After 6 years, Russia finally lifts ban on Red Sea flights

Good morning, ladies and gents — we start the new week with the official news that Eid El Adha will begin next Tuesday, 20 July after Dar Al Iftaa yesterday evening came out with a statement confirming the news. Though we’re expecting the vacation to run through Thursday, the government, banks, and the EGX are yet to announce the official days off.

The biggest news over the weekend came to us courtesy of Moscow, which finally announced that it had lifted its ban on direct flights to Egypt’s Red Sea resorts after six long years (though we’re still none the wiser about when airlines will have their routes up and running). This coincided with the biggest non-story of the weekend, which saw a lot of talk and equal amounts of hand-sitting at the UN Security Council’s chamber in New York, leaving the way forward through the GERD crisis as uncertain as ever. All that and more in the news well, below.

But before we get to it, we open the issue with more sombre news…

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Former Egyptian first lady Jehan El Sadat passed away at the age of 88 last Friday, an Ittihadiya statement announced at the weekend. Her military funeral service was attended by President Abdel Fattah El-Sisi and dozens of governmental officials. The widow of late president Anwar El Sadat had reportedly been struggling with illness for some time. The former first lady was married to late president Anwar El Sadat from 1949 until his assassination in 1981. The BBC also took note of the former first lady’s passing, as well as her contribution to advancing women’s rights in Egypt where she pushed for laws granting women the right to custody of children after divorce.

The story got a lot of digital ink in the global press over the weekend: Reuters | Associated Press | Washington Post I New York Times I BBC.

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THE BIG STORY INTERNATIONALLY- Covid variants + vaccine inequality threaten global economy -G20: G20 finance ministers warned yesterday that the spread of new variants of covid-19 and uneven vaccination rollouts across the developing world could jeopardize the global recovery. IMF Managing Director Kristalina Georgieva said that the rapidly spreading delta variant means that the virus remains the “fundamental risk facing the world,” while ministers pledged to maintain economic support to prevent recoveries from faltering.

Ministers also signed off on the global tax pact: G20 finance ministers yesterday signed off on an agreement that would levy an international tax on multinational corporations, Reuters reports. The plan, backed by G7 nations last month and agreed by some 130 countries last week, would impose a minimum global corporate tax rate of 15% on large corporations in every country they operate in.

Holdout states are being pressed to sign up:The G20 is urging all countries holding out to sign up to the global corporate tax pact before the meeting of G20 leaders, according to the Financial Times. Eight nations including Ireland, Barbados, Hungary and Estonia are refusing to sign up to the minimum tax.

But there are other hurdles: US lawmakers could still prevent the country from taking part in the accord, which requires Congressional approval to be finalized. A Treasury official told Bloomberg that pillar 1 of the agreement, which entails a redistribution of tax rights on multinationals, won't be greenlit before next year amid congressional opposition.

What’s next? The pact will be discussed by the G20 leaders when they convene in Italy in October. The OECD accord is slated for implementation in 2023.

***CATCH UP QUICK with the top stories from Thursday’s edition of EnterprisePM:

• Annual urban inflation inched up at a slower than expected pace in June: Capmas figures showed the headline rate accelerating from 4.8% in May to 4.9% last month, well below the 5.5% predicted by some analysts thanks to a favorable base effect and a slowdown in the growth of monthly food prices. The national rate (including urban and rural areas) increased at a sharper rate to 5.7% from 4.9%.
• Eni is on board with the government’s clean hydrogen plans: Eni will work on feasibility studies to produce green and blue hydrogen under an MoU signed with state-owned Egyptian Natural Gas Holding Company (EGAS).
• Eight Egyptian startups raised USD 52 mn in June: Egyptian startups were the second highest recipients of funding in MENA in June, with the majority of that figure coming from Trella’s USD 42 mn funding round co-led by Maersk Growth that was closed late last month.

WHAT’S HAPPENING TODAY-

The EGX will continue to test out closing auctions today, having closed out last week with a mock trial of the proposed system. A third mock session will be undertaken tomorrow. Last week we spoke to EGX boss Mohamed Farid, who gave us the lowdown on the proposal that’s currently on the table and what it could mean for the exchange.

Parliament will discuss today and tomorrow the draft bill that would toughen penalties for [redacted] harassment. The draft bill, approved by the House Legislative Committee in late June, would hand offenders between two and four years in prison and fines worth EGP 100k-200k. Under current legislation, the maximum penalty is a one-year jail sentence and a fine of up to EGP 10k.

WATCH THIS TONIGHT- It’s England v Italy in the Euro 2020 final, which will take place at 9pm CLT in London’s Wembley Stadium, where 60k supporters will be permitted to attend.

It was the Copa America final last night: Argentina were crowned South American champions after edging out Brazil 1-0 to take home their first major cup in almost three decades.

PSA– Egyptians will now pay EGP 300 to issue a mandatory ins. certificate when issuing or renewing their passports under the travel ins. policy issued last month by the Financial Regulatory Authority (FRA), effective as of 3 July, according to the Official Gazette (pdf). The new policy covers all overseas trips that do not exceed 90 consecutive days. It sets a limit of EUR 30k in ins. coverage for medical expenses and hospitalization costs, provided that the patient bears the first EUR 100 in expenses. The decision also covers the costs of transportation of the insured person to Egypt in case of illness or accident, as well as the costs of repatriating their bodies in case of death.

HAPPENING THIS WEEK-

Are we going to get a decision on fuel prices? The government’s fuel pricing committee has been in talks since the beginning of the month over whether to raise, cut or leave on hold fuel prices during 3Q2021. We were expecting to hear something yesterday but a government official had suggested that a decision could instead be made later in the month.

The committee’s decision has been made more difficult by the inability of OPEC+ to reach a new oil supply agreement. The dispute between the UAE and Saudi Arabia which last week blocked a proposal to increase production has thrown the market into uncertainty. Some analysts see prices rising rapidly as the absence of new supply causes the market to tighten further. Others have warned that a dispute between two of OPEC’s largest producers could pose an existential threat to the alliance, potentially resulting in a new price war and plunging prices.

The EGX will hold its board elections for the 2021-2025 term on Wednesday, 14 July. Here’s a rundown of the candidates vying to fill board positions.

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CIRCLE YOUR CALENDAR-

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

The Great Russian Return is finally happening: Egypt’s Red Sea resorts are set for an influx of Russian holiday-makers after Russian President Vladimir Putin lifted the six-year flight ban on Thursday, Egypt’s Foreign Ministry said in a statement. Direct flights between Russia and Egypt’s Red Sea destinations had been suspended for security reasons since 2015’s Metrojet crash in Sinai.

Moscow has kept us on our toes for the past 10 weeks: We had been expecting flights to resume in May, after Putin agreed during a phone call with President Abdel Fattah El Sisi to lift the ban. The situation soon became more uncertain when the governor of the Red Sea claimed flights would return in June, only for the Kremlin to say that the trajectory of the covid-19 pandemic will determine when Russians are allowed to return to the Red Sea.

So when exactly can we expect the first tourists to land? That much remains unclear, with the foreign ministry statement saying that “Egypt looks forward to the speedy return of Russian tourists to Egyptian resorts.”

The return of direct charter flights will bring much needed FX inflows for Egypt: Goldman Sachs has estimated that the return of Russia-Red Sea flights could eventually be worth some some USD 3 bn in annual tourism revenues. Almost 3 mn Russian tourists visited Egypt in 2014 prior to the ban, the most of any other nationality.

How many can we expect when flights resume? Deputy Tourism Minister Ghada Shalaby told Russia’s Sputnik news Friday that Egypt expects from 300K to 400K Russian tourists per month following the decision, and had said in April that Egypt could see as many as 1 mn Russian tourists this year if the ban is lifted.

Egypt is already welcoming more tourists in 2021 than it did last year: Around 3.5 mn tourists visited the country during the first half of 2021, which is around the same number who visited during all of 2020. The government expects tourism to bring in between USD 6-9 bn this year, compared to USD 4.4 bn last year.

A good time for flights to return: The government earlier this month eased occupancy restrictions on hotels, allowing them to operate at up to 70% capacity for the first time since the initial wave of the pandemic. Hotels, restaurants and other non-essential businesses had been required to operate at only 50% capacity since last July as a precautionary measure put in place to curb the spread of the virus.

Bechtel will design Africa’s largest petchem complex: US construction giant Bechtel will lead the design and construction of the USD 7.5 bn petchem complex being built by the Red Sea National Refining and Petrochemicals Company in the Ain Sokhna industrial zone under two agreements signed with the Oil Ministry over the weekend, the ministry said in a statement. The agreements will see the US company working alongside state-owned Petrojet and Enppi on the project management, engineering design services, and construction of the facility, which the government says will be the largest of its kind in Africa.

Red Sea National Refining and Petrochemicals Company and Bechtel are expected to sign an official agreement for the project in early August, the statement said. Bechtel, Technip and Saipem have already assisted the Egyptian Petrochemicals Holding Company (ECHEM) in conducting preliminary studies for the project, while Bechtel is said to also be securing funding from unnamed international institutions for the execution of the project.

What’s happening with TPC? We’ve been told that the Red Sea-Bechtel refinery is a separate project to the USD 11 bn Tahrir Petrochemicals Complex (TPC), which is also billing itself as the biggest refinery of its kind in Africa. TPC owner Carbon Holdings was reported in April to be restructuring mns of USD in debt taken on to finance the construction of the plant. A TPC official declined to provide an update on the project when approached by Enterprise at the time.

Zeta doesn’t look like its getting 90% of ANFI: Shareholders of Alexandria National Company for Financial Investment (ANFI) appear to have declined to sell their holdings to Hong Kong-based Zeta Investments, after the subscription period for its MTO to acquire 90% of the company ended Thursday without any offers to sell, Hapi Journal reports.

Higher bid not enough: Zeta had raised its offer to EGP 6.00 per share from EGP 5.48 following a higher bid by rival Compass Capital, which had offered to purchase 100% of the company for EGP 5.72 per share.

Compass Capital is still very much in the running: The Financial Regulatory Authority approved (pdf) Thursday Compass Capital’s MTO, which is now offering to pay EGP 6.12 per share, valuing the company at EGP 32 mn. The subscription period will last 10 working days, ending on 28 July. Compass had upped its bid last week in response to Zeta raising its offer to EGP 6.00.

But Zeta isn’t down and out just yet: Sources tell Al Mal that Zeta is planning on lodging a new bid for the company, without providing further information. Egyptian capital market regulations allow companies to submit a new purchase offer within five working days of a previous offer.

Other bidders appear to have fallen by the wayside: Offers to acquire ANFI had come from Tycoon Holding, which offered to acquire a 90% stake for EGP 5.60 per share, as well as Kayan Sustainable Development, Zaldi Capital, and a group of investors including Egyptian businessman Ahmed El Saba and Saudi Arabia’s Mostafa El Humeidan. Gulf lender Abu Dhabi Islamic Bank is the selling party and owns almost 85% of the company, holding 9% directly and the remainder through its KWIN and ADI Lease subsidiaries.

Egypt will receive its first shipment of Pfizer and Johnson & Johnson vaccines, as well as a new batch of the Oxford / AstraZeneca jab in the coming days, Health Minister Hala Zayed told El Hekaya’s Amr Adib on Friday (watch, runtime: 1:49). Some 2 mn doses of the Pfizer / BioNTech mRNA vaccine will be delivered, she said, but didn’t provide further information on the J&J or AstraZeneca shipments. The minister said last month that Egypt would receive in July the final 1.9 mn doses of AstraZeneca allocated under the Gavi / Covax program.

We’re not sure where the Pfizer + J&J vaccines are coming from or whether we’ve paid for them or not. Until now we’ve had zero intel that Egypt would be getting its hands on any of the Pfizer jabs, while the last thing we heard about J&J was that we would receive the first shipment in the final quarter of 2021. As far as we’re aware, all the J&J vaccines we’re in line for are coming through the African Union, which has organized mns of doses of the vaccine to be distributed among African countries.

Egypt is also set to receive in the coming days raw materials to manufacture another 5 mn doses of home-made Sinovac, Zayed added.

The Health Ministry reported 121 new covid-19 infections yesterday, down from 127 the day before. Egypt has now disclosed a total of 282,985 confirmed cases of covid-19. The ministry also reported 15 new deaths, bringing the country’s total death toll to 16,383.

IN GLOBAL COVID NEWS-

Senegal to boost Africa’s vaccine production capacity with new plant: Senegal will start construction of a new plant for production of covid-19 vaccines later this year, Reuters reports. European countries and institutions pledged EUR 6.75 mn worth of grants for the plant construction, with the facility targeting to produce 25 mn doses by the end of next year. Senegal earlier announced plans to produce 300 mn doses by the end of next year.

The investment is part of an EUR 1 bn initiative announced by the EU to establish covid-19 vaccine manufacturing facilities in Africa, with Egypt, Senegal, South Africa, Rwanda and Morocco being among the leading candidates. Vaccine imports currently account for 99% Africa's needs, while vaccination rates still don’t exceed 1% of the continent’s population, a statistic made even worse by the current spread of the delta variant.

G20 governments should allocate at least USD 75 bn over the next five years to emergency response plans for future pandemics, according to a report presented to finance ministers and central bankers from the G20 group of nations, the Financial Times reports. World leaders should commit USD 10 bn to a Global Health Threats Fund that would support research through public private partnerships to create a steady global supply of vaccines, tests and PPE, the report recommended. An additional USD 5 bn annually would be channelled to the World Health Organization, the World Bank, IMF and regional lenders.

Little progress at the UN Security Council on GERD: After more than a week of build-up and anticipation, it seems that France’s UN rep was correct: efforts to persuade the UN Security Council to intervene in the dispute over the Grand Ethiopian Renaissance Dam (GERD) did not amount to much. Official statements and reports in the global press suggest that we’re in the same position as we were this time last week: Egypt and Sudan are calling on the UN to back their draft resolution, Ethiopia is protesting against it, and members of the Security Council are reiterating their support for the African Union-led negotiations.

We were warned about this: French UN Ambassador and council president Nicolas de Riviere said days before the meeting that the most the council will do is encourage the three countries to get back around the table and continue negotiations.

Egypt and Sudan are still pushing the Security Council to vote on the resolution tabled by Tunisia, which would set a new six-month deadline for the three countries to come to an agreement through a new round of talks that would bring in an additional mediator such as the UN to work alongside the AU.

Both countries’ foreign ministers sounded notes of optimism in a post-meeting presser, according to the Associated Press. Council members showed support for the resolution and agreed that no unilateral action should be taken, Foreign Minister Sameh Shoukry said. And Sudanese Foreign Minister Mariam Al Mahdi said that “we are very much optimistic that the Security Council will address this matter in a responsible way, and it will not just be dropped from its agenda,”

But it doesn’t sound like the council is in a rush to vote on the resolution: Shoukry told Kelma Akhira’s Lamees El Hadidi last night that the draft resolution will be discussed at some point by the council but emphasized that the process is probably going to take some time (watch, runtime 20:28).

Meanwhile, Ethiopia is still insisting on African solutions to African problems: Ethiopian Irrigation Minister Seleshi Bekele said during the meeting that the council should not get involved in Nile water issues, insisting the matter could be resolved with the mediation of the AU. And the country’s foreign ministry spokesperson Dina Mufti told reporters at the weekend that the filling of the dam’s reservoir will continue as planned with or without an agreement with the two downstream countries.

The story dominated the conversation on Egypt over the weekend: AP | Reuters | WSJ | Bloomberg | BBC.

IN OTHER DIPLO NEWS-

Egypt and Senegal signed a cooperation agreement on Friday to establish a joint business council. The two countries hope to triple bilateral trade to more than USD 200 mn over the next three years.

Everyone is still talking about GERD everywhere on talk shows yesterday: Foreign Minister Sameh Shoukry talked to Kelma Akhira’s Lamees Al Hadidi to comment on Thursday’s session at the UN Security Council over the Grand Ethiopian Renaissance Dam (GERD) (watch, runtime 20:28). He described the council’s situation as “complicated” due to its political considerations and intertwining interests.

Egypt still hopes for action by the UN Security Council: Comments made by the council’s members during the session have shown so far their great interest in the issue and understanding of the need to reach a legally-binding agreement over the dam via AU-backed discussions.

The issue of mediation was emphasized by Shoukry, who told Lamees that additional mediators such as the UN, the EU or South Africa will need to be brought into the process before negotiations can resume (watch, runtime 20:28). The issue of mediation has been a key point of contention between the three sides: Sudan and Egypt have for months been pushing for new mediators but Ethiopia has insisted that it will only sit down for AU-sponsored talks.

The council’s session also got full coverage and analysis in Al Hayah Al Youm (watch, runtime 28:19) and El Hekaya’s Amr Adib (watch, runtime 15:07)

ALSO ON THE AIRWAVES- The first day of the Thanaweya Amma exams also got attention, with Education Minister Tarek Shawki making appearances on El Hekaya (watch, runtime 14:23), Ala Mas'ouleety (watch, runtime 18:39) and Hadeeth Al Kahira (watch, runtime 14:23) to evaluate the new hybrid examination system during its first day of implementation and address concerns expressed by some students over the difficulty of some exam questions. Al Hayah Al Youm also interviewed students to get their insights on the new system (watch, runtime 3:15).

Refresher: Students are being tested via multiple-choice bubble sheets, and are required to record their answers digitally on tablets and on paper in case of any technical malfunctions.

Eid prayers should have the same precautionary measures implemented during Eid El Fitr, starting from social distancing to wearing face masks, Endowments Minister Mohamed Mokhtar Gomaa reiterated in a phone call with Amr Adib (watch, runtime 2:01). Traditional Eid prayers will be only at mosques where Friday prayers are being held. The takbir will only last for seven minutes at most while the sermon will be up for 10 minutes, he added.

It’s another human-rights centred weekend in the foreign press: The New York Times writes that the Egyptian government has denied its report last week that featured interviews with women who claimed to have been assaulted by security forces. Meanwhile, Reuters reports that activists are speaking up against the sentencing of two Tik Tok influencers on human trafficking charges, and Al Monitor is reporting that a US advocacy group is lobbying Secretary of State Anthony Blinken to speak up against poor medical conditions in Egypt’s prisons.

Also making headlines:

• The government plans to regulate tuk-tuks and integrate them into the nat gas vehicle transition scheme. (Reuters)
• Egypt plans to integrate “vertical forests” into the new capital, utilizing facades of buildings as surfaces on which to grow foliage in order to provide a cooling effect and absorb 7 tonnes of CO2 annually. (CNN)
• Raphael Cormack’s book on Cairo’s 1920s divas, Midnight in Cairo, is getting yet another positive nod in the foreign papers (FT).

There’s nothing on our radar this morning. It’s just that kind of a day.

Ethiopia PM Abiy's party reelected in landslide vote: Prime Minister Abiy Ahmed will remain in government for another five years after his Prosperity Party won the majority seats in last month’s parliamentary elections. The party won 410 out of the 436 contested seats in the country’s federal parliament, though dozens of other seats will remain empty after some of the 547 constituencies didn’t vote due to unrest and logistical issues. Ethiopia’s new government is likely to be formed in October. The news got coverage in Reuters, Associated Press, Bloomberg and the Guardian.

Also worth knowing this morning:

• Lebanon’s energy crisis is worsening: Lebanon is facing severe power outages after two major plants supplying 40% of the country’s energy shut down on Friday, Bloomberg reports.
• UN human rights investigator slams Israeli settlements as a war crime: Israel’s illegal settlements in the West Bank and east Jerusalem amount to “a war crime,” the UN’s special rapporteur on human rights in the occupied Palestinian territory has said in a report, according to Reuters.

July: The government’s fuel pricing committee will meet to announce 3Q prices.

14 July (Wednesday): The EGX will hold board elections for the 2021-2025 term.

Mid-July: Legislative session expected to end.

19 July (Monday): Arafat Day (national holiday).

21 July (Wednesday): Clean Energy Business Council’s webinar Women entrepreneurs in clean energy (3pm)

20-23 July (Tuesday-Friday): Eid Al Adha (national holiday).

23 July (Friday): Revolution Day (national holiday).

23 July-11 August (Friday-Wednesday): Tokyo 2020 Olympics.

2-4 August (Monday-Wednesday): Egypt is hosting the Africa Food Manufacturing exhibition at the Egypt International Exhibition Center.

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

9 August (Monday): Islamic New Year.

12 August (Thursday): National holiday in observance of the Islamic New Year.

3-5 September (Friday-Sunday): The World Karate Federation will hold the third competition of the 2021 Karate 1-Premier League in Cairo.

12-15 September (Sunday-Wednesday): Sahara Expo: the 33rd International Agricultural Exhibition for Africa and the Middle East.

15 September (Wednesday): The CFO Leadership & Strategy Summit is taking place in Egypt.

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

30 September-2 October (Thursday-Saturday): Egypt Projects 2021 expo, Egypt International Exhibition Center, Cairo, Egypt.

30 September-8 October (Thursday-Friday): The Cairo International Fair, Cairo International Conference Center, Cairo, Egypt.

30 September: Closing of 2021’s first oil and gas tender in the Gulf of Suez, Western Desert, and the Mediterranean.

1 October (Friday): Businesses importing goods at seaports will need to file shipping documents and cargo data digitally to the Advance Cargo Information (ACI) system.

1 October (Friday): Expo 2020 Dubai opens.

6 October (Wednesday): Armed Forces Day.

7 October (Thursday): National holiday in observance of Armed Forces Day.

12-14 October (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

18 October (Monday): Prophet’s Birthday.

21 October (Thursday): National holiday in observance of the Prophet’s Birthday.

24-28 October (Sunday-Thursday) Cairo Water Week, Cairo, Egypt.

27-28 October (Wednesday-Thursday) Intelligent Cities Exhibition & Conference, Royal Maxim Palace Kempinski, Cairo, Egypt.

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

30 October – 4 November (Saturday-Thursday): The first edition of Race The Legends, Egypt.

1-3 November (Monday-Wednesday): Egypt Energy exhibition on power and renewable energy, Egypt International Exhibition Center, Cairo, Egypt.

November: Egypt will host another round of talks to reach a potential Egyptian-Eurasian trade agreement, which can significantly contribute to increasing the volume of Egyptian exports to the Russia-led bloc that includes Armenia, Belarus, Kazakhstan and Kyrgyzstan.

1-12 November (Monday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

29 November-2 December (Monday-Thursday): Egypt Defense Expo.

12-14 December (Sunday-Tuesday): Food Africa Cairo trade exhibition, Egypt International Exhibition Center, Cairo, Egypt.

13-17 December: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

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

14-16 February 2022 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

1H2022: The World Economic Forum annual meeting, location TBD.

May 2022: Investment in Logistics Conference, Cairo, Egypt.

27 June-3 July 2022 (Monday-Sunday): World University Squash Championships, New Giza.

**Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish below between the actual holiday and its observance.