Egypt is once again a natural gas exporter

News over the weekend was dominated by international headlines, including the killing of 50 people in a terrorist attack on Muslims in New Zealand by a white supremacist.

Four Egyptians were among the dead in the Friday morning shootings at two New Zealand mosques, according to an Emigration Ministry statement. The attacks were “the worst ever mass killing in New Zealand,” leaving 50 dead and more than 40 injured, according to Reuters. The gunman had published a manifesto prior to the shooting citing “‘white genocide’, a term typically used by racist groups to refer to immigration and the growth of minority populations, as his motivation.” The attack was designed with social media in mind and live-streamed from a camera on the attacker’s helmet. President Abdel Fattah El Sisi condemned the attack as a “cowardly terror attack against humanity.”

El Sisi’s remarks came during a speech to open the first Arab African Youth Platform on Saturday in Aswan. The summit, which runs until tomorrow, brings together 1,500 young people from Arab and African countries. You can watch the president’s opening speech here.

It’s interest rate week in the United States and the consensus is that the US Federal Reserve will not hike rates again until 3Q2019, according to a Reuters poll of economists. Of the 100 economists surveyed, 55% expect the Fed to tighten again by the end of 3Q2019, a stark contrast from a month ago when a majority predicted a rate hike in 2Q2019. A growing number of economists see no hikes through year’s end — great news for emerging markets.

Dubai-based Network International has snagged a new chairman ahead of a mid-April listing on the London Stock Exchange. Ron Khalifa, the former head of Network International’s UK rival Worldpay, was announced as chairman on Thursday at the same time as the company filed its intention to float. Network International is “dominant in market share terms in its main markets, such as the United Arab Emirates, Jordan and Egypt,” the Financial Times reports, and is profitable, delivering USD 98 mn in net income on revenues of USD 298 mn. You can catch up on Network’s IPO process at the microsite they’ve established for the transaction.

There’s a serious beef going down in the tech world: Apple has claimed Spotify is using “misleading rhetoric” a few days after the music streamer filed a European antitrust complaint against the iPhone maker, Reuters reports. Spotify’s complaint alleges Apple has illegally favored its own streaming service by abusing its control of the App Store, prompting Apple to fired back that Spotify is “trying to squeeze” its artists in the pursuit of making money.

Generation Z is leading climate action: “If you don’t act like adults, we will,” school students the world over said in organized protests on Friday against climate change, CNN reports. The students marched in front of government buildings in their respective cities, inspired by 16-year-old climate activist and Greta Thunberg. Thunberg, who later tweeted that upward of 1.4 mn students in more than 2,083 marches hit the streets on Friday.

Things to keep an eye on this week:

• Constitutional change: The House will begin this week public hearings on the proposed constitutional amendments. There’s no word whether the hearings, which will be open to the press and which wrap next week, will be televised.
• Conferences and gatherings: Our friends at AmCham are holding their annual real estate conference on Monday, the Portfolio Egypt conference takes place on Tuesday, and the Green Building Conference gets underway on Wednesday.
• In the courts: AIND’s lawsuit against Peugeot Citroen is back before the judge today
• Global macro: OPEC is holding a joint ministerial monitoring committee meeting today and tomorrow.

We have the details on all of the above and more in this morning’s Calendar section.

Bns, one of our favourite TV shows, is back on air tonight in the US of A. This season sees an uneasy alliance between a hedge fund boss Damian Lewis and the erstwhile erstwhile US district attorney played by Damian Lewis. You can catch the trailer here (watch, runtime: 2:20) or learn how wardrobe folks and location scouts recreate the lifestyle of bn’aires in this piece over on the New York Times.

Happy birthday to The Colonel and a very happy St Patrick’s Day to all.

PSA- You can expect clouds with a chance of rain today in the nation’s capital, according to the national weather service, Ahram Online suggests. Our favourite weather app begs to differ, but it’s been wrong before. Expect a high today of 21°C.

The Arab and African Youth Forum, which kicked off in Aswan on Saturday and runs through tomorrow, kept the talking heads busy on an otherwise quiet night on the airwaves (watch, runtime: 15:00). President Abdel Fattah El Sisi’s speech at the event, which was attended by over 1,500 African and Arab youth (watch, runtime: 04:14), got plenty of coverage. And, of course, there’s Amr Adib’s commentary (watch, runtime: 01:36). We have more on the gathering in this morning’s Speed Round, below.

If you have some time to kill this morning, watch Amr Adib throw a fit on live television over social media outrage that Facebook and Instagram were briefly down (watch, runtime: 02:35).

We are once again a natural gas exporter: The Egyptian Natural Gas Holding Company (EGAS) has offered a tender to sell four LNG cargoes for April loading with bids due on Monday, Bloomberg reported. Egypt is also offering four cargoes for loading in May and three for June. Reuters also has the story.

The tender marks Egypt’s return to the export market after increasing demand and depleting production turned the country into a net importer in 2015. Major discoveries in the Mediterranean, including Eni’s Zohr field, helped Egypt achieve self-sufficiency and now return to exports.

However, the return comes a time when prices are low and demand is slowing. “The speed and scale of which Egypt has turned from importer to notable exporter is likely to further loosen the already wide supply / demand balance,” Nick Campbell, a director at industry consultant Inspired Energy Plc, told Bloomberg. That will exacerbate “the lower demand environment with warmer winters in Europe and the Far East leaving storage levels relatively full.”

Egypt is one of the only MENA countries where organic corporate growth is expected to exceed 20%, Fadi Al Said, director of MENA equity and portfolio manager at financial advisory firm Lazard, tells Bloomberg TV. The EGP devaluation and ensuing high inflation rates are still proving “some tailwinds” driving nominal growth through price adjustments, he says. “I wouldn’t say that I’m overly bullish on Egypt on a macro level; I would say that we’re betting on 100 mn people living there and that they have very low penetration in each and every sector. We’re just positioning ourselves in companies that might benefit from these trends,” Al Said says (watch, runtime: 6:06).

Yields on Egyptian debt are among the most attractive in emerging markets once you adjust for inflation, Bloomberg says. “Emerging-market government debt lost 0.3 percent February after gaining 7.6 percent in the previous three months, according to the Bloomberg Barclays index, as mounting evidence of a global slowdown outweighs the benefits of a dovish Federal Reserve. Investors looking for sovereign bonds that buck the trend may want to watch real returns.” Brazil, Indonesia, South Africa, Egypt, and Mexico all offer real yields above 4%, and 18 of 23 EMs “offer higher compensation for inflation risks than U.S. bonds.”

Primary budget surplus of 0.5% of GDP in 7M2018-19: Egypt recorded a primary budget surplus of EGP 24 bn (or 0.5% of GDP) during 7M2018-19, compared to a deficit of EGP 13 bn a year earlier, the Finance Ministry said in its February monthly bulletin. The budget deficit during the period came in at 4.2%, compared to 4.9% during the same period last year. Tax revenues grew 22.2% to EGP 356.6 bn, while spending on cash subsidies rose 11.4% to EGP 12 bn. Local debt stood at the equivalent of 84.7% of GDP at the end of September 2018, compared to 97.2% a year earlier.

Background: The budget deficit in 1H2018-19 shrank to 3.6% of GDP in 1H2018-19, an Ittihadiya statement said previously, down from 4.2% the previous year, while the primary budget surplus was 0.4% of GDP, up from a deficit of 0.3% during the same period last year. Egypt is targeting an 8.4% budget deficit this fiscal year ending in June and 5.8% GDP growth.

Gov’t to begin implementing new export incentive program next fiscal year: The government will begin implementing a new, flexible export incentive program next fiscal year, according to a Cabinet statement. The program will be implemented for a year as a trial with periodic meetings between the prime minister and export councils to review progress and evaluate exporters’ performance.

How much exporters will receive is not confirmed. Abdel Hamid Demrdash, the head of the agricultural exports council, said a portion of the incentives will be in cash, with the balance written off against taxes, according to Youm7. Our own source at one of the nation’s export councils told us no agreement has yet been reached. Exporters will be required to obtain a certificate from the Industrial Development Authority (IDA) making clear their percentage of local content to determine their eligibility for subsidies, Al Mal reports.

Background: The Finance Ministry has been looking at different ways to pay out delayed export subsidies owed to a number of exporters. The new program will come as part of a larger strategy to double exports of manufactured goods to USD 50bn by 2025 and to encourage foreign and domestic investment in key sectors.

INVESTMENT WATCH- German healthcare project developer Hospinorm is planning invest some EGP 600 mn as it enters the Egyptian market, according to Al Mal. Hospinorm plans to set up a 100-bed hospital in an unnamed new urban community. The group is looking at both greenfield and brownfield options, according to Egyptian International Counseling Group (EICG) Managing Director Mostafa El Shebini. Hospinorm has contracted EICG to conduct feasibility studies for the German company’s debut in Egypt. According to Shebini, Hospinorm will begin looking for a local partner in the healthcare sector once the feasibility studies are complete and is eyeing entering the Egyptian market before the year is out.

INFRASTRUCTURE WATCH- Egyptian companies want a slice of the USD 20 bn Libyan reconstruction pie: Several Egyptian companies are gearing up to chase what could be USD 20 bn worth of reconstruction contracts as the first phase of Libya’s rebuilding gets underway, Federation of Egyptian Chambers of Commerce Secretary General Alaa Ezz tells Reuters’ Zawya. Companies are eyeing infrastructure, communications, and tourism projects, among others, and some Egyptian players — such as Orascom Construction, Arab Contractors, and Elsewedy Electric — “have already taken serious steps” to get into the action, Ezz says. The federation is currently in talks with development banks, including the African Development Bank, World Bank, and the European Investment Bank, to finance some projects, while others will be executed under a build, operate, transfer framework.

PSA- Can we please all stop calling the Federation “FEDCOC.” Please?

M&A WATCH- Alabbar’s Adeptio challenges FRA rejection of its appeal against Americana MTO decision: Adeptio AD Investments, the lead shareholder of Egyptian International Tourism Projects Company’s (Americana Egypt), has filed suit in an administrative court challenging the Financial Regulatory Authority’s (FRA) rejection of its appeal against an order to submit a mandatory tender offer (MTO) for Americana, Americana’s legal advisor Thaqeb Aawan said. The FRA earlier this month rejected the appeal, requesting that Adeptio, which is led by Emirati business figure Mohamed Alabbar, conduct a fair share value study of Americana. But Adeptio is still adamant that its indirect ownership of Americana is less than 90% of its total capital, and does not require an MTO submission. The FRA’s MTO order was originally made last January, when a minority shareholder appealed to the authority. Minority shareholders, who own some 3%, are continuing to pile pressure on the authority.

MOVES- Prime Minister Moustafa Madbouly issued a decree on Thursday appointing a new board of directors for the Egyptian Electricity Utility and Consumer Protection Agency (Egyptera), according to a copy of the decision picked up by the local press. The new board is led by Electricity Minister Mohamed Shaker, and seats Egyptera Chairman Mohamed Abdel Aziz alongside the heads of the Consumer Protection Authority, the Egyptian Competition Authority, and the Federation of Egyptian Industries. Deputy Electricity Minister Osama Asran and South Cairo Electricity Distribution Company head Mohamed El Sisi are also part of the new lineup.

MOVES- Current State Information Service head Diaa Rashwan was elected as head of the Journalists’ Syndicate,Al Mal reports. Rashwan received 63.5% of the votes, defeating journalist and Akhbar Al Youm board member Refaat Rashad.

MOVES- Ahmed Abdallah, a veteran banking and finance lawyer with more than 15 years of experience in the industry, has joined Baker McKenzie Cairo’s banking and finance group as a counsel, Baker principal Mohammed Ghannam said in a statement. Abdallah holds an LLB from Cairo University.

Egypt has topped a list of the hottest travel destinations for high net worth individuals, according to data given to Business Insider by travel agency Original Travel. The company, which caters to the luxury end of the travel market, says that bookings to Egypt in 2019 are on course to rise threefold from last year.

It’s all quiet in the foreign press this morning, with Egypt getting very little attention from journos overseas. The Telegraph is out with an article examining Egypt’s “Two is Enough” campaign, calling it a “desperate bid” to curb population growth. Other than that, it’s tumbleweeds as far as the eye can see.

Arab-African youth forum dominates headlines in state-owned press: President Abdel Fattah El Sisi’s opening of the first Arab African Youth Forum in Aswan over the weekend topped the front pages of all three state-owned newspapers this morning (Al Ahram | Al Gomhuria | Al Akhbar). In his speech, El Sisi said investing in youth is a priority to ensure development. The president also reaffirmed Egypt’s commitment to fighting terrorism in light of anti-Muslim shootings in New Zealand today that left four Egyptians dead, Al Ahram reported.

Can we really trust our memories? We tend to think of memory as an accurate storage of experiences in the brain that can be accessed when needed. But this video from The Guardian (watch, runtime: 07:35) tells us that we reconstruct, rather than relive, our past experiences every time we access them. By changing and adapting the narratives themselves — ‘reconsolidation’ in psychologist-speak — we can become vulnerable to memory manipulation.

Research has shown that new information can enter a person’s memory modifying what we remember of the original experience. This could be through media coverage, for instance, or through skilled questioning by a professional. This understanding of why our memories really can’t be trusted has serious consequences for the criminal justice system, so heavily reliant as it is on witness testimony. More positively, it also opens up paths for medical or therapeutic intervention to help people suffering from conditions such as depression or PTSD.

US State Department issues scathing report on Egypt’s human rights record: The US State Department’s Egypt 2018 Human Rights Report (pdf)charges that Egypt has committed a wide range of human rights violations. The 55-page report provided detailed accounts of each category, blaming authorities for “inconsistently [punishing] or [prosecuting] officials who committed abuses,” and failing to “comprehensively investigate allegations of human rights abuses.” The Egypt report is part of State’s annual human rights reports.

The Foreign Ministry isn’t pleased with the State Department’s assessment, issuing a statement saying the report is laden with “unsubstantiated claims.” Besides relying on “false information” collected through NGOs motivated by “political agendas,” the report makes no mention of the government’s efforts to improve human rights, the statement notes. The Foreign Ministry also stressed “the importance of respecting the principle of non-interference in internal affairs.”

Egypt receives letter of guarantee for Russian Industrial Zone: Egypt has received the letter of guarantee from Russia’s Trade and Industry Ministry for the implementation of the USD 7 bn Russian Industrial Zone (RIZ) in the Suez Canal Economic Zone (SCZone), deputy SCZone head Mohamed Baraya said on Thursday. An Egyptian-Russian company will be set up in April to operate and manage the planned RIZ, which spans 5.25 sqkm and will be implemented over three phases in 13 years.

AU Commission Chair Moussa Faki Mahamat praised Egypt’s achievements in Africa during his address at the opening ceremony of the Arab and African Youth Forum which began in Aswan on Saturday, Egypt Today reports. Faki lauded the role played by Egypt in establishing the principles of the Organization of African Unity and helping to end conflicts in Africa. He also congratulated President Abdel Fattah El-Sisi on assuming the chairmanship of the African Union.

Egypt, South Africa look to boost trade: The Federation Of Egyptian Industries (FEI) has signed a memorandum of understanding (MoU) with its South African counterpart to boost trade ties between the two countries, Al Masry Al Youm reported. No further information was provided on the MoU, but it comes amid a series of visits to African countries by the FEI to discuss investment prospects and strengthen business ties.

Italy’s Eni has made a new natural gas discovery at the offshore Nour gas field in the East Mediterranean, the company announced on Thursday (pdf). The discovery well, the Nour-1 New Field Wildcat, reached a depth of 5,914 meters (19,403 feet). The well has not yet been tested, but the company said it has acquired “intense and accurate” data. The well revealed “33 meters of gross sandstone pay with good petrophysical properties and an estimated gas column of 90 meters.” The discovery is on the upper formations, as the lower formations have failed to yield positive results, a source from the Oil Ministry said following the discovery, according to Ahram Gate.

Egypt’s Idku gas liquefaction plant should be working at full export capacity by June following linkage to the Eastern Mediterranean gas fields, with exports increasing to 1.13 bn cubic feet of gas per day (scf/day) up from the current 800 mn scf/day, Oil Minister Tarek El Molla told Daily News Egypt in an interview on Saturday. With Egypt working to achieve self-sufficiency in gas production, any surplus will be exported through the Idku plant and the Jordan gas pipeline, El Molla said.

Oil Minister Tarek El Molla met last week with World Bank Group senior director and top energy official Riccardo Puliti to discuss financing for East Med gas projects and infrastructure during the CERAWeek conference in Houston, according to a cabinet statement. El Molla also discussed cooperation with Noble Energy Chairman David Stover, who praised Egypt’s efforts to become an energy hub. The minister also met with ExxonMobil President Steve Greenlee, who said his company is looking to invest in Egypt.

Saudi logistics service provider Globe Group is eyeing Damietta Port as its entry point into Egypt, the Damietta Ports Authority (DPA) said in a statement following a meeting between a delegation of senior executives from Globe and the DPA. The delegation is particularly interested in usufruct rights to manage and operate the new EGP 1.3 bn multipurpose platform set to be inaugurated next month at the port.

The Suez Canal Authority (SCA) is in talks with four alliances (Groupe PSA, Mahoni, the Holding Company for Maritime and Land transport and Agility Logistics) to establish logistics centers and a storage station in East Port Said, the domestic press reported.

The Arab Organization for Industrialization (AOI) discussed with representatives from Germany’s Siempelkamp potential plans to build a factory to produce MDF wood from palm tree waste in El Wadi El Gedeed, Al Shorouk newspaper reports. The proposed facility would have a total production capacity of 60k cubic meters per year.

International real estate advisor Savills signed an agreement with Egypt’s Sphere to set up a joint venture that would serve the Egyptian market, Trade Arabia reports. The new JV will take responsibility for the management, agency, and marketing of Arkan in West Cairo.

Air Cairo will begin operating direct flights between Milan Bergamo and Sharm El Sheikh from 31 March, and Rome and Naples to Marsa Alam from 1 April, according to Italian news agency Di Viaggi.

The Transportation Ministry will receive the first batch of 32 air-conditioned trains for the third and fourth phases of Metro Line 3 in April 2020, newly-appointed Transport Minister Kamel El Wazir said.

Banque du Caire’s financial leasing arm, Cairo Leasing Company, is in “intensive talks” with two unnamed banks to borrow EGP 450 mn, CEO Ahmed Sherif tells Al Mal. According to Sherif, one of the banks is state-owned. Talks are currently in their final stages and the company expects to receive the line of credit “soon.”

The Military Production Ministry signed on Thursday a memorandum of understanding with South Korea’s Kett Engineering to build waste energy factories, according to a cabinet statement.

President Abdel Fattah El Sisi ratified on Thursday a USD 200 mn loan from the European Bank for Reconstruction and Development (EBRD) for the Suez Oil Processing Company (SOPC) to finance the company’s energy efficiency investments, including its Green Economy Transition Approach, Al Mal reports. The approval was published in a presidential decree carried by the Official Gazette on Thursday.

An Egyptian lawyer has filed a lawsuit with the military prosecutor against novelist Alaa El Aswany, accusing him of insulting the president, the army, and the judiciary, Egypt Today reports. The lawsuit cites an article written by El Aswany for Deutsche Welle last week.

Red Hot Chili Peppers perform at the Pyramids: The Red Hot Chili Peppers entertained around 10,000 fans at the Giza Pyramids on Friday, playing some of the most recognizable tunes from their long career, Reuters reported. Concert organizer Karim El Chiaty, the vice chairman of Travco Group, said that fans traveled from 67 countries to attend the gig. For those who had prior plans / couldn’t get a ticket / don’t like going outside, the band was kind enough to livestream the concert and upload it to YouTube afterwards — it’s got 1.8 mn views and counting.