Wednesday, 29 January 2020

Vodafone is packing its bags.
Plus: Trump unveils his plan to make Israel great again

TL;DR

What We’re Tracking Today

We have big news for you this morning, ladies and gents: Vodafone Group yesterday confirmed earlier reports that it was looking to leave Egypt and sell its stake in Vodafone Egypt to Saudi Telecom. The two companies will apparently be signing a memorandum of understanding that could lead to an acquisition (though we’re not quite sure when that will happen).

An announcement coming today? Youm7 reported that Vodafone Egypt CEO Alexandre Froment-Curtil will today hold a press conference to address the announcement — and maybe to officially announce an acquisition by STC, if the company source that talked to the press is to be believed. We wait with bated breath.

The world’s most prolific headline generator continues to dominate the news cycle this morning: President Trump yesterday unveiled his administration’s long-awaited plans to make Israel great again. The proposals give Israel the all-clear to a large-scale land grab in the West Bank, and in return the Palestinians would receive international investment and be allowed to form a “state” (emphasis on the inverted commas). We explain in this morning’s Speed Round below.

A bit of perspective courtesy of the New York Times: “Rather than a serious blueprint for peace, analysts called it a political document by a president in the middle of an impeachment trial working in tandem with a prime minister under criminal indictment and about to face his third election in the span of a year.”

Speaking of which, the Donald’s ongoing impeachment trial continues to spam our news feeds. Senators will over the coming two days debate whether to allow witness testimony after Trump’s defense yesterday wrapped up their arguments. Trump’s team may soon be looking for a plan B after Monday’s potentially-damning allegations from ex-national security chief John Bolton increased uncertainty about whether Senate Republicans would have the votes to block witnesses. The Atlantic definitely hasn’t been shy about what it thinks of proceedings, calling the trial an “absurdity”, Trump’s legal arguments “kafkaesque,” and the Senate “utterly ridiculous.”


It’s GERD deadline day (again): We have our fingers crossed that today is the day that Egypt and Ethiopia finally kiss and make up, as talks in Washington come to a close. The original deadline for a final agreement passed earlier this month when Egyptian, Ethiopian, and Sudanese officials agreed on the terms of the initial filling timetable for the dam. Technical talks last week produced what the Sudanese irrigation minister called “convergence,” but as far we are aware there remained points of disagreement heading into the talks yesterday.

Cabinet will today announce the winner of the Sixth of October dry port tender at its weekly meeting: It’s looking like the contract is going to the Elsewedy-Concorde-AE International consortium, if reports over the last two days are to be believed (see here and here).

Stuff you can go to this week:

  • CI Capital’s annual three-day MENA Investors Conference wraps tomorrow at the Four Seasons Nile Plaza.
  • The British Embassy and IFC’s StartEgypt Forum 2020 will pit 45 startups against each other in a pitch competition today at the Greek Campus.
  • This year’s Cairo International Book Fair runs through to Tuesday, 4 February at the New Cairo International Exhibition and Convention Center.

News triggers to keep your eye on with the new month approaching:

  • The purchasing managers’ index for Egypt, Saudi Arabia and the UAE is due out on Tuesday, 4 February at 6:15am CLT.
  • Foreign reserves figures for January will be released on Tuesday, 4 February.
  • Inflation figures for January are out Monday, 10 February.

DEBT WATCH- Egypt’s external debt rose 18% y-o-y to reach USD 109.4 bn at the end of 1Q2019-2020, according to the Central Bank of Egypt’s monthly statistical bulletin (pdf).

Domestic debt also rose 8% to USD 270 bn during the quarter.

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As China succumbs to coronavirus, Europe’s top luxury brand stocks take a USD 46 bn tumble: The top nine European luxury goods stocks have seen a wipe-out of USD 46 bn as one of their main markets is focusing less on designer getup and more on the spread of the coronavirus, according to Bloomberg. China contributes to around 35% of luxury goods revenue with many of the biggest European luxury players having an average revenue exposure to Asia in excess of 40%. Citi believes the stocks most at risk are Swatch, Prada and Ferragamo, but so far LVMH has taken the biggest blow with half of the cumulative market cap wipe-out coming from them.

All of this market turmoil isn’t just about the virus — it’s concerns about how it will affect the global economy. Investors are growing worried again about the outlook for global economic growth after these concerns were quelled in recent weeks with the approaching US-China trade agreement and the cooling off of tensions between Washington and Tehran, Peter Goodman writes for the New York Times. A large part of these concerns is the lack of adequate information available to accurately assess the severity of the issue and just how much it will impact the world as a whole, which has pushed investors the world over to reduce their exposure to risk. “What was left to the imagination resonated as a reason for investors to unload anything less than a sure thing,” Goodman says.


In tech miscellany:

  • WhatsApp revealed it saw a spike in security flaws last year but denies its vulnerabilities were to blame for the now infamous hacking of Amazon chief Jeff Bezos’s iPhone, the Financial Times reports,
  • Big Tech execs jump aboard the regulation bandwagon before it’s too late: Heads of Microsoft, Google, Facebook and Apple are now asking for governments to regulate them. Why might tech companies want more rules in play despite actively resisting controls in the past? The answer is likely more strategic than altruistic suggests the WSJ.
  • Johnson risks wrath of the Donald by giving go-ahead to Huawei: UK Prime Minister Boris Johnson has approved the limited use of Huawei equipment in UK’s 5G infrastructure despite repeated warnings from the US that the move will make the UK vulnerable to Chinese spying, according to the Financial Times.

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It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical, Hardhat, will focus each Wednesday on infrastructure, covering everything from energy, water, transportation, urban development and even social infrastructure such as health and education.

In today’s issue: Hardhat gives an extensive primer on the Dabaa nuclear power plant, where the project currently stands, and some insight into the ongoing debate over its safety and economic viability.

Enterprise+: Last Night’s Talk Shows

It was truly a mixed bag of politics, economics, and health on the airwaves last night.

Trump’s long-awaited Middle East Peace Plan was the center of attention last night, Al Hayah Al Youm’s Lobna Assal (watch, runtime: 2:33) and Yahduth Fi Misr's Sherif Amer (watch, runtime: 6:07) both covering the news out of Washington. We have more on that in this morning’s Speed Round below.

CBE governor says the hard part is over: Masaa DMC’s Ramy Radwan interviewed the CBE Governor Tarek Amer who said that the Egyptian economy had stabilized and that the country has reached safety (watch, runtime: 1:46). Amer said that the surge in the USD against the pound after the float was expected, but it has since cooled down and the EGP is rising slowly against the greenback (watch, runtime 3:47). Amer suggested that tourism the recovery in the tourism sector, which achieved USD 12.6 bn in revenues last year, is indicative of an improving situation in Egypt (watch, runtime: 1:17) and (watch, runtime: 0:47).

No funding from IMF: Amer said that Egypt does not need new funding from the International Monetary Fund (IMF) adding that the discussions with fund entail using the IMF's experience in the structural reforms program to improve government efficiency and bolster the investment climate (watch, runtime: 1:58)

No Chinese infected with Wuhan virus: Chinese ambassador to Egypt Liao Liqiang yesterday moved to reassure Egyptians that no Chinese were infected with the Wuhan virus in Egypt, Lobna Assal noted. Liqiang added that they are communicating directly with the foreign and health ministries to prevent the disease from spreading to Egypt (watch, runtime: 3:19). Min Masr's Amr Khalil phoned Cabinet Spokesman Nader Saad, who confirmed that no infections have yet been reported among Egyptians in China and that the embassy is following up on the situation (watch, runtime: 10:40).

Speed Round

Speed Round is presented in association with

M&A WATCH- Those rumors of Vodafone wanting to bail on Egypt have turned out to be true: Vodafone Group is set to sign a memorandum of understanding with Saudi Telecom (STC) that could see it offload its stake in Vodafone Egypt, the cabinet said in a statement yesterday. This confirms rumors last week that STC was in talks with the multinational to acquire its 55% stake in its Egypt arm.

CEO attributes exit to strategic shift: The statement came following talks between Vodafone Group CEO Nicholas Read, Vodafone Egypt CEO Alexandre Froment-Curtil and Prime Minister Moustafa Madbouly in Cairo yesterday. Read said that the company has decided to exit Egypt because of its “strategy to focus its investments,” the statement reads. Vodafone has exited several markets in the past year, selling both its New Zealand and Malta units. There is also speculation that it could leave India following disastrous quarterly figures last year.

Regulators are ready to sign-off on the acquisition: A source in the telecoms sector told Al Mal that the National Telecommunications Regulatory Authority will approve the acquisition after the companies have finalized an agreement. The due diligence process will take a maximum of six months, the source said, adding that financial and legal advisers to oversee the transaction have not yet been appointed.

An acquisition would bring Vodafone’s 22-year history in Egypt to an end: The company has been operating in Egypt since 1998, and is the largest mobile operator in the country.

STC has been eyeing up Vodafone Egypt for years: The Saudi company more than six years ago was reported to be engaged in acquisition talks with state-owned Telecom Egypt over its 45% stake in the company. Telecom Egypt said on Sunday that it has no plans to exit the company.

Telecom Egypt shares rose 6.1% yesterday in anticipation of an acquisition agreement, EGX data shows.

Are we getting an official announcement today? A source close to Vodafone Egypt yesterday told the local press that STC will today announce its acquisition of the company.

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IPO WATCH- Emerald set to become Egypt’s first IPO of 2020 in 10 days -Omran: Real estate investment firm Emerald will make its EGX debut “within 10 days,” making it this year’s first IPO, Financial Regulatory Authority Chairman Mohamed Omran said, according to the local press. EGX boss Mohamed Farid had said earlier this week that an IPO worth under EGP 1 bn will be going to market in 1Q2020. While Farid did not name the company, this is in line with previous press reports on Emerald’s planned offering, which will see the company sell 28% of its shares. Emerald plans to raise EGP 203 mn from the sale, unnamed sources said at the time.

Background: The IPO will see the company selling up to 70 mn shares, with 95% of these earmarked for institutional investors. The fair value assessment, which was conducted by the Professionals for Investment Banking, has set the share price at EGP 2.90 apiece. The IPO prospectus was reviewed by lead manager and major shareholder Odin Investments, along with the FRA.

Emerald will make its debut after the EGX closed 2019 with only two IPOs. Rameda Pharma went public in December after fintech player Fawry floated in August. Egyptian companies pulled back from raising capital after Sarwa Capital’s IPO went sideways in late 2018. A global slowdown in appetite for emerging market IPOs and fears the recent Aramco listing would suck liquidity out of the market also played a role last year. Meanwhile, Eastern Tobacco’s 4.5% secondary sale in March was the only state-owned company to go to market last year.

Trump unveils his plan to make Israel great again: US President Donald Trump finally unveiled the political component of his Middle East Peace Plan yesterday winning the praise of Israel and immediate anger from Palestinians. In a press conference with Israeli caretaker PM Benjamin Netanyahu, Trump didn’t disguise where his administration’s priorities lay, describing the long-awaited proposals as a “great plan for Israel…a great plan for peace.”

The plan reads like Israel’s wish list, allowing the Jewish state to annex its illegal settlements in the West Bank and take control of the land bordering the Jordan Valley. Israel would get to claim Jerusalem as its unified capital, with the Palestinians being designated land on the outskirts of East Jerusalem on which to build their capital ‘Al Quds’. Israel has offered to halt its colonization of the West Bank for four years, but Netanyahu yesterday pledged to push ahead with attempts to annex the existing settlements and the Jordan Valley.

What do the Palestinians get? The Palestinian Authority would receive around USD 50 bn in investment from international donors with which to build a new state in which the US pledged to establish an embassy. This authority would not be permitted to become a fully fledged state equal to Israel on the world stage, but would be banned from having an army and an airforce. Israel would be responsible for overall security in the Palestinian territories, which would also contain more than a dozen Israeli “enclaves.” Trump tweeted a map showing the Palestinian territories far smaller than envisioned by the Oslo peace agreement in 1993, linking Gaza to the West Bank by road. You can find the entire plan here (pdf).

Surprising absolutely noone, Palestinians were not happy: Trump said he sent a letter to Palestinian President Mahmoud Abbas asking him to read the plan. However, Abbas mocked the plan dubbing it the “slap of the century,” according to Reuters. Abbas stressed that Jerusalem is not for sale, while thousands of Palestinians took to the Gaza streets in protest.

Egypt’s Foreign Ministry released a fairly positive statement on the plan, urging the Palestinians and Israelis to “undertake a careful and thorough consideration of the U.S. vision to achieve peace and open channels of dialogue, under U.S. auspices, for the resumption of negotiations. Jordan, meanwhile, said it was committed to a two-state solution based on the pre-1967 borders while rejecting Israel’s annexation of its valley. The United Nations Secretary-General Antonio Guterres said he supports the Palestinians and Israelis in resolving their conflict on the basis of UN resolutions, international law and bilateral agreements while the European Union also said it needed to study it more closely, according to the Associated Press.

M&A WATCH- The number of investors wanting in on Raya’s Aman Holding minority stake doubles in a week: Twenty-four domestic and international investors have now submitted bids to acquire a minority stake in Raya subsidiary Aman Holding, up from 12 last week, Chairperson Medhat Khalil said, according to Al Shorouk. Aman Holding was set up earlier this month to parent Raya’s three non-banking financial service arms — Aman for Financial Services, Aman for E-Payments, and Aman for Microfinance. The company has EGP 375 mn in capital and holds 99% stakes in the former two businesses and a 74.5% stake in the latter.

US-Egypt trade talks to restart next year: Egypt and the US will re-enter negotiations over a bilateral trade agreement next year, US Ambassador Jonathan Cohen said on the sidelines of a conference at the American Chamber of Commerce in Cairo, according to Al Shorouk.

The slow pace of reform has stood in the way of a trade agreement for almost three decades: A bilateral trade agreement between the two countries has been talked about on and off since the 1990s. The US currently imports some Egyptian products duty free through its Generalized System of Preferences program and Egypt’s Qualified Industrial Zones, but Washington has repeatedly conditioned a comprehensive trade agreement on Egypt undertaking deeper economic reforms. We heard this once again last year, when a US State Department official said Egypt must continue lifting non-tariff trade barriers and improving the quality of its exports if it wants to go back to the table.

The US is currently our #1 export destination: The value of Egyptian exports to the US stood at USD 732.2 mn at the end of 1Q2019-2020, making it the biggest importer of Egyptian goods, according to CBE figures (pdf).

Meanwhile: The House industry committee has called for the government to annul its trade agreement with Turkey, saying that it harms domestic industry, Asharq Alawsat reports. Egypt at the start of the year began exempting Turkish car imports from customs, further increasing pressure on the local market.

DEBT WATCH- Four Egyptian companies are gearing up to issue EGP 5 bn in sukuk on the EGX, Al Shorouk reported head of the Financial Regulatory Authority’s (FRA) insurance department Sayed Abdelfadil as saying. CIAF Leasing will offer USD 50 mn while Talaat Moustafa Group (TMG) will issue EGP 2 bn before the end of March (which is slightly sooner than previously expected). The two unnamed companies — one of which is a real estate holding company and the other a hospitality company — will offer EGP 1 bn and EGP 1.5 bn respectively. Both are still in the stage of preparing the required documents. Abdelfadil also disclosed that EFG Hermes has obtained approval for the EGP 1 bn sukuk issuance for TMG.

EFG Hermes, Banque Misr, and Abu Dhabi Islamic Bank will receive sukuk licenses within the next three months, Abdelfadil said. Consumer and structured-finance player Sarwa Capital was granted Egypt’s first sukuk license last year and will meet today with FRA officials to discuss a new issuance.

EFG Hermes is also in talks to manage green bond issuances: EFG Hermes is negotiating to manage an unnamed state company’s green bond offering, sources told the local press, without disclosing the value of the issuance.

And regulators are currently deciding whether to approve a EGP 500 mn green bond issuance by an unnamed Norwegian renewable energy company, according to a separate report.

These would be the first green bond issuances in the country: The Capital Markets Act issued last July opened the door to the introduction of new financial instruments, including short-selling, futures and commodities exchanges, sukuk, and green bonds. But FRA chief Mohamed Omran believes that green bonds will be the “biggest challenge” for financial markets over the coming period, even after the authority in November slashed inspection fees in half.

Egypt, ExxonMobil sign USD 332 mn oil and gas agreements: The Oil Ministry has signed two new agreements with ExxonMobil for oil and gas exploration in the Mediterranean, according to a cabinet statement. The US company will invest a minimum USD 332 mn to drill seven wells, paying the Egyptian government USD 17 mn as a signature bonus. The first USD 220 mn agreement covers four wells in the North East El Amriya offshore block, and the second will see Exxon drill three wells in the North Marakia block at a minimum investment cost of USD 112 mn.

Background: The US oil giant acquired both blocks last month for offshore exploration, with a combined area of more than 1.7 mn acres. Exxon will operate and hold 100% interest in both blocks, where operations are expected to start this year. The agreement comes less than a week after Shell, Apache and Petronas inked USD 450 mn in exploration and production agreements with the state oil company EGPC.

Egypt is considering sending LNG shipments to Lebanon via sea, Oil Minister Tarek El Molla told Al Arabiya. Egypt is already technically linked to Lebanon through the Pan Arab Pipeline built in 2003 — the same pipeline that delivers our gas to Jordan — but using the pipeline means that gas would have to pass through Syria first before reaching Lebanon which is no longer a viable option, El Molla said..

Egypt’s ambitions for becoming a regional energy hub have seen major developments in recent weeks: Israeli finally began exporting gas this month under the landmark USD 19.5 bn agreement. Egypt is currently receiving 200 mcf/d from Israel’s Mediterranean fields, and is set to receive more than 85 bcm over the next 15 years to use both for domestic consumption and to export. The seven-member Eastern Mediterranean Gas Forum was also formalized this month, an organization which will increase cooperation between the region’s gas producers, consumers and transit countries.

DISPUTE WATCH- Raya files appeal against EGP 110 mn+ fine: Raya Holding yesterday filed an appeal against the Cairo Economic Court’s ruling against its chairman Medhat Khalil, the company announced in an EGX disclosure (pdf). In separate comments made to Al Mal the group’s legal advisor, Hani Khalil, stated that the company’s shareholder transactions and ownership fell pursuant to EGX bylaws, insisting the Financial Regulatory Authority (FRA) instead direct its dispute towards the EGX. Khalil also contended that the regulator’s reliance on civil law to define shareholder relationship is without precedent.

Medhat Khalil was ordered to pay a record EGP 110 mn fine on Monday following a drawn out dispute between Raya Holding and the FRA over a violation of ownership regulations. Khalil had already failed to pay an EGP 11 mn fine to the regulator after he was found to have exceeded the maximum ownership limit in Raya without making a mandatory tender offer (MTO). The FRA originally ordered Khalil at the end of 2018 to make a MTO or sell off his shares after it determined that he along with related parties violated regulations by controlling a combined 42% of the company.

World Bank, IFC launch advisory program in MENA to improve MSME access to finance: The World Bank Group and the International Finance Corporation (IFC) are launching the second phase of an advisory program to improve access to finance for micro, small, and medium enterprises (MSMEs) in MENA countries including Egypt, according to an emailed statement (pdf). The program — on which the World Bank and IFC are cooperating with the Netherlands, Switzerland, the UK, and Sweden — will also be implemented in Algeria, Iraq, Jordan, Lebanon, Morocco, Tunisia, and Palestine. The program, which pays particular attention to women entrepreneurs and businesses geared towards financial inclusion, “involved enhancing the enabling environment, developing financial market infrastructure, and building the technical and funding capacity of financial intermediaries.”

LEGISLATION WATCH- The Consumer Credit Act will be introduced to the House of Representatives within the coming two weeks, Chairman of the Financial Regulatory Authority Mohamed Omran said yesterday, after the House Economic Committee signed off on the legislation. The local press is reporting that the committee introduced a new article listing the types of goods eligible to receive consumer finance. The legislation is now with the House General Committee, which will decide in a few days whether to introduce it to the general assembly.

Background: We reported yesterday that the House had given a preliminary nod to the Consumer Credit Act. Under the legislation, new consumer finance companies with at least EGP 10 mn in issued capital would be able to obtain a license from the FRA. Companies must also be at least 25% owned by a financial institution, and be founded by legal persons that hold at least 50% of the company.

Egypt’s new unified digital tax payment system is set to be fully implemented by the end of the year, Finance Minister Mohamed Maait said in a statement. The new system will provide businesses with a single online system for filing and paying income tax, stamp tax and VAT, in an effort to streamline procedures and encourage informal businesses to go legit. IBM is designing an integrated model for the automated system, while e-Finance, SAP, and Ernst & Young also have pieces of the project. The government expects to roll out a beta model for large-scale taxpayers before gradually expanding the system to encompass all tax payments. The Madbouly Cabinet greenlit the proposed legislation last year.

LEGISLATION WATCH- The Financial Regulatory Authority (FRA) will begin working on a draft law to regulate the fintech industry in collaboration with the European Bank for Reconstruction & Development, FRA boss Mohamed Omran said, according to Al Shorouk. The authority has been considering legislation to govern crowdfunding, but decided to incorporate it within a broader fintech law that would cover this type of financing. The draft should be finalized this year.

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Egypt in the News

It’s a deadzone in the foreign press this morning.

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With Dabaa, Egypt is entering the atomic age and here is your starter-pack: Hate the idea or love it, Egypt is getting a nuclear power plant. The project is massive, with a maximum capacity of 4.8 GW of nuclear power, and built by Russia’s nuclear giant Rosatom at a cost of around USD 25 bn. Close to 85% of the project’s financed by a USD 25 bn loan from Russia, with Egypt scheduled to begin repaying the 3% interest (through biannual payments over 22 years) in October 2029. The remaining cost will be sourced locally by the Egyptian government, whether from the state coffers or through local banks. As Dabaa stands out as arguably one of the most controversial of the government’s ongoing megaprojects, we’ve decided to give a primer on where things stand with the project, as well as take a look at some of the criticisms levied against it.

The time frame: Construction is expected to begin around the second half of this year, and the first 1.2 GW nuclear reactor of four will begin operations in 2026. The remaining reactors will be up and ready by FY2028-2029. The first phase of a factory to produce uranium compounds, set to service the plant, was completed by the Egyptian Atomic Energy Authority earlier this month.

Where does the project stand now? The plant got its site approval last April from the Egyptian Nuclear and Radiological Regulatory Authority (ENRRA), but a separate construction license is yet to be issued by the authority, Electricity Ministry spokesperson Ayman Hamza told Masrawy last month. Utilities and Infrastructure were already completed, while fences are in place, and housing for workers and employees are under construction.

Expanded role of Rosatom: Rosatom will supply fuel to the reactors throughout the plant’s entire operational lifetime. Rosatom will also be conducting personnel training and will assist Egypt in the operation and maintenance of the plant for the first ten years of its operation. The Russian side, according to another contract, will construct a purpose-built storage and supply containers for storing spent fuel.

But there is some room for us: Egyptian companies will carry on at least 20% of the work on the first reactor and are expected to have a bigger role in the other three. Some 150 Egyptian companies were deemed by the government to be qualified to work on Dabaa, according to sources who spoke to Al Mal last year. An announcement that Rosatom is considering establishing factories with Egyptian companies to manufacture components for Dabaa also made headlines last October.

Currently, seven Egyptian and Russian companies have submitted bids to compete in a tender to further prepare the site for construction, launched by Atomstroyexport, a Rosatem subsidiary that is the project’s main contractor. Orascom Construction, Hassan Allam, Arab Contractors, and Petrojet, alongside another unidentified Egyptian company and two Russian companies are those in the running. Other local companies involved in the project include Sabbour Consulting, which signed an MoU with the Atomic Energy Authority earlier this month that effectively makes it the main technical consultant for the project. Atomstroyexport plans to launch 20 tenders for construction and management jobs, Anatoly Kovtunov, the Egypt director of Atomstroyexport told the local press in October. In total, the Russian company issued 10 tenders so far for civil works and procurement, Kovtunov separately said.

There’s room for foreign companies as well. The government signed a USD 200 mn contract with Australian engineering consultancy firm Worleyparsons in 2017 to provide project management consulting. General Electric's Power, meanwhile, will deliver four nuclear turbine islands to the projects at an estimated cost of USD 700 mn. ENRRA is also working with two foreign technical consultants, one based in Russia and another in the Czech Republic, to assist on the regulatory front, a source from the authority told Enterprise, but named neither company and didn’t state any contract values.

Dabaa is expected to cover 10% of Egypt’s electricity needs, ENRRA Authority spokesman Karim El Adham told Enterprise. It is based on a projection that Egypt’s electricity consumption will reach over 40 GW when Dabaa is up and running, from a current 30 GW. Rosatom also said the plant would ensure competitive electricity pricing in Egypt over a period of 60 years, and improve Egypt’s ability to make savings from cheaper electricity.

But critics have voiced concerns over safety. Fears of radioactive waste have pervaded the project since its inception. The Nuclear Power Plants Authority (NPPA), which will own and operate the plant, claims it will use “improved fuel technology with extended refueling intervals” to limit radioactive waste, as well as install “a double containment structure” to prevent radioactive leaks. “With today’s level of tech globally, handling nuclear waste became much cleaner and safer, El Adham said. Others, including Ragia Elgerzawy, health and environment officer at the Egyptian Initiative for Personal Rights, allege a lack of transparency from authorities with regards to the project.

We already have an electricity surplus. So why do we need more? Egypt’s current total installed capacity of around 40 GW, outstrips current consumption by 10 GW, El Adham says. However, we need to diversify sources of energy, and conserve fuel use for the high-value petrochemicals industry, he added.

We also need to factor in our future population growth and demand. Dabaa is key to ensure future supply meets demand, considering our current birth rates, regional president of Schneider Electric Walid Sheta told Enterprise last year.

More electricity is good for our ambition to become a regional energy hub: Egypt’s plan to emerge as a regional energy hub includes exporting electricity to neighboring countries. Our grid is currently with four countries — Jordan, Palestine, Libya, and (more recently) Sudan. The former Arab country is our biggest market, with an electrical connection capacity of 400 MW. We’re also finalizing an interconnection agreement with Saudi Arabia, which is due to be signed in May, and are party to a planned USD 4 bn EuroAfrica project to connect the electricity grids of Egypt, Cyprus, and Greece is also scheduled for completion by December 2022.

Nuclear may not be the most cost effective means, though: Eric Trager, fellow at The Washington Institute, wrote that the nuclear plant is “very cost-ineffective” compared to other energy projects Cairo has signed up for recently, like the Siemens combined cycle power plant and the Benban solar park. Dabaa also compares unfavorably with other nuclear projects in the region and increases pressure on foreign reserves during the repayment process.

There will be no definitive conclusion to the Dabaa debate: The debate over the risks-vs-rewards of nuclear energy is one happening in every nuclear country in the world. High costs, nuclear waste and the carbon footprint of extracting and transporting uranium is always being weighed against the energy generating capacity of nuclear, with varying countries changing policies with varying outcomes. Germany, for one, saw its carbon emissions rise significantly following the decommissioning of its plants after the Fukushima disaster. And while the debate remains inconclusive, Dabaa is a fact of life for us. The silver lining? The plant will help Egypt diversity its energy mix as we currently rely heavily on fossil sources (oil and gas). It will also give qualified private sector outfits a chance to take part, create jobs, which will ultimately promote economic activity and growth.

Your top infrastructure stories of the past week:

  • A House of Representatives joint committee yesterday approved government amendments to the Railway Act that would hand more powers to regulate the national railway system to the Transport Minister.
  • Egypt jumped 34 places since last month in Speedtest’s latest December update in fixed broadband download speed likely due to Telecom Egypt’s USD 16 bn investment since mid-2018 to improve internet infrastructure.
  • In renewable news: Germany’s Belectric won a tender for a 50 MW solar photovoltaic power plant in Zaafarana, while Dubai’s Alcazar Energy is bidding for one wind and one solar plant in the West Nile region with a combined capacity of 450 MW.
  • The New Administrative Capital Company for Urban Development (NACCUD) signed a contract with US-based Honeywell and Etisalat Misr to develop a smart city management system for the new capital.
  • El Sewedy Electric and two unnamed Chinese and French companies won a tender to supply 200k smart electric meters for part of the first phase of the new administrative capital.

The Market Yesterday

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EGP / USD CBE market average: Buy 15.74 | Sell 15.86
EGP / USD at CIB: Buy 15.74 | Sell 15.84
EGP / USD at NBE: Buy 15.75 | Sell 15.85

EGX30 (Tuesday): 13,620 (-0.1%)
Turnover: EGP 460 mn (28% below the 90-day average)
EGX 30 year-to-date: -2.4%

THE MARKET ON TUESDAY: The EGX30 ended Tuesday’s session down 0.1%. CIB, the index’s heaviest constituent, ended down 0.2%. EGX30’s top performing constituents were Telecom Egypt up 6.1%, Sidi Kerir Petrochemicals up 2.1%, and AMOC up 0.9%. Yesterday’s worst performing stocks were Heliopolis Housing down 3.6%, ADIB down 2.9% and Pioneers Holding down 2.6%. The market turnover was EGP 460 mn, and regional investors were the sole net sellers.

Foreigners: Net long | EGP +1.8 mn
Regional: Net short | EGP -12.9 mn
Domestic: Net long | EGP +11.1 mn

Retail: 54.9% of total trades | 53.7% of buyers | 56.1% of sellers
Institutions: 45.1% of total trades | 46.3% of buyers | 43.9% of sellers

WTI: USD 53.96 (+0.9%)
Brent: USD 60.04 (+0.9%)

Natural Gas (Nymex, futures prices) USD 1.93 MMBtu, (-0.3%, February 2020 contract)
Gold: USD 1,570.80 / troy ounce (-0.3%)

TASI: 8,166 (-0.2%) (YTD: -2.7%)
ADX: 5,178 (+0.2%) (YTD: +2.0%)
DFM: 2,792 (+0.1%) (YTD: +1.0%)
KSE Premier Market: 7,024 (+0.4%)
QE: 10,422 (-0.6%) (YTD: -0.0%)
MSM: 4,087 (+0.4%) (YTD: +2.7%)
BB: 1,645 (-0.1%) (YTD: +2.2%)

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Calendar

January: 1,000 artifacts to be displayed when Hurghada Museum opens.

23 January-4 February: Cairo International Book Fair 2020, New Cairo International Exhibition and Convention Center, Egypt

27-29 January (Monday-Wednesday): African Private Equity and Venture Capital Association’s North African Fund Manager Masterclass, Sheraton Cairo Hotel, Galaa Square, Cairo.

28-30 January (Tuesday-Thursday): CI Capital’s annual MENA Investors Conference, Four Seasons Nile Plaza, Cairo.

28-29 January (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

28-29 January (Tuesday-Wednesday): Egypt and Ethiopia to meet again in Washington, DC, for mediation on GERD.

29 January (Wednesday): StartEgypt Forum 2020, the Greek Campus, Downtown, Cairo

February: An Italian business delegation will visit Egypt to discuss investments in the Port Said industrial zone.

February: A delegation of Swiss businesses will visit Egypt to discuss investment.

February: Higher Education Minister Khaled Abdel-Ghaffar will visit Minsk, Belarus.

2 February (Sunday): Cairo Economic Court will issue its verdict on two Americana Egypt lawsuits, one looking into minority shareholder’s lawsuit against Fincorp Investment Holding as Adeptio AD Investments’ financial advisor for its mandatory tender offer (MTO) for Americana Egypt and the other is concerned with an appeal by Adeptio AD Investments against a Financial Regulatory Authority to submit a mandatory tender offer (MTO) for Americana Egypt.

3-5 February: The Arab-African International Forum, Jeddah, Saudi Arabia.

4 February (Tuesday): Court hearing for PTT Energy Resources’ USD 1 bn lawsuit against Egyptian government.

8 February (Saturday): Midterm break ends. Traffic in Cairo stinks once more.

9-10 February (Sunday-Monday): The the 33rd ordinary African Union (AU) Summit where Egypt will hand over the African Union presidency to South Africa

11-13 February (Tuesday-Thursday): Egypt Petroleum Show, Egypt International Exhibition Center, Nasr City, Cairo.

14-16 February (Friday-Sunday): A Euro-Mediterranean Organization for Economic and Development Cooperation delegation will visit Egypt to discuss cooperating in the field of organic cotton and home textiles

23 February (Sunday): Court session for Arabia Investments Holdings’ lawsuit against Peugeot. It was previously postponed to 24 November 2019 and then to 5 January 2020, and now 23 February.

23 February (Sunday): Court session for Amer Group, Porto Group compensation claim against Antaradous

20 February (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

March: The Middle East and North Africa Financial Action Task Force (MENAFATF) will visit Egypt to assess the progress of actions taken to combat money laundering and terrorist sponsoring activities.

1 March: A conference on “logistics and its impact on the movement of goods and industry,” venue TBD, Alexandria.

3 March (Tuesday): Business Today’s bt100 awards ceremony, Cairo.

4-5 March (Wednesday-Thursday): Women Economic Forum, Cairo.

7 March (Saturday): International Conference for Investment organized by Suez Canal Economic Authority, Al Galala City, Egypt

17-18 March (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

25-26 March (Wednesday-Thursday): Mega Projects Conference, Egypt International Exhibition Center, Nasr City, Cairo.

7 April (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

12 April (Sunday): Easter Sunday.

20 April (Monday): Sham El Nessim, national holiday.

23 April (Thursday): First day of Ramadan (TBC).

25 April (Saturday): Sinai Liberation Day, national holiday.

28-29 April (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

5-7 May (Tuesday-Thursday): AFSIC – Investing in Africa, London, United Kingdom.

14 May (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

23-26 May (Saturday-Tuesday): Eid El Fitr (TBC).

9-10 June (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

17-20 June (Wednesday-Saturday): 2019 Automech Formula car expo, Egypt International Exhibition Center, Cairo.

30 June (Sunday): June 2013 protests anniversary, national holiday.

25 June (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

28-29 July (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

30 July-3 August (Thursday-Monday): Eid El Adha (TBC), national holiday.

13 August (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

20 August (Wednesday-Thursday): Islamic New Year (TBC), national holiday.

15-16 September (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

24 September (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

6 October (Tuesday): Armed Forces Day, national holiday.

29 October (Thursday): Prophet Mohamed’s birthday (TBC), national holiday.

November: Egypt will host simultaneously the International Capital Market Association’s emerging market, and Africa and Middle East meetings.

4-5 November (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

5 November (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

12 November (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

15-16 December (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

17 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

24 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

25 December (Friday): Western Christmas.

1 January 2021 (Friday): New Year’s Day, national holiday.

7 January 2021 (Thursday): Coptic Christmas, national holiday.

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