposed to the EGP 25 bn Egypt will reportedly pay Russia for c. 4.8 GW of energy.

General Electric has agreed with China’s Harbin to establish a 6,510 MW “clean coal” power plant in Egypt with an investment value of USD 8 bn, according to unnamed sources at the Electricity Ministry speaking to Daily News Egypt. The power plant will comprise of six 1,058 MW units, the sources said. The location of the project has not been determined, the source added, noting the project is awaiting approval from the cabinet. Harbin will arrange the financing through three Chinese banks, a source at the company said, including the Industrial and Commercial Bank of China and the Export-Import Bank of China.

Ergot issues are not over, apparently: Egypt’s Agricultural Quarantine Authority rejected a 33k tonne shipment of American wheat, saying it contained ergot. According to the Health Ministry and Agriculture Ministry documents seen by Reuters, the shipments contained an ergot percentage of only 0.006% — significantly less than the threshold of 0.05% placed by Prime Minister Sherif Ismail last week. The shipment was rejected initially on 12 June and the importer had appealed the decision following Ismail’s decision, but the Agriculture Ministry said it cannot approve it until a court order restricting ergot-containing shipments is lifted.

You can once again use any Egyptian credit card when using Careem, Al Borsa reported. “We are aware that recently, some banks had stopped allowing the use of credit cards to deal with Careem,” the company’s general manager Hadeer Shalaby said, adding that he problem has been solved after talks with authorities. In related news,Uber has updated their surge price notifications, giving users a set fare instead of a price multiplier when surge pricing is in effect. “When fares go up due to increased demand, instead of surge lightning bolts and pop-up screens, riders are given the actual fare before they request their ride,” the company says. “There’s no complicated math and no surprises.”

Some days, Twitter gets it right:

• German Foreign Office, after Brexit: “We are off now to an Irish pub to get decently drunk. And from tomorrow on we will again work for a better #Europe! Promised! #EURef.
• Best comment on Brexit if you’re young, a UK national and not a xenophobe.
• Best photo of the day on Donald Trump. (Mature language warning in effect)
• Best comment of the day on Donald Trump. (By the inimitable Patrick Chovanec, an old China hand, fan of Egypt and head of strategy at Silvercrest Asset Management.)
• On human decency: “A person with Down’s Syndrome in the Grand Mosque in Mecca, #Saudi offers tissues to the tearful person next to him.”

The UK voted to leave the EU, with the “leave” camp nabbing 51.9% of the vote. Stock markets in London and Europe saw some of their biggest fall in years, with the biggest losers being banks and homebuilders. At one point, the GBP hit a 30-year low. Moody’s downgraded the UK’s long term issuer and debt ratings to negative from stable, with both affirmed at Aa1 following the decision. The UK government estimated that Brexit could cause the British economy to shrink 3.8-7.5% by 2030.

Fallout: Prime Minister David Cameron announced his resignationimmediately after the vote, while British member of the EU executive, Financial Services Commissioner Jonathan Hill, resignedon Saturday. Meanwhile Scotland, which largely voted in favor of “remain,” says a second independence referendum is “highly likely,” according to First Minister Nicola Sturgeon on Saturday.

Uncertainty looms: Despite Article 50 of the Lisbon treaty suggesting we may face around two years of uncertainty before the UK can officially detach itself from the EU, the bloc’s foreign ministers are saying they want to make a break as soon as possible to avoid “years of uncertainty [for financial sector workers] and the risk of thousands of job cuts.”

Potential relocation of financial sector workers: Fortune Magazine has an excellent breakdown of which banks are expected to move what number of their jobs outside of London. “HSBC… said it was likely to cut as many as 1,000… PriceWaterhouseCoopers estimates that Brexit could cost between 70k – 100k financial services jobs by 2020.”

What does this mean for us? Risky assets like EMs were the first to go as investors sought a safe haven away from the fallout. While Eastern Europe is widely seen the EM most exposed to long-term repercussions of Brexit, the FT (paywall) writes that Egypt and South Africa “were the non-European countries most exposed to a UK economic decline, with more than 4 per cent of their exports going to the UK,” said Geoff Dennis, strategist at UBS.

Oh, and Egypt may have to negotiate new trade and investment pacts with the UK, which just happens to be the largest non-Arab investor in Egypt.

Bregret: MP David Lammy is urging Parliament to outright ignore the “non-binding referendum” and “stop this madness” as over 2 mn people signed a petition demanding a second referendum, according to the Independent. Several citizens have come out to say that despite voting to leave, they had not expected the immediate economic impact. Others were outraged at UK Independence Party Leader Nigel Farage’s admission that it was a “mistake” for the “leave” campaign’s to claim the GBP 350 mn sent to the EU every week would be funneled to the National Health Service.

Seif Eddin Mustafa, aka the “lovejacker,” who hijacked an EgyptAir flight in March, told a Cypriot Court Egypt’s military-backed government "must have tortured and murdered" Giulio Regeni. According to the AP, he said he hijacked the domestic EgyptAir flight intending to seek asylum in Italy in order to “point the finger” at Egypt’s “fascist regime” and caught a glimpse of a “foreign-looking” person in Lazogli prison during his nearly two-month detention there in December and January.

Egyptian authorities should drop the charges filed against the Atfal Shawarea satirical group, Human Rights Watch urged. “The investigation appears to be based purely on their satirical videos and violates the right to free speech,” the organisation says.

Immigration Minister Nabilah Makram’s remarks concerning her lack of information on the size of the Egyptian community in Israel led the House of Representatives to declare “the growth of the Egyptian community in Israel constitutes a danger to Egyptian national security,” Rami Galal writes for Al Monitor. “The concerns of Egypt’s expatriates overall have been dealt with extremely ineffectively, and not only the Egyptian community in Israel,” Representative Nancy Nasir said. Meanwhile, Egyptian journalist based in Israel Hashim Farid said the accusations the diaspora were “baseless.”

Egyptian cotton on the decline: The mixture of pure Egyptian cotton seeds with inferior Indian and American types, challenges marketing crops “due to the abating role of agricultural societies in collecting and setting a fixed price for cotton, [and] the emergence of parallel markets where some merchants control the cotton prices,” are just some of the reasons Egyptian cotton is in decline, according to Al-Monitor’s Ahmed Hidji. “The bad policies of the government caused the collapse of cotton,” said Al-Basha Idris, head of the Exporters Division at the Cairo Chamber of Commerce.

Foreign Affairs (paywall) picks up on Egypt’s improved relations with Hamas over the weekend, with Oren Kessler and Grant Rumley saying “If it sounds like a stretch, it’s because it is … Egypt and Hamas continue to have fundamentally divergent interests, ones that don’t lend themselves to quick fixes. With mutual animosity running this deep, rumors of any reconciliation between Egypt and Hamas are just that.”

On the occasion of the USD 3.1 bn Panama Canal expansion launching today, we’re taking a second look at the project, and the New York Times has by far the most insightful and authoritative piece written to date. The c. 7,500-word feature deploys actually-useful animated graphics to explain how the new extension works and delves deeply into the controversies surrounding the project’s bidding, design and construction.

Leaks: “During water tests in the canal… photographs and video showing water gushing from concrete in one of the Pacific locks — the same locks near the earthquake faults… This was no small leak… To fix the problem… the decision was made to reinforce… A smaller leak was soon found on the Atlantic side. A month after the first leak was discovered in the Pacific lock, further cracks were found during a new test… There is little unanimity about what exactly went wrong and what should have been done about it.”

On the use of tugboats guiding enormous neo-Panamax ships down the expansion: Head of the canal tugboat captains’ union Ivan de la Guardia is quoted as saying: “We don’t think it’s going to work. We think it’s going to be a real mess. I think something awful is going to happen.” (Read The new Panama Canal: A risky bet)

Since we (and the world) are still on Brexit, mosey on over to the New Yorker to check out their cover this week, showing the UK silly-walking off a cliff. If you’re not a Monty Python fan, here’s the original silly walk sketch (run time: 4:53)

Silly walks not your cup of tea? How about Brexit in food? Too bad baked beans were originally an American import to the UK, so the UK may be better represented here by a lone jar of Marmite. Or their most infamous export, colonialism.

Watching 27-year old CEO and co-founder of the Eventtus app, Mai Medhat, say she’s happy to be at the 2016 Global Entrepreneurship Summit, sharing a stage with US President Barack Obama and Mark Zuckerberg, is a really crowd-pleasing moment. Medhat handles herself here very well and it’s gratifying to see the startup culture that young Egyptians have forged get some international attention. (Watch, running time: 5:23)

Egypt won a three-year seat on the UN’s Human Rights Council (UNHRC) for 2017-2021, Ahram Online reports. Egypt’s foreign ministry spokesman Ahmed Abu Zeid said: "It is a powerful message to those who doubted Egypt’s loyalty to its international and constitutional commitments to human rights.” Saudi Arabia was elected to lead the council last September.

Apache Corp has signed a five-year extension agreement with EGPC on its Khalda-2 drilling concession in the Western Desert, Al Masry Al Youm reported. The agreement involves drilling 10 new wells and investments of USD 40 mn, Oil Minister Tarek El Molla said.

The committee that evaluates renewable energy projects is meeting to study a proposal by Eni to build a solar power plant at the Petrobel site in Abu Rudeis in South Sinai, Ahram reported. The project is part of the cooperation framework between the ministries of electricity and oil to diversify energy sources and maximize use of renewable energy. A task force will assembled between the ministries and Eni to conduct studies and formulate a feed-in tariff agreement. No time frame was given for the meeting.

Egypt has received USD 650 mn worth of gasoline, diesel, and fuel shipments from Saudi Arabia in May and June as part of an agreement with Aramco to supply Egypt’s fuel needs for five years, Petroleum Minister Tarek El Molla said, Al Borsa reported on Saturday. The government had received USD 300 mn worth of shipments in May and is likely to receive USD 350 mn in June as a result of the current increase in oil prices. Under an agreement signed in March with the Egyptian General Petroleum Corporation, the Saudi Fund for Development will pay Aramco for the products, but Egypt will repay it with a 2% interest, with the agreement likely to cost it an estimated USD 30 bn if oil prices continue to fall.

Shanghai SafBon Water Service could invest USD 1 bn in Egypt, Al Borsa reported. Company representatives met with Investment Minister Dalia Khorshid and discussed opportunities to build desalination and recycling plants. SafBon is reportedly eyeing four BOT projects in Kafr El Sheikh, Cairo, and Fayoum with the total investment injected over four years.

The Cairo governorate will inaugurate the second and last phase of the EGP 1 bn Khedivial Cairo project by end of July, Amwal Al Ghad reported. The project consists of reviving the architectural heritage of Downtown Cairo and renovating the road network, Cairo acting Governor Ahmed Taymour said. The governorate will also inaugurate a number of road projects to develop streets and squares in districts including Matariya, Ain Shams, and Nasr City.

Juhayna Food Industries is investing EGP 640 mn this year, divided into EGP 350 mn to expand its juice, yoghurt, and dairy factories and EGP 390 into growing its animal resources and transportation fleet, CEO Seif Safwan Thabet told Al Mal. Juhayna recently added two production lines to its EgyFood factory in Sixth October, increasing production to 800 tonnes per day from 500, he added. The company currently has 1,500 milking cows, a number it aims to grow to 4,000 by the end of the year, said Thabet. Juhayna is looking to tap into COMESA markets in the last quarter of this year with dairy and juice products, he added.

Ezz Steel’s factory has only worked for 34 days this year due to natural gas supply disruptions, corporate marketing office George Matta told Al Mal. Matta said the company has not resorted to importing any steel quantities, even when demand exceeded supply. He says the only thing the group is asking the government for is to stick to its agreed energy supply contracts with manufacturers. Matta also denied allegations the company is increasing its prices unreasonably, saying the market is in control of the final retail price.

The state-owned Food Industries Holding Company will issue a tender to import 25,000 tonnes of soybean oil, Reuters reported. The shipments will be for delivery between 11-31 August and the tender deadline is 29 June.

Garment manufacturer Cottonil plans to build a factory in Upper Egypt, Al Mal reported. The company’s chairman said the factory would be its fifth in Egypt overall. He added that Cottonil had recently completed operations to develop its existing plant in Khanka.

LG Egypt is increasing the prices of imported home appliances by 40%, while domestically manufactured appliance prices have gone up by 10%, LG Egypt CEO Don Kwack said, Al Mal reported. The price increase is caused by the EGP devaluation and increase tariffs, he added. The company is expecting the USD shortage to end in the second half of the year, Kwack told Al Mal. The Egyptian government is assisting the company in negotiating with banks for greenbacks to meet production inputs, he added.

UAE-based Arabian Construction Company (ACC) won a contract to expand the Children’s Cancer Hospital Egypt, according to Arabian Business. ACC said in a statement it had been granted the construction deal for the first phase of the USD 200 mn extension project 10 years after building the main hospital. “The extension consists of two buildings – an out-patient centre extending over 8,500 sq m and an administrative building of 2,500 sq m. Both contain three basements, ground floor and 13 floors. The out-patient centre also includes a bridge link back to the main building, the statement said.”

Arabtec is still unclear as to “when or if the proposed project to build homes for the Egyptian government will start,” Neil Halligan writes for Arabian Business. Arabtec Construction CEO Raja Jani Ghanma said “the project, which has been scaled back from its original [one mn] houses to 100,000, has seen little progress on the part of the Egyptian government’s Ministry of Housing. Arabtec put forward a proposal to start the project with a little over one-tenth of the reduced project last October, but there has been no confirmation of support from Egypt’s housing ministry.” Arabtec wanted to start off with building 13,000 houses, but the government has not responded to the proposal.

Real estate firm New Vision plans to increase its investment in Egypt to EGP 1 bn by 2019, particularly in the Cairo districts of New Cairo and Mohandessin, Chairman Mohammed Kamal said, Al Mal reported on Saturday. The firm is set to launch five new projects in the neighbourhoods, worth around EGP 70 mn, while its current total investments have reached EGP 350 mn so far.

The Tourism Development Authority (TDA) is hosting 12 Italian bloggers for a week-long visit in Egypt, in efforts to ‘improve Egypt’s image,” TDA head Samy Mahmoud said, Al Shorouk reported. The TDA accompanies the bloggers on tours in Cairo and Sharm El Sheikh to have first-hand experience when writing about Egypt and to inform them about the security situation, Mahmoud said. “The chosen journalists have thousands of followers on social media, which helps share their visit with their followers and improve Egypt’s image,” Mahmoud said. The visit is not related to Giulio Regeni’s killing, Mahmoud said.

The Saudi Egyptian Construction Company (SECON) signed an agreement with Hilton to manage SECON’s new four-star hotel in SECON Resort in New Damietta, Al Mal reported. The hotel has a total investment cost of EGP 120 mn and is part of the 17.7 feddan SECON Resort tourism and housing project, CEO Darwish Hassanein said. The company has a comprehensive plan to develop its land portfolio, including plots received from the Egyptian government, he added.

The Maxim Real Estate Investment company has launched the EGP 6.5 bn Bo Sands project in the North Coast and has begun the first phase of the EGP 3.5 bn Bo Islands project, Chairman Mohamed Karar told Al Borsa. Bo Sands is built over an area of 300 feddans and represents 17% of the larger, 1,800-feddan Bo Sidi Abdel Rahman project signed with the government at the Marsa Matrouh Investment Conference, he added.

The National Telecommunications Regulatory Authority (NTRA) will collect an annual 3% of the revenues Telecom Egypt receives from its landline telephone services and will apply the same percentage to the remaining three telecom companies once they receive their licenses, Al Borsa reported on Saturday. The move will see the NTRA collect a total of EGP 90 mn per year from Telecom Egypt, as well as EGP 60 mn from the three other firms during the first two years of the provision of the service. All proceeds are set to be directed toward the state’s public treasury.

EgyptAir has paid the contractual fees for eight new Boeing B737-800 planes it had contracted from BOC Aviation in December last year, Al Borsa reported. The first of the planes will arrive in December this year, said Civil Aviation Minister Sherif Fathy. This transaction makes the average fleet lifetime eight years, he added. The purchase is the first phase of EgyptAir’s fleet development plan that extends to 2025. The transaction value was not given.

Twenty new air-conditioned trains will become operational on the First Metro line by the end of next month at a total cost of EGP 2.3 bn, head of Egyptian National Railways Tarek Gamal ElDin told Amwal Al Ghad. The trains will be provided through the Hyundai-Rotem consortium, he added. The authority will soon issue a tender to buy another 13 trains for the Second Metro line, he said.

The Finance Ministry and the Egyptian Tax Authority announced that the 5% wealth surtax will be classified as a tax-deductible cost when calculating income tax, Al Borsa reported. Al Shorouk explains that the deduction is possible if the surtax is borne directly by the taxpayer and is for the current year.

The Social Fund for Development (SFD) will soon sign an EGP 100 mn loan agreement with Al Baraka Bank, head of Small Enterprise Finance Nevine Gamea told Al Mal, without giving a more specific timeframe. The loan will be directed toward small enterprises, she added. As we had previously reported, the SFD is launching the second phase of the Gam’eyeti project with funding from NBE and the Arab Investment Bank. The SFD is also in talks with the Arab Fund for Economic and Social Development for a separate USD 50 mn loan to finance small enterprises, she added.

Wadi Group will inject EGP 320 mn to transfer its poultry farms from alongside the Cairo-Alexandria road to Toshka, Al Borsa reported. The project will begin from mid-July, group president Toni Freiji said, and will take three years to be completed. Freiji said Wadi Group obtained the land from the government through a public tender.

The Consumer Protection Agency formed a new, independent committee to review advertisements and commercials, Chairman Atef Yacoub said, Al Mal reported on Saturday. The new entity will fall under the leadership of Hassan Mekawy, the former dean of the faculty of media at Cairo University, and will include other media professors and experts such as the CEO of the Media Chamber at the Federation of Egyptian Industries Amr Fathi. The move comes on the heels of the CPA’s decision to take several ads off the air, including those of Juhayna, Birell, Cottonil, and Dice, as they “violate community traditions and public tastes.”

Pointless read of the day: We’re living in a hot place that is in the middle of a cold war all because Iran and Saudi Arabia, according to former member of the House of Commons Foreign Affairs Committee Robert Harvey. Cheers for the insight, Bob.