The Russians are coming? Flights could resume in October.

*** Enterprise is two years old this morning. We’re not going to mark the occasion with cake, but we may just celebrate by sleeping-in an extra few hours next week when we mark back-to-back long weekends for Islamic New Year and Armed Force Day. And we’re very happy to say that we’ll have an announcement after the break about the first of the new products we’ve been mumbling about the past few weeks. Thank you, all for being readers — the honor of writing you each day is what keeps us working overnight (or getting up at ungodly hours) to produce Enterprise each morning.

“Significant progress” has been reached on the resumption of Russian flights to Egypt, according to a statement [Russian] from the Russian transport ministry on Friday. Sources speaking to Al Masry Al Youm, Egypt and Russia have agreed to resume flights “gradually” starting from October. The return would reportedly begin with a Moscow-Cairo route through Cairo International Airport’s terminal 2, which is set to begin operations on Wednesday. Flights to Sharm El Sheikh and Hurghada would follow. Sources add that Russian Transport Minister Maxim Sokolov will be in Cairo today, where he will be received by President Abdel Fattah El Sisi to finalise the agreement.

Watch the first US Presidential Debate live tonight at around 2 am CLT (that’s 2am Tuesday morning, 9 pm Eastern Monday evening on the east coast of the United States) at debates.twitter.com — and you won’t need to log in to be able to watch. We’ll see if we can’t have the highlights for you in tomorrow’s edition, but given the debate will overlap the last four hours of our production schedule…

The Finance Ministry will meet on Tuesday with advisors BNP Paribas, JPMorgan, Citi and Natixis to finalize the strategy for its USD 3 bn eurobond issuance, government sources tell Al Borsa. Finance Minister Amr El Garhy had previously told the newspaper that they had not yet settled on a date for the sale, but that it should take place in October.

Administrative Court to issue ruling on appeal of its decision to void Tiran and Sanafir agreement on Thursday: The country’s High Administrative Court will reportedly issue a ruling on the government’s appeal of the court’s initial decision in June that voided a border demarcation agreement with Saudi Arabia, Al Borsa reports. Last we heard, the government had filed an appeal with the Supreme Constitutional Court, the highest court in the land, although the case appears to remain with the Administrative Court’s first circuit of appeals, which was recently reconstituted, according to El Watan. The agreement handed the Red Sea islands of Tiran and Sanafir to Saudi Arabia.

House back in session next week: President Abdel Fattah El Sisi issued a decree recalling the House of Representatives into session on Tuesday, 4 October at noon.

The annual meetings of the IMF and World Bank Group will be held 7-9 October.

GLOBAL LENDERS BLESS FIT PHASE TWO: International finance institutions including the International Finance Corporation, the European Bank for Reconstruction and Development and the European Investment Bank reportedly signed-off on the terms of phase two of the feed-in tariff (FiT) program, at a meeting last Tuesday with the head of the Egyptian Electricity Holding Company Gaber Dessouky and New and Renewable Energy Authority chief Mohamed El Sobky. Sources tell Al Borsa that the lenders are awaiting the official launch of phase two on 26 October to begin talks with project owners

Lenders are still looking for assurances from the government that it will not change the terms of the program, with some threatening to pull out if the government doesn’t meet the new terms. Officials reportedly promised there would be no back-tracking, particularly on arbitration, which doomed phase one. Lenders also want to know when the FiT contracts will be finalized, how the government came up with the new tariff rates, and what plans the government has to make FX available to investors. A meeting was scheduled in two weeks’ time to address these concerns. FiT project owners will begin by drawing-up new feasibility studies to account for the reduction in the rates, which dropped to USD 0.084 per kWh from USD 0.14 per kWh in phase one solar projects. Companies speaking to Al Borsa continue bemoan the new rate, stating that profit margins will be eroded further when the devaluation takes place.

TE WANTS EXTRA 4G SPECTRUM: Telecom Egypt (TE) has submitted a bid formally to acquire the additional 4G spectra available after Vodafone Egypt, Orange Egypt and Etisalat Misr refused to bid for them, Al Mal reported. TE had acquired 15 frequency bands and there were 25 more available to other bidders. Chairman Maged Othman also added that TE’s stake in Vodafone Egypt does not create a conflict of interest as the company did not bid for a 4G licence.

Kuwait’s Zain is still interested in entering the Egyptian market, despite the “negative signs” from Egyptian MNOs having not bid for 4G licences, sources told Al Arabiya. Representatives from Zain will travel to Egypt “soon,” Al Arabiya adds, without providing further details.

The board of the National Telecommunications Regulatory Authority will meet early next month to decide whether to grant TE additional frequencies or sell them off to international companies, a senior government source tells Al Borsa.

THERE’S NO BUBBLE in the real estate sector in Egypt, SODIC Managing Director Magued Sherif, Managing Director told Al Borsa in an interview. He says developers have even been trying to swallow the rising costs of projects to keep market prices stable, emphasizing that Egypt’s real estate market depends entirely on “cash, not mortgage financing.” Sherif adds that SODIC is in the final stages of negotiations to obtain a plot of land on the Red Sea and is considering additional land acquisitions on the North Coast. A potential residential project near the company’s headquarters is also in the works, with Sherif adding that the firm will launch several projects in 4Q2016. SODIC is also interested in bidding to develop a 410 feddan plot in Sheikh Zayed via a public-private partnership once the New Urban Communities Authority tenders the land.

FUEL SUBSIDY spending dropped by 28.7% y-o-y in FY2015-16 to EGP 51 bn, “a greater decline than previously announced,” Oil Minister Tarek El Molla said. Earlier figures, according to Reuters, estimated spending on fuel subsidies to be closer to EGP 55 bn during the fiscal year. El Molla said Egypt’s government is planning to reduce fuel subsidy spending further still to EGP 35.04 bn in FY2016-17. The story gives no explanation for the drop, leaving us to presume that the majority of it came due to lower oil prices, particularly with oil in the USD 20s per barrel this past January and in the low USD 30s in February.

‘SUPER RATE HIKE’ in the cards? Or can we look for rates to fall after devaluation to get the economy back to work? Bloomberg’s Ahmed Feteha surveys Pharos’ Radwa El Swaify, EFG Hermes’ Mohamed Abu Basha and Beltone Financial’s Hany Genena on what to expect next on interest rates and devaluation after the Central Bank of Egypt’s surprise decision on Thursday to leave interest rates on hold.

WHAT’S THE DIFFERENCE between the value-added tax (VAT) and the old sales tax system? Beyond scope and rates, not that much as the mechanisms for applying them are almost the same, argues tax advisor Abdelhamid Attalla in a piece for Sharkawy & Sarhan’s newsletter. The most substantial change is the inclusion of services into the system, which is sure to raise prices and put a dent in margins, said Atalla. Producers and merchants, who were only able to deduct taxes paid on the goods they used, can now deduct the taxes paid on services they procured as well. Reverse charges will also be applied to imports of services, so importers of services must now pay VAT. The expanded scope of the tax also means that we should expect prices to go up overall with the increased baseline rate. Atalla notes, as we did in a “PSA” last week, that the law went into force on 8 September, so any invoice issued or contract entered into as of that date has to reflect the VAT.

EGYPTIAN FOOD IMPORTS are fit for human consumption, said Kuwaiti Health Ministry spokesman Ahmed El Shatty, speaking with Kuwait’s Al Seyassah newspaper. The remarks have been picked up here at home by Ahram Gate. El Shatty reiterated the Egyptian Agricultural Ministry’s statement that the US Food and Drug Administration had not imposed new bans on Egyptian food imports, but rather had noted orders issued in 2009 and 2010 against three Egyptian cheese producers (see FDA website here). Kuwaiti authorities, he added, have found no link between imports of Egyptian fruit and vegetables and food-borne diseases in Kuwait. The announcement comes after Kuwait conducted tests on samples of Egyptian products currently in the market. Al Seyassah notes that the head of the Kuwaiti food authority was not available for confirmation.

THE EUROPEAN INVESTMENT BANK’s board has reportedly approved a EUR 560 mn loan to Egypt on preferential terms, unnamed EIB sources told Ahram Gate. The EIB will direct around EUR 500 mn of the loan to the Central Bank of Egypt to support low-interest-rate lending to SMEs by commercial banks. The balance of the loan will be earmarked to support the overhaul of the Cairo Metro system. The 20-year loan will carry a 1% interest rate, with the agreement set to be signed in October, the sources added.

THE USUAL SUSPECTS are in the running to advise on NBE’s USD 1 bn bond issuance: Citi, JP Morgan, HSBC, Goldman Sachs, Credit Suisse, Deutsche Bank, and BNP Paribas are among the 17 candidates the National Bank of Egypt (NBE) is debating hiring as advisors on its USD 500 mn to USD 1 bn international bond issuance, said NBE board member Hussein Refaie. The bank will select the advisors within the coming few weeks, Al Borsa reports. As we noted earlier this month, the bank’s Chairman Hisham Okasha had said that bond issuance would take place sometime in 1Q17. NBE had originally planned to run the sale last year, but market conditions were not favorable, said Refaie. In related news, Capital Intelligence has reportedly affirmed NBE’s long-term foreign currency rating at B- / B with a ‘stable’ outlook, noting that NBE’s “capacity for timely fulfilment of financial obligations ‘is very vulnerable to adverse changes in internal or external circumstances.’”

CHEESE MAKER Obour Land filed for listing with the EGX yesterday. Obour Land asked to list 200 mn shares at a par value of EGP 1 per share. The EGX is now reviewing the documents filed by the company. CI Capital is advising.

BELTONE FINANCIAL will invest USD 24 mn in Auerbach Grayson, Al Borsa reported. The company said it has completed its fair value assessment for the transaction. Beltone will inject the money through a capital increase that would leave it in control of up to a 60% stake in Auerbach Grayson, possibly through a subsidiary. Beltone had previously agreed to acquire 51% of the company.

JOINT WB, AFDB DELEGATION in Cairo for talks on second tranche delivery: A joint delegation of the World Bank and the African Development Bank discussed the second tranches of their respective loans to Egypt totalling USD 1.5 bn at a meeting on Sunday with International Cooperation Minister Sahar Nasr, Trade and Industry Minister Tarek Kabil, Oil Minister Tarek El Molla, and senior officials from the ministries of finance and electricity. The officials talked of how their respective ministries plans to implement the government’s reform agenda. The Cairo meetings, part of the ongoing talks to secure a USD 1 bn tranche and a USD 500 mn tranche from the WB and AfDB, respectively, are expected to continue through to Thursday, according to a statement from the MOIC. This comes as the Planning Ministry formed a committee to assess and monitor the implementation of the Upper Egypt Development program which the government hopes to secure a USD 500 mn loan from the World Bank to fund, according to the Official Gazette.

CRIMINALIZING ILLEGAL IMMIGRATION has been propelled to the top of the House of Representative’s agenda since the tragic capsizing a boat carrying migrants last week, Legal Affairs Minister Magdy El Agaty said, according to Al Shorouk. The death toll in the incident has now risen to 169, according to a Health Ministry statement picked up by local media. Migrants will not be prosecuted under a proposed act that has been with the House for about three months ow, El Agaty made clear, but traffickers (including crew members on migrant ships) will be. The House will reconvene on 4 October. Discussions on strategies to fight the trade will also dominate the Ismail cabinet’s weekly meeting on Wednesday, according to Al Masry Al Youm.

CHALLENGE TO MASS SURVEILLANCE to get the boot? The State Commissioners Authority recommended on Sunday that an administrative court dismiss a lawsuit challenging the government’s decision to impose mass surveillance of social media, Ahram Online reported. The case had been filed by human rights groups. The court authority reportedly admitted in its advisory ruling that while the system does undermine the rights guaranteed in Egypt’s constitution, “such rights and freedoms are contingent on not exceeding legal limits or undermining national security or public order.”

MOVES- Abu Dhabi Islamic Bank (ADIB) Egypt appointed Zoheir Idriss as COO and Soha El Turky as CFO, according to a regulatory filing. As with all high level positions in the banking sector, ADIB says the appointments are contingent on CBE approval.

MOVES- Amr Kamel (Linkedin) was appointed the African Export-Import Bank (Afreximbank)’s Executive Vice-President for Business Development and Corporate Banking, according to a company statement. Kamel was previously the bank’s Director of Banking Operations.

OTHER STORIES MAKING NEWS this morning of which you may want to be aware:

• Jordanian writer Nahed Hattar was gunned down yesterday outside an Amman courtroom, where he was on trial for insulting Islam and inciting sectarian strife sharing on Facebook a cartoon lampooning Daesh to which more state-acceptable fundamentalists objected.
• “Jordan is pressing Israel for trade and financial concessions before it signs off on a groundbreaking but politically sensitive multibn-USD agreement to buy gas from the offshore Leviathan field,” the Financial Times reports, citing Jordan’s deputy PM for economic affairs.
• Goldman Sachs is axing 30% of its investment bankers in Asia (ex-Japan), Reuters reports, citing sources “familiar with the matter.” Bloomberg independently puts the number at 25%.
• Between all that’s happening in Egypt and the US presidential election, it’s sometimes hard to remember that the UK has voted to leave the European Union — and the City is just waking up to the notion that it might be a “hard exit,” the Financial Times reports.
• Golf legend Arnold Palmer died overnight at age 87, Golf Digest reports, noting that, “No one did more to popularize the sport than Palmer. His dashing presence singlehandedly took golf out of the country clubs and into the mainstream. Quite simply, he made golf cool.” The New York Times’ full obituary is here.

Populism and isolationism are sweeping developed markets, prompting two BlackRock fund managers writing for the Financial Times to wonder how long it is before “neo-populism” becomes a “thing” in emerging markets. The piece stutters when it brings up possible examples in Turkey, Hungary, Poland, Slovakia and Russia — “advanced” EM — before abruptly making the argument that the wave will be “very difficult for it to become widespread because of one major factor: China,” which they say may “become a major force for cooperation and multilateralism at a time of divisiveness and isolationism in the west.” As written, the piece has no legs, but the first half raises a question worth mulling over coffee this morning.

IT’S A QUIET MORNING for Egypt in the International press. Coverage is tilted toward news that the death toll in the migrant shipwreck is now approaching 170, while some outlets have picked up the Associated Press’ report announcing President Abdel Fattah El Sisi’s plan to tighten border security to clamp down on migrant flows. The piece notes that European Union border agency Frontex says 12k migrants have arrived using Egypt as their departure point over the past six months, up from 6k during the same period last year.

The Ismail government’s decision to ban rice exports to control prices and preserve supply for the domestic market has left Egyptian farmers in a tough situation, writes Marwa Yahya for Xinhua. Many have planted rice in anticipation of the rising prices, which went up to EGP 11 per kilo from EGP 3.5, but the export ban means “it will be better for me to buy rice than to plant it,” farmer Mahmoud Abdel Fattah said. The government should strike a balance between controlling prices and avoiding losses for farmers, said head of the Rice Division at the Federation of Egyptian Industries Ragab Shihata.

Al Ahram columnist Makram Mohamed Ahmed urges the Prime Minister to call for hosting a scientific conference to revise Egypt’s agricultural policy. The recent ergot flap brings into question the efficiency of our policy and its ability to grow, he says, in light of impending water shortages and that Egypt imports 60% of its food.

Harvard economist study on paying children to do better in school: How do you get nightmare children to study and perform well in school? Pay them. Yes, pay them — isn’t school supposed to prepare children for the real world? In the real world, would you work or expect someone to work for no paycheck, but rather the promise of some incredibly abstract goal years and years down the road? Harvard economist Roland Fryer Jr. set out to test this idea in a study (pdf) of 18,000 students in Chicago, Dallas, and New York spanning 400 schools over two school years to analyze the effects of paying children a salary to do well at school, in what was “one of the more rigorous studies ever on anything in education policy.” (Read Should kids be bribed to do well in school?)

Djara cave, Western Desert. The Djara dripstone cave, rediscovered by German explorer Gerhard Rohlfs in 1875 after knowledge of its existence had been lost for millennia, features engraved cave art that spans from c. 8,500 to 4,500 calibrated BCE. Read more on the Djara cave and the art discovered there in Djara — Cave Art in Egypt’s Western Desert, (pdf). (Photo credit: Sowar Online)

Back to life, back to reality: Almost everyone is back from vacation. The goblins are back in school. The following video encapsulates what your morning commute has once again become. Yalla enjoy. (Watch, running time: 7 minutes)

Shoukry interview touches on Israel, Turkey, Russian import ban: Foreign Minister Sameh Shoukry has said that Egypt’s relationship with Israel is “very solid and stable” and that Egypt supports Russia’s efforts to host talks between the leaders of Israel and Palestine, in an interview with Al Monitor. Shoukry also said in the interview that there are currently “no substantial efforts” on the part of the Turkish government to boost ties with Egypt, despite the Turkish government’s claims that it is open to the restoration of ties. As for Russia’s recent ban on Egyptian exports, Shoukry blames the matter on the technical nature of the issue, diplomatically ruling out any political drivers.

President Abdel Fattah El Sisi met with French Defence Minister Jean-Yves Le Drian in Cairo, Ahram Gate reported.

Jordan, Egypt, Saudi land transport company: Jordan’s transport ministry is preparing a study to establish a tripartite land transportation company with Egypt and Saudi Arabia, Ahram Gate reported. The plan is to increase the volume of trade between the three countries and, according to Jordan’s tourism minister, give the Hashemite kingdom some respite from the damaging economic effect of regional conflict. He says Jordan is also working on setting up maritime routes between the three countries for yachts to promote tourism.

The USD 300 mn rail goods line linking Ain Sokhna with Helwan has now become the latest EEDC project to see its terms and conditions changed by the Transport Ministry, said Mohamed Maher, Vice Chairman of Prime Holding, the investment bank which marketed the project. The Transport Ministry wants the terms of the project, originally under a public-private partnership framework according to DNE, to be amended so that investors foot the bill for the whole project until it is operational, at which time the government would then pay part of the costs. Naturally, the move has drawn the ire of the three unnamed Chinese and Saudi companies vying for the project, as revenues of infrastructure projects traditionally fall over time, said Maher.

The news came as a lawyer filed a lawsuit calling on the president, prime minister, and the ministers of agriculture, health, and supply to stay the decision to allow imports of wheat with ergot contamination that meets international standards, Al Borsa reported.

The Transport Ministry will inaugurate three major highways worth EGP 2.8 bn before the year’s out, said the head of the Roads and Bridges Authority Adel Turk, according to Amwal Al Ghad. The projects include the EGP 1 bn the Suez-Desert Road (the main road to the new Administrative Capital), the EGP 970 mn road connecting the Matrouh and Beheira governorates, and the EGP 875 mn highway linking Minya to Bahariya.

The government is set to announce this week the company that will inspect imported wheat shipments following the return to a 0.05% ergot policy, sources told Al Mal. The government is choosing between an international and domestic firm, the source added, noting that the domestic firm is a subsidiary of a sovereign authority. The winning company will first travel to the country of origin to assess the shipments contracted by GASC we reported on last week, the source said, and then inspect the shipment in Egypt.

Cairo Cotton Center are investing USD 100 mn into the domestic market by the end of 2016, Chairman Magdy Tolba told Amwal Al Ghad. The investment will be used to build the second phase of the Obour factory, he added. The factory expansion is set to be completed by the end of 2017, bringing the total output to 50k garments per day from the current 20k, he added.

Universal Group is struggling to maintain production capacities for want of FX, said the company’s Chairman Yousry Kotb. The company has been forced to raise prices on some of its goods, but this price hike cannot keep up with the rate of the EGP’s depreciation (presumably on the parallel market), he tells Al Mal. As we noted last week, Universal is investing over EGP 1 bn in a washing machine factory.

Higher Education Minister Ashraf El Sheehy is set to hold talks with China’s Vice Education Minister Du Yubo today on the establishment of a Chinese university at the new administrative capital, Al Mal reported. The officials will also discuss the formation of a Chinese college of technology in Egypt, as well as an Egyptian university in China.

EgyptAir has passed the U.S. Transportation Security Administration’s (TSA) biannual inspection of the company’s Cairo-New York flights, CEO Safwat Mosallam said, according to Al Masry Al Youm. The three-day inspection included evaluating all stages of security procedures, as well as baggage handling, among other criteria.

The government is considering a proposal encouraging Egyptian expatriates to purchase locally-assembled cars in USD, an unnamed government source told Al Borsa. Under the policy, expats will be offered Egyptian-made cars at lower prices on the condition they pay in FCY, while vendors taking part in the initiative may be offered tax and customs incentives such as rebates for making prompt deposits of these sales. The proposal appears to have garnered support from the industry, as Bavaria Group’s Farid El Tobgui expressed his support for the move. The trial balloon is part of a wider initiative proposed by the Immigration Ministry to attract FX from expats. The proposal will need further study, said Customs Authority head Magdy Abdelaziz, telling Al Masry Al Youm that the government will present it to the House for discussion this week.

The Holding Company for Engineering Industries (HCEI) plans to resurrect production at the El Nasr Automotive Manufacturing Company as soon as next year, said HCEI board member Khaled El Fekky. The company plans to complete a feasibility study on the project next month, claiming the move has the backing of President Abdel Fattah El Sisi, El Fekky added in a call-in to the Kalam Bi Filoos talk show on Al Asima TV. El Fekky’s statements is ridden with platitudes and he evades all serious questions about how to revive the Nasser-era zombie.

State-owned Misr Petroleum Company and Petroleum Cooperative Society Company are reportedly in talks with the National Bank of Egypt (NBE) for a four-year, EGP 1.25 bn loan to finance the firms’ working capital, unnamed sources told Al Mal. No information was given about the amount each company is vying for, as well as the possibility of USD tranche of the loan. The two companies —both subsidiaries of EGPC— had already been granted a EGP 10 bn loan from the NBE, along with four other banks, around two years ago.

Exemptions from real estate taxes for manufacturers and cutting the cost of natural gas to industry will be at the head of the House of Representatives’ Industry Committee when it reconvenes next week, committee chief Mohamed El Sewedy told Al Shorouk. The comments come in response to statements from the Finance Minister on not intending to exempt factories from real estate tax in light of a widening budget deficit and rising internal debts.

One civilian was killed and six injured after an IED detonated in North Sinai on Sunday, Ahram Online reported, citing state news agency MENA. The explosion occurred on the Rafah-Sheikh Zuweid road, and the injured were taken to Arish Hospital.

From the Enterprise Self-Help Department: “Monotasking is the new multitasking.” We have a general loathing for the “‘x’ is the new ‘y’” meme, but this one hits on something we’ve been grousing about for a long time: Multitasking isn’t an advantage, a curse. Writes Fast Company: “A classic 2007 study of Microsoft workers found that when they responded to email or instant messaging alerts, it took them, on average, nearly 10 minutes to deal with their inboxes or messages, and another 10-15 minutes to really get back into their original tasks. That means that a mere three distractions per hour can preclude you from getting anything else done.” Read Monotasking Is The New Multitasking and dwell for a moment on the “six tips for doing it right.”