Is the gov’t scrapping USD 23 bn in coal power plant deals?

Attention, fixed income traders: The Finance Ministry announced that next week’s T-bill and bond auctions will run this week, instead, because of the Eid Al-Adha vacation, Reuters reports. Todaythe central bank will hold the six-month, one-year, and ten-year auctions; it will hold the three-month, nine-month, and 5-year treasury auctions tomorrow.

Trading in Misr Fertilizers Production Company (MOPCO) shares is to begin on the EGX today under the symbol MFPC.CA. The EGX says this will be the first time in over 10 years that a public sector company’s shares are traded on the bourse.

A “high-level Russian delegation” is expected to arrive today to decide whether or not flights should be resumed to Egypt, according to Reuters, citing a statement from the Civil Aviation Ministry. The delegation will assess security and technical reforms taken by Egypt, the ministry added.

Apple’s fall launch event is tonight, and the iSheep among us will dutifully tune-in at 8pm CLT for the live stream. New iPhone? Cool. No new MacBook Pro? [Insert your choice of sad, brassed-off, or excreta-based emoji here.] The tech press is chasing its tail, going from “what we know” about the iPhone that will launch tonight to this morning’s “The new iPhone and Apple Watch: What we don’t know.” Brace yourselves for the backlash against Apple’s reported decision to ditch the headphones jack — it has already begun (here and here).

Oh, and Donald Trump and Hillary Clinton are now in a statistical dead heat heading into the last two months of the campaign. A new CNN poll released yesterday found Trump has overcome Clinton’s lead and now has a 2-point advantage among likely voters. That’s within the poll’s margin of error, hence the “statistical dead heat.”

Day three of the 6th EFG Hermes London MENA and Frontier Conference gets underway this morning at Emirates Arsenal Stadium in London. Tomorrow’s program will include a keynote address by Finance Minister Amr El Garhy.

Banks and the stock market will be off next week until Tuesday for the Eid Al-Adha vacation, the CBE and the EGX said (the latter in an emailed statement). They’ll be back in business on Wednesday, 14 September. We’re taking a longer time off, with Enterprise on vacation for the whole of next week. We’ll be back to our usual publication schedule on Sunday, 18 September.

The government is reportedly considering cancelling USD 23 bn worth of MoUs to build coal-fired power plants near the El Hamrawein Port on the Red Sea coast, sources told Al Mal. The Electricity Ministry is reportedly looking instead to put the projects out to tender through a competitive bidding process as it aims to lower costs. International investors have already been contacted and sources tell Al Mal that four offers have so far been received. The sources said talks, which are being led by “higher authorities,” are ongoing now with companies including Shanghai Electric, General Electric, Mitsubishi, and Hitachi. The projects are to be developed over three stages, each adding 2,000 MW in capacity through BOOT and EPC-plus-finance mechanisms. Al Mal says the original MoUs were signed with Dongfang Electric Corporation, Shanghai Electric, Orascom Construction and IPIC.

What’s happening here? Some of El Hamrawein’s projects were already contracted and had secured funding. Dongfang says on its website it was contracted to complete the “ultra-supercritical thermal power project (phase I) 3×660MW” on 21 January and had already secured a “capital raising and loaning framework agreement” with the Industrial and Commercial Bank of China. Orascom Construction had announced in March that its consortium with Abu Dhabi-based International Petroleum Investment Company (IPIC) signed a development agreement as an addition to an MoU for a 3,000 MW coal-fired power plant. The project carried an expected investment cost of USD 3 bn, funded through a mixture of debt and sponsor equity, OC said. The future of both projects is now unclear.

Is this a pattern? If Al Mal’s report is proven true, this will be the second time in under two months that the government has moved to unilaterally revise terms on an already-signed agreement for a major infrastructure project. Sadly, we rank 131 out of 189 countries on the Ease of Doing Business index for a reason.

The House of Representatives approved the appointment of Mohamed Ali Elsheikh as the new Supply Minister yesterday, Reuters reported. Elsheikh is a retired major general in the armed forces who the Associated Press reports was in charge of the military’s supply command, which is responsible for the distribution of food, water and fuel (among other things) to all units. After retirement about a year and a half ago, Elsheikh was named head of the armed forces’ public service division, whose discount food stores have been among the tools the state has used to cushion the poor and low-wage earners from the impact of inflation.

Elsheikh is expected to be sworn in today after President Abdel Fattah El Sisi returns from the G20 Hangzhou summit. As per constitutional requirements, Elsheikh’s appointment was approved by the House of Representatives after the president and prime minister agreed to his nomination. MP Magdy Malak, who chaired the committee which investigated the wheat fraud scandal that toppled former Supply Khaled Hanafy, praised the appointment of a member of the armed forces and urged Elsheikh to “restructure and reform” the ministry and the wheat subsidies system in call-in to “Mubasher min Al Asima” on On TV (runtime: 3:35).

New governors today, too? Al Masry Al Youm says El Sisi will also swear in anywhere between five and ten new governors at the same time as Elsheikh is sworn in. Among the governorates the paper claims are getting new chiefs: Cairo, Alexandria, Beni Suef, and Qalyubia. A wider cabinet reshuffle is in the works for October, sources tell Al Masry Al Youm. The shakeup will take place once the IMF funding agreement is approved, the sources say, hinting at a date sometime in October.

Egypt sending a delegation to the IMF after Eid? The Central Bank of Egypt and the Finance Ministry are reportedly sending a delegation to meet with the IMF in DC after the Eid break to discuss progress in securing USD 5-6 bn in foreign funding, sources tell Al Masry Al Youm. The funding is a precondition for IMF board approval of the three-year, USD 12 bn extended fund facility. It’s still uncertain whether CBE Governor Tarek Amer and Finance Minister Amr El Garhy will join the delegation, but the source did confirm that Amer and El Garhy had gone to DC at the end of August following the USD 1 bn UAE deposit. The Investment Ministry is planning a roadshow starting in October to market the upcoming USD 3-5 bn eurobond sale and will focus its effort on New York, London, and Dubai, said a ministry source. This is the second hint this week that the eurobond offering will be in October.

The House of Representatives remained consistent to the end, postponing the final vote on the Civil Service Act until after it reconvenes from recess in October after failing to reach a quorum for the vote for the second time in a week, Al Borsa reports. Among the excuses: many MPs have gone on Hajj. Foot-dragging on the bill could have a far-reaching impact. The government has a full year to implement the law once it passes, arrangements have to be made to pay bureaucrats the 7% annual raise (which is effective retroactively), the executive regulations still need to be passed, and hiring temporary employees has been suspended since June pending passage of the law, the head of the Central Authority For Organization & Administration Mohamed Gamil tells Al Shorouk.

The House did get around to approving yesterday a EUR 68 mn grant from the French Development Agency to finance connecting 450K homes to the natural gas grid, Al Masry Al Youm reports. When Abdel Aal was not striking references to Tiran and Sanafir being Egyptian from the session’s record, the House spent the day basking in its accomplishments. And no, they haven’t tendered the customary report on the latter — they ran out of time. Happy Eid, y’all.

The terms for the second phase of the FiT projects are out: The Electricity Ministry has approved international arbitration in contracts for the second phase of the feed-in tariff (FiT) projects, Al Mal reported. The caveat is that international arbitration will be invoked only if one party should wish to appeal the results of arbitration at the Cairo Regional Center for International Commercial Arbitration, which must first attempt to settle any disputes. The announcement was made at a press conference yesterday; you can watch the full press conference here (in Arabic; runtime: 23:13)

The Ministry has also increased the percentage of domestic content that must be used in any FiT project to 40% for wind farms and to 30% for solar power projects. Energy purchase agreements for wind farms will run for 20 years, while agreements for solar projects will be on 25-years terms, Al Mal reported.

…The cabinet-approved rates for solar power projects under FiT: USD 0.084 per kWh for 20-50 MW projects and USD 0.078 per kWh for 0.5-20 MW projects. Rooftop-installed solar arrays will have a rate of EGP 1.02 per kWh for over 500 kW generated, and EGP 1.085 for under 500 kWh generated, Al Mal reported. The ministry will pay 30% of the 25-year contract in USD at the exchange rate set on the day of signing the agreement, while 70% will paid at the rate set on payment day, according to Al Borsa.

The ministry also approved the purchase terms for wind projects, and Ahram Gate has the full list of rates for wind farms under the second phase of FiT projects.

Back to phase one projects: Electricity Minister Mohamed Shaker said investors have until 26 October to request they be allowed to quit phase one, Shaker told Al Mal. The investors will be able to recuperate their entire capital, including EGP 220k in fees to the NREA and the Egyptian Electricity Transmission Company. Any party that qualified for phase one of the FiT has spent c. EGP 350 mn to date, he noted. Testing Shaker’s pledge will be Cairo Solar, which Al Mal says is withdrawing: Chairman Hisham Tawfik is “fed up” and is asking the ministry approved international arbitration for the second phase projects but not the first. He also says the projects’ returns are not worth the risk.

Emirates NBD and Morocco’s Attijariwafa Bank have submitted bids to acquire Barclays Bank’s Egyptian unit, sources told Reuters. The sources did not mention when the bids were made or their valuation of the bank; neither bank commented on the report. Emirates NBD had begun due diligence back in June and was said to have tapped New York-based Perella Weinberg Partners to advise. Attijariwafa had been rumored to be in the race to acquire the banking unit for months and had already hired UBS as its adviser in the transaction.

“[The EU] will continue to put pressure on Egypt to end the Industry and Trade Ministry-imposed exporters registry, in keeping with the principles of free trade,” said outgoing head of the EU delegation to Egypt James Moran who renewed his call on Tuesday for the policy to be scrapped, Al Borsa reports. The newspaper claims that Moran had confirmed the World Trade Organization looked into the registry back in June, something the Trade and Industry Ministry denied at the time. The registry, which was imposed in January, places new quality control measures for companies looking to export to Egypt. Moran, who said his replacement will be appointed in the coming 3-4 months, claimed he is optimistic about Egypt’s economic reform program.

The central bank kept the exchange rate unchanged at EGP 8.78 per USD 1 at yesterday’s FX auction, where it sold USD 118.1 mn to banks. Reuters says greenback were selling on the parallel market at a rate of EGP 12.75-12.77 per USD 1.00.

CIB tightens debit card withdrawal rules for travelers outside Egypt, Crédit Agricole cuts-off debit card use abroad: CIB customers will no longer be able to make foreign currency withdrawals from their EGP accounts via debit card while abroad, the bank said yesterday in an update to its summary of limits on international use of its credit and debit card products. Purchase and cash advance limits for credit cards as well as for debit cards linked to USD accounts remain unchanged. You can check the latest update from CIB here and compare it to last month’s here. Crédit Agricole Egypt, meanwhile, stopped the use of debit cards outside of Egypt as of 1 September and stopped the use of its pre-paid cards abroad and for internet purchases. CAE has also banned the use of both its debit and credit cards for any online purchases in foreign currency, according to another Al Mal article. The bank also informed its customers that a number of unnamed institutions in Egypt will no longer accept foreign currency payments using Crédit Agricole cards. The bank will also halt the use of all its cards in China, Indonesia, Nepal, Thailand and the Dominican Republic.

AUC, Cairo U slump in global rankings: The American University in Cairo and Cairo University both slipped in university rankings according to the QS World University rankings for 2016/2017, Ahram Online reported. AUC dropped 20 places to 365 while Cairo University dropped 50 places to the 551-600 bracket. All Egyptian universities, with the exception of AUC, dropped in the rankings for academic reputation. “Only the American University in Cairo is inside the world’s top 800 for citations per faculty [out of all universities in Egypt]. If Egypt wants to compete more effectively in the long term, it will need to systematically think about its research funding, infrastructure and strategy,” Ben Sowter, head of research at QS, told Mada Masr. MIT, Stanford, Harvard, Cambridge and Caltech are the top five globally, according to the ranking.

Egyptian policymakers, take note: Saudi is considering cutting USD 20 bn in projects: Saudi Arabia is considering cancelling more than USD 20 bn in projects as part of efforts to reduce its budget deficit, Bloomberg (autoplay video) reported. Bloomberg’s editor-in-chief John Micklethwait seems positive on the cuts, pointing to the genuine amount of waste in Saudi state spending and that the cut projects will have little negative impact. John Sfakianakis, director of economic research at the Gulf Research Center, is more cautious, saying, “Much lower government spending will translate into lower private sector growth… It’s a double edged sword as the government has to rationalize spending because of the drop in oil revenues.”

G20 Summit offers little in the way of substance: Following the conclusion of the G20 Summit in Hangzhou, China, and the release of the final communique loaded with jargon, many are left wondering what, if any, detailed actions were agreed upon by world leaders, aside from the United States and China ratifying the Paris climate change agreement. Reuters, the Guardian, and several other media outlets took note of the lack of any “concrete steps” to achieve the summit’s aims to promote flagging global trade or its five stated themes: “policy coordination; innovative economic growth; financial and economic governance; trade and investment; and development.”

Phone app to counter ‘forced disappearance’: The Egyptian Commission for Rights and Freedoms (ECRF) has created a phone app that combats forced disappearances, Ruth Michaelson writes for The Guardian. The app “allows Android phone users to key in a code when they are being detained, which sends three text messages to contacts and an email containing the location of their arrest to the ECRF.” Sputnik also covered news of the app.

Two worlds [really far apart]: The chaos of life in Cairo offers “the gift of time,” Swiss filmmaker Sandra Gysi says, talking to Swissinfo’s Susan Misicka. “Gysi is working on a documentary about the perception of time and how it differs between Western and Southern societies. She’s been filming at the main train stations in Zurich and Cairo.” Gysi also talks to Misicka about her previous projects, including a film about “the last man who can recite from memory the Sira” as well as initiatives in Sudan.

Al Ahram columnist Farouk Goweda believes that the way sick children are paraded in television ads for charity organizations is humiliating and unethical. We agree.Goweda also wants to see more transparency on how charity organizations and NGOs use their funds.

Former MP and Al Masry Al Youm columnist Amr El Shobaki says the reason Egypt was successful at the 2004 Athens Olympics was an investment into human capital. The current system is more concerned with mega projects and “buildings,” not developing athletes. El Shobaki commends former Youth and Sports Minister Ali El Din Helal for his effort ahead of the 2004 Olympics.

El Watan’s Mahmoud Khalil criticizes Health Minister Ahmed Rady for accusing women protesting infant formula shortages of “having an agenda” and “trying to claim milk illegitimately”. Yes, Mr. Minister, feeding one’s offspring can be considered an agenda.

Wait, where’s all the gold leaf and flowers? Saudi Deputy Crown Prince Mohammed bin Salman meets with Japan’s Emperor Akihito in Tokyo on Thursday, 1 September, via the Tweeter.

Readings on Ethiopia: It’s difficult to find any single worthwhile reading on Ethiopia that delivers a good overview of its political structure, background on the Grand Ethiopian Renaissance Dam, and an explanation of the current unrest. That’s why we’ve decided to present three readings, with a separate article each focusing on these subjects. Three readings? We can only imagine your reaction.

For background on Ethiopia’s modern history and political structure, told through the story of an Ethiopian professor who has oddly enough decided to take up arms with Eritrean rebels against the Ethiopian government, see the excellent NYT profile on former Bucknell University professor Berhanu Nega, which we noted in last Friday’s Weekend Edition. “In the mid-1980s, the Derg dictator, Mengistu Haile Mariam, blocked food supplies to the region, creating a devastating famine in which one mn people died. Photographs of starving children, disseminated by the news media, catalyzed an international relief effort, Live Aid, and inspired the pop hit ‘We Are the World.’” As we noted almost a year ago, most of the USD 140 mn raised by Live Aid instead went to the Ethiopian military to buy weapons for their civil war. (Read Once a Bucknell professor, now the commander of an Ethiopian rebel army)

For background on the GERD, including its sources of funding and eventual objectives, see William Davison’s May 2015 piece for Bloomberg. Contrary to popular wisdom in Egypt, the GERD is not funded by Israel, but rather through government bonds and a lottery. As for what Ethiopia plans to do with all that electricity: “Ethiopia wants to export 1,200 megawatts to Sudan and 2,000 megawatts to Egypt.” (Read Ethiopians rally Olympic-style, chip in on bonds for dam)

As for the roots of the current unrest, see Jeffrey Gettleman’s piece for the New York Times last month. “Many… feel Ethiopia is unfairly dominated by members of the Tigrayan ethnic group, which makes up about 6 percent of the population and dominates the military, the intelligence services, commerce and politics.”(Read ‘A generation is protesting’ in Ethiopia, long a US ally)

International Cooperation Minister Sahar Nasr discussed the need to reevaluate how US aid and assistance can feed into Egypt’s economic reform program at a meeting with the US State Department’s Deputy Assistant Secretary for Assistance Coordination Richard Albright, Al Ahram reports. The USAID’s deputy assistant administrator for the Middle East Maria Longi and its mission head to Egypt, Sherry Carlin, also attended the meeting.

Egypt has signed the Treaty of Amity and Cooperation (TAC) in Southeast Asia, Xinhuanet reported. The TAC was formed in 1976 by ASEAN member countries to promote “regional and international peace and stability” between treaty signatories.

Egypt will host an international conference to coordinate humanitarian aid for Yemen sometime next March, Yemen’s Local Administration Minister Abdel Raqeeb Fateh told Reuters.

Foreign investments in the oil and gas sector reached USD 6.6 bn in FY2015-16, down from USD 7.5 bn in FY 2014-15, Oil Minister Tarek El Molla told Reuters’ Arabic service. El Molla says the investments in exploration, production, and development during the year came despite the internal energy price slump, which drove IOCs to reduce their expenditures globally. Egypt is targeting USD 12.1 bn in investments from IOCs in FY2016-17, the newswire notes.

Kuwait Energy announced it began to produce from the Al­ Jahra SE­1X exploration well in the Abu Sennan concession in Egypt’s Western Desert, KUNA reported. The field was discovered in late July and Kuwait Energy began operations to produce from it a day later. “The well is producing at a 2" inch choke size and production has stabilized to a daily average rate of 410 bopd,” Sara Akbar, CEO of Kuwait Energy, told KUNA. Kuwait Energy holds a 50% revenue interest in the concession, with Dover Investments controlling 28%, and Rockhopper Exploration controlling 22%.

Societe Egyptienne D’entreprises (Moukhtar Ibrahim) are set to complete four new bridges as part the first phase of the national road network at total cost of EGP 500 mn by next year, Chairman Fayek El Banna told Amwal Al Ghad. The bridges are in Zagazig, Mansoura, and the 30 June Axis in Cairo, he added, and are currently over 65% complete. The company was set to complete the projects by December, but land dispute issues have delayed the projects’ implementation.

Agricultural exporters are looking to expand in Asian markets, including China, India, Malaysia, and Japan, Daily News Egypt reported. China and Malaysia are the two most promising markets in the far East region, Agriculture Export Council member Mohamed Bakr said, but there are obstacles: The Egyptian Commercial Service isn’t active in the region, maritime shipping routes are rare, and air freight is expensive. He’s calling on the Trade and Industry Ministry to provide additional export subsidies for companies targeting Asia.

The board of ASCOM Carbonate and Chemicals Manufacturing (ACCM) has approved adding a third calcium carbonate production line, costing EGP 80 mn, according to a regulatory filing statement. The investment, which is still awaiting approvals from relevant authorities, is expected to increase earnings by USD 2 mn annually.

Misr Beni Suef Cement has filed a lawsuit against the IDA calling for an expansion license it should have been awarded back in 2007, Al Borsa reported. The company’s winning bid in 2007 was EGP 134.5 mn, but the IDA is now requiring the company to secure funding worth EGP 251 mn under the new conditions, sources at the company said. A court hearing has been scheduled for 25 October.

Al Mottahedoon Pharma (United Pharma) will reopen its IV solutions factory “within days,” something the company’s chairman Abdullah Mahfooz is stating will help end shortages in the market which have driven a sharp rise in prices to EGP 200 in the black market from a standard price of EGP 80, Al Borsa reports.

Amer Group signed a long-term partnership agreement with hotel management group AccorHotels to manage Porto Sokhna, Porto El Gabal, and the Cancun Ain El Sokhna resort, Al Mal reported.

Orascom tech arm A15 has signed a partnership agreement with PayMob, an electronic payment services provider, Daily News Egypt reported. Euromonitor International studies suggest e-commerce is expected to grow more than threefold in Egypt this year, A15 says. Meanwhile, the CBE says there are 40% more credit cards, and 36% more debit cards, in use since 2010.

The Egyptian Financial Supervisory Authority (EFSA) is considering easing corporate governance regulations for smaller brokerage firms, who are chafing under tough market conditions, said EFSA chief Sherif Samy. He tells Al Borsa that these changes under consideration include allowing smaller brokerages to reduce the number of board committees, including cutting the risk committee and the payroll committees, in addition to reducing the frequency of the committee meetings. EFSA is also mulling allowing brokerages to merge the functions of auditor and anti-money laundering unit. In other EFSA news, the regulator issued its guidelines for selling insurance policies online, setting IT and identity security standards, the newspaper reports.

Egypt needs to present a program to attract foreign investments alongside its IMF funding agreement, Hazem Badran, CI Capital’s Co-CEO, told Al Mal. Investors require legislative clarity especially on taxation issues, free movement of capital, and the “real” exchange rate. Badran says the main obstacles to attracting new investments are shortages of energy supplies to factories and the shortage of FX. Badran is also conflicted about the state’s involvement in large infrastructure projects, saying that while they add capacity to the Egyptian economy and help it function more smoothly, they add a burden on state finances and add to the shortage of foreign funding. He also laments the delay in issuing an investment law, but says the VAT application is a positive.

A committee from the UK has inspected passenger safety and luggage and cargo transportation at Cairo International Airport as part of its tour to check airports with flights headed for London, Al Shorouk reported.

An accord signed between Egyptian Defense Minister Sedki Sobhi and his Russian counterpart Sergei Shoigu to establish a training program for Egyptian pilots gives reason to believe Egypt may be buying Russian-made Ka-52K carrier-based attack helicopters, Sputnik reported. The helicopters would be a natural fit with the Mistral-class helicopter carriers Egypt has acquired from France; the vessels were originally configured for Russian use.

Six young conscripts were injured in a gunfight with militants in the North Sinai town of Sheikh Zuweid on Tuesday evening, Al Mal reported, citing fierce clashes. The injured were taken to the military hospital in Arish. Separately, five policemen — two officers, two non-commissioned officers and one conscript — were also injured, in the city of Aburdees in South Sinai, Ahram Online reported. Militant activity has largely been confined to North Sinai thus far.

The government is looking to hire private companies to manage, maintain and secure the area around the Giza Pyramids, according to Ahram Online. Cabinet announced that a company has already been hired, signing a EGP 5 mn per year contract to maintain the area’s cleanliness. Another company has been hired for security, and a third will be chosen to manage the site. The decisions came following a meeting between Prime Minister Sherif Ismail and officials from the housing, tourism and antiquities ministries. The government will also assign additional tourism police to the area and rebuild a nearby police station.