Tobacco license tender goes live on 1 August

Good morning, all. We have another packed issue for you this morning, albeit one that is again low on hard business news. Instead, legislation dominates the agenda: with our elected representatives eager to escape to Sahel for the summer recess, the general assembly votes are coming thick and fast. All that and more in the news well, below.

THE BIG STORY INTERNATIONALLY- Nothing is dominating the front pages of the international press this morning. Here’s some of the stories that are gaining traction:

• Biden plots new trade pact to counter China; The Biden administration is considering a “digital trade agreement” that would bring Indo-Pacific countries into a common area that would harmonize regulations on data usage, trade and electronic customs (Bloomberg).
• Back off, Pfizer: US officials are pushing back against Pfizer, which is lobbying for regulators to authorize booster shots as the delta variant spreads across the country. (NYT)
• Sounds like Cuba needs some democracy: The US has expressed support for huge demonstrations that took place in Cuba on Sunday that saw thousands take to the streets to protest the government’s handling of the economy and the pandemic (Reuters | AP | FT | WSJ)

WHAT’S HAPPENING THIS WEEK-

The EGX will hold its board elections for the 2021-2025 term tomorrow, 14 July. Here’s a rundown (pdf) of the candidates vying to fill board positions, updated yesterday after Porto Group Chairman Gamal Fathallah withdrew from the race.

Expect a decision on fuel prices in the coming days: 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.

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

• Gold exploration contracts inked: The government signed four new gold exploration contracts worth more than USD 17 mn with Sukkari operator Centamin and Canada’s B2Gold.
• Yodawy raises USD 7.5 mn series B funding: Yodawy landed USD 7.5 mn in a series B funding round led by Algebra Ventures, Beirut-based Middle East Venture Partners and UAE-based VC firm Global Ventures.
• GEMS goes to Somabay: GEMS, EFG Hermes, and the Sovereign Fund of Egypt’s Egypt Education Platform will develop and operate a GEMS International School in Soma Bay.

CIRCLE YOUR CALENDAR-

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

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: The government is planning to integrate informal waste collectors into its new waste management system by employing them as private sector contractors. But waste collectors mainly rely on service fees and tips from households, as well as selling sorted waste to recyclers and manufacturers. All that may be put at risk, they believe, with the implementation of the new system, which could threaten a way of life that has existed for hundreds of years.

Tobacco license tender goes live in August: Tobacco players will be able to bid for a license to establish Egypt’s second major tobacco company from 1 August in the second iteration of a tender that was pulled earlier this year after attracting criticism for containing unfair terms, Al Shorouk reports. The Industrial Development Authority (IDA) has now revised the conditions booklet and plans to open the tender for bidding at the beginning of next month, Federation of Egyptian Industries’ (FEI) tobacco division Ibrahim Imbaby told the newspaper.

Take one: The conditions booklet has been redrafted by the government more than two months after several tobacco players filed a couple of complaints with the FEI, the IDA and the Egyptian Competition Authority (ECA), alleging that the license would provide preferential treatment to current tobacco monopoly Eastern Company and would set up a new monopoly over e-cigarettes and heated tobacco. Under the first tender, the new market entrant would have had to price its products 50% higher than Eastern, and allow the state company to own a 24% stake.

Take two: The new terms slash the number of cigarettes the company will have to produce to 1 bn each year, down from 15 bn in the original tender. The government has also agreed to issue more licenses following the tender, scrapping a rule that would have prevented new licenses in the decade following the tender.

One controversial condition doesn’t seem to have changed: Eastern Company will still own 24% of the new market entrant, according to Al Shorouk.

And we’re still none the wiser about the others: We don’t know whether the new company would still be required to effectively price itself out of the market, nor is it clear how the new conditions would prevent an emerging e-cigarettes monopoly.

The potential bidders: JTI-Nakhla Tobacco, British American Tobacco Egypt, Imperial Tobacco and Al Mansour International Distribution Company were all invited to bid in March but it's unclear which will submit bids under the new conditions.

The Cairo Court of Cassation has overturned an International Court of Arbitration (ICC) ruling against Damietta Port Authority that had obliged it to pay USD 494 mn in compensation to the Damietta International Ports Company (DIPCO), according to a statement (pdf).

The ruling is the latest development in a five-year-old dispute between the two sides over the termination of a contract to construct a container terminal at Damietta Port, after the ICC tribunal had slapped last year the DPA with the fine. The DPA had initially lost its appeal against the fine in December 2020 after the Cairo Court of Appeals upheld the ICC’s ruling. DIPCO was awarded the contract in 2006, which was then annulled in 2015 by DPA, who claimed DIPCO had failed to adhere to the agreed time frame.

Advisors: Cairo-based Youssef & Partners and US-based Crowell & Moring represented DIPCO in the arbitration, while Sarie ElDin & Partners represented DPA. MAS law firm also acted for DIPCO in the litigation, while Sarie El Din & Partners acted for DPA.

INVESTMENT WATCH-

The Transport Ministry is reportedly set to sign in September or October new contracts with Italy’s Eurogate for the management and operation of the container terminal, sources close to the agreement told Enterprise yesterday. The first phase of the project should cost EUR 700 mn, of which Eurogate will pay EUR 400 mn and the DPA funding the remainder. The second phase of the terminal’s development should also include the extension of several rail lines from various sea and land ports to the terminal, and will take place starting 2025, the sources said.

Lawmakers have authorized President Abdel Fattah El Sisi to do whatever is necessary to protect Egypt’s water security from the Grand Ethiopian Renaissance Dam, Youm7 reports. The mandate appears to allow the presidency to take any measure he chooses — up to and including military action — to mitigate the dam’s threat to Egypt’s water supply. MPs quoted by the paper said it is important that El Sisi is able to act at his discretion to solve the crisis, and said that the Egyptian people are against Ethiopia’s filling of the dam and support measures being taken to prevent it.

A dead-end at the UN: The move comes a few days after Egypt and Sudan failed to get the backing of the UN Security Council on the GERD. The two countries spent much of last week lobbying the council to condemn Ethiopia’s decision to unilaterally fill the dam and pressure it to return to the negotiating table with different mediators. But in a meeting last Thursday, members declined to take Egypt’s side, instead reiterating their support for the current African Union-led process and calling on all sides to re-enter talks. The president hasn’t made any public statements about the GERD crisis since the meeting.

The Europeans don’t sound like they’re about to flex their diplomatic muscle: In a statement yesterday, EU foreign ministers expressed “regret” that Ethiopia had chosen to continue filling the dam and called its actions “unhelpful,” but refrained from taking a stronger position on the dispute. Ministers appeared to rule out acting as mediators in the dispute, and instead expressed support for the AU process, calling on all three sides to resume talks.

The EU has been Egypt’s latest focus: Shoukry has been in Brussels for the past two days holding talks with European foreign ministers, European Council president Charles Michel, and Nato Secretary-General Jens Stoltenberg. El Sisi is also scheduled to visit Brussels soon, Shoukry told Al Ghad TV last night (watch, runtime 7:00).

So back to the AU? The AU will present new ideas for resuming the negotiating process and resolving the impasse, Shoukry said during a separate interview on Ala Mas’ouleety last night (watch, runtime 16:18).

Why Russia and China didn’t back us: Al Shorouk Editor-in-Chief Emad El Din Hussein told Al Kahera Wal Nas last night that Russia’s neutral position at the council was surprising, but suggested that its trying to expand its influence in Ethiopia as part of great power competition with the US (watch, runtime 10:11). As for China, Hussein noted that many of Ethiopia’s developmental projects are being carried out by Chinese companies, and that Beijing prefers to keep the GERD issue away from the council because of this.

GERD is getting attention in the foreign press this morning, with articles in the National and the UK Independent warning that Egypt and Sudan are running out of diplomatic options after the UN Security Council last week refused to condemn Ethiopia’s unilateral filling of the Grand Ethiopian Renaissance Dam (GERD). The two countries had few backers on the council, with Russia warning them against “escalation of confrontational rhetoric,” and the US hesitant to get involved in the issue. This, analysts say, may force Cairo and Khartoum to either reenter negotiations on Ethiopia’s terms or take military action.

People found guilty of [redacted] harassment will now face tougher penalties after the House of Representatives yesterday approved amendments to the penal code, Youm7 reports. Under the old law, offenders would receive a minimum one-year jail sentence and a EGP 10k-20k fine. The amendments raise the sentences significantly, handing harassers minimum five-year prison terms and fines worth EGP 200k-300k. Minimum seven-year jail sentences will be handed to people who collaborate with others, use weapons or have professional or personal authority over the victim. Reuters also took note of the story.

But some are questioning how the law will be enforced: Women’s rights groups have welcomed the stronger laws, but warned that the penalties won’t mean much unless they are enforced and awareness is raised about the issues of harassment, Reuters reports.

Lawmakers also gave their final approval to amendments that hand the presidency the authority to dismiss state employees without disciplinary action, Al Shorouk reports. The amendments to the Civil Service Act would allow those with suspected links with any terrorist organization to be temporarily suspended from their positions for up to six months and have half of their pay docked while an investigation is conducted. Employees will be permanently fired if these links are proven correct but will be able to appeal the decision before administrative courts. The bill was initially approved by the House in late June and came in response to several rail incidents, which Transport Minister Kamel El Wazir claimed were due to “extremist elements” in the Railways Authority. The story got coverage in Reuters and TRT World.

ALSO GETTING THE HOUSE’S APPROVAL

• Amendments obliging cotton ginners to record the quantity and quality of their cotton supplies and make records available to the Cotton Arbitration and Testing General Organization. Those who are in violation may have their supplies seized, and could face up to six months in jail, or pay a fine ranging from EGP 100k to EGP 1 mn.
• Amendments to several internal parliamentary regulations governing fund management, the process of delegating a deputy in the absence of the house speaker, and giving the cabinet the authority to refer draft bills to the senate before they are discussed by the lower house
• The extension of the state of emergency for another three months.

Rosatom will provide between USD 3-4 bn to several Egyptian contractors working at the site of the Dabaa nuclear power plant as soon as permits are issued and construction begins, the company’s Chief Sustainability Officer Polina Lion told a presser yesterday, according to a press release (pdf).

The contractors: Hassan Allam Construction, Arab Contractors and Petrojet have all been awarded contracts to begin work preparing the site ahead of construction.

The permits: We’re not sure when we can expect approval on these. The Nuclear Power Plants Authority has only recently handed to the regulator the licensing documents to construct the first two reactors. Construction will begin as soon as the permits have been granted, Rosatom said last week.

We’re running a year behind schedule: Construction work was slated to begin in the second half of last year but there appear to have been delays regarding the construction permits. Last year, it was said that the first 1.2 GW reactor would be up and running by 2026 and the remaining units coming online during FY2028-2029.

The plant: Russia’s state-owned nuclear giant was contracted in 2015 to construct the 4.8 GW nuclear plant — located 184 km west of Alexandria. The facility is costing in the region of USD 30 bn, 85% of which is being financed through a USD 25 bn loan from Russia, with Egypt scheduled to begin repaying the sum with 3% interest in October 2029.

IN OTHER ENERGY NEWS-

Snam boss in town to talk green hydrogen: The CEO of Italian energy company Snam Marco Alvera was in Cairo yesterday for talks with Prime Minister Moustafa Madbouly over potential investments in renewable energy projects such as green hydrogen production, the cabinet said in a statement, without providing further details.

Snam isn’t the first industry player to show interest in green hydrogen in Egypt: Siemens is working on a pilot project to produce green hydrogen in Egypt, while Eni is producing feasibility studies on green and blue hydrogen production. South Korea’s Hyundai Rotem has also discussed the subject with government officials.

This is part of a USD 3-4 bn plan that could see the construction of several green hydrogen plants. Hydrogen could be used as an alternative source of fuel for the power industry and be exported abroad, with aims to integrate it into its 2035 energy strategy.

CIB’s net income rose 24% y-o-y in 2Q2021, reaching EGP 3.21 bn from EGP 2.6 bn in the same period last year, according to the bank’s quarterly financials (pdf) released yesterday. A 24% rise in fee and commission income offset a drop in net interest income, helping overall revenues to rise slightly to EGP 6.36 bn. The bank’s interest income fell 4% to just above EGP 6 bn, which the bank attributed to maturities on high-yielding bonds previously purchased.

The bank attributed revenue growth to “robust deposit growth,” and an “impressive revival in corporate lending” thanks in part to a rise in trade finance and forex trading activities, it said in a separate statement (pdf). Its gross loan portfolio grew 9% to EGP 149 bn during the first six months of the year, while loan loss provisions fell by more than 50% from 1H2020.

What management said: “Building on a strong first quarter of the year, CIB continued to outperform in the second quarter of 2021, which further saw notable growth in the Bank’s balance sheet, particularly in local currency. Local currency deposits grew steadily throughout the quarter, and local currency loans increased by 14%, adding EGP 13 bn in the quarter, back to the all-time high growth levels of early 2017.”

Higher education outfit Taaleem Management Services reported a 20% increase in its bottom line to EGP 98.9 mn during the third quarter of its fiscal year, compared to EGP 82.8 mn last year, according to the company’s quarterly financials (pdf). This came on the back of a 58% surge in revenues, which climbed to EGP 267.4 mn during the three-month period from EGP 169.2 mn. The company’s fiscal year runs September-August. Taaleem debuted on EGX last April, ending a nearly two-year-long IPO drought.

GERD was still the king and queen of talk shows yesterday night: Foreign Minister Sameh Shoukry had an interview with Ala Mas’ouleety’s Ahmed Moussa to update us on his visit to Brussels for talks with EU foreign ministers (watch, runtime 16:18). Kelma Akhira’s Lamees Al Hadidi covered Shoukry’s meeting with NATO Secretary General Jens Stoltenberg (watch, runtime 4:46). We have more on the story in the news well, above.

ALSO ON TALK SHOWS- An initiative to treat spinal muscular atrophy patients at no charge got attention: Health Minister Hala Zayed talked to El Hekaya’s Amr Adib to reveal latest updates on the initiative (watch, runtime 2:11 I 3:10). Egypt has set up 24 clinics for the patients including two in Cairo, she noted. Some 8 cases out of the 25 screened are eligible for treatment. The initiative also got coverage in Kelma Akira (watch, runtime 3:58) and Al Hayah Al Youm (watch, runtime 13:37).

GERD is the biggest story on a slow morning in the foreign press as far as Egypt’s concerned. We have more on this in this morning’s Diplomacy section.

Elsewhere:

• Human rights: US officials appear to have agreed with Egyptian authorities in 2015 to jail activist Mohamed Soltan after his release by Egypt, according to a leaked document seen by Politico.
• Culture: Xinhua looks at the ongoing Cairo International Book Fair, which is seeing high turnout despite covid-19 precautions.

Other things we’re keeping an eye on this morning:

• Abu Dhabi Islamic Bank Egypt will set up a company to issue corporate sukuk and is expected to receive three requests for offerings after the Eid break, which sources say will come from Palm Hills and Wadi Degla.
• Banque Misr has formally applied to the Kenyan central bank for a license to open an office in Nairobi.
• Banque du Caire will launch a digital financing program for micro and small firms in 3Q2021.
• Three companies will bid for a contract to deepen the Damietta Port in a tender that will be launched “in the coming period.”

Egypt has signed up to the African Medicines Agency (AMA) treaty, Health Minister Hala Zayed said yesterday. The AMA aims to unify medical regulations among African countries, and improve access to medicines. The treaty came into force in March of last year, after 15 countries signed up.

This could help facilitate Egyptian vaccine exports to the rest of the continent. Egypt hopes to produce as many as 80 mn doses of the Chinese Sinovac vaccine by the end of the year, and could soon have an agreement in place to locally manufacture the Oxford / AstraZeneca shot.

The Health Ministry reported 110 new covid-19 infections yesterday, down from 117 the day before. Egypt has now disclosed a total of 283,212 confirmed cases of covid-19. The ministry also reported seven new deaths, bringing the country’s total death toll to 16,403.

IN GLOBAL COVID NEWS-

Some 550 mn Sinovac, Sinopharm doses could be heading to Covax (by this time next year): Gavi, the Vaccine Alliance has bought 110 mn vaccines from Sinovac and Sinopharm for delivery between July and October, and has the option of purchasing a further 440 mn shots that would be shipped during 4Q2021 and the first half of 2022, it said in a statement yesterday. The Covax facility will start making the 110 mn jabs available “immediately,” Gavi said, without disclosing which countries can expect to receive shipments.

Is Covax now relying on China to hit its targets? The program is far behind on its target to supply 1.8 bn doses by early next year, shipping only 106 mn since it began the rollout earlier this year. Reuters and Bloomberg have coverage of the story.

The initiative has so far delivered 2.6 mn of the 4.5 mn shots allocated to Egypt, with the final 1.9 mn-dose batch set to arrive this month including a 250k-jab batch of the Oxford / AstraZeneca vaccine as soon as mid-week.

Rising delta cases have countries considering the need for booster shots: Israel, the most vaccinated country in the world against covid, is now offering some citizens third doses of the Pfizer / BioNTech vaccine as case rates rise due to the highly-infectious delta variant. For now, only at-risk adults will be offered the booster shot, but policymakers are also considering expanding it to more members of the public. The story got digital ink in the global press: FT I Bloomberg I Reuters.

The US and UK are also debating whether to introduce booster shots: Pfizer is discussing with the US its request for a federal approval of a third booster dose, while Britain is also eyeing a possible booster program in the fall.

But the WHO is calling on rich countries to hand these vaccines to the under-vaccinated global south: World Health Organization Director-General Tedros Adhanom Ghebreyesus has called on developed countries to hold off on booster shots while poor countries still haven't immunized most of their populations. “Some countries and regions are actually ordering mns of booster doses, before other countries have had supplies to vaccinate their health workers and most vulnerable," he said, calling the gap “hugely uneven and inequitable.” The story got coverage in Reuters and Associated Press.

Saudi Arabia will give Tunisia 1 mn vaccines as the country’s healthcare system struggles to cope with a surge in covid cases. The Saudi Press Agency said yesterday that 190 ventilators, 319 oxygen concentrators and other equipment will be sent.

Ethiopia and Russia are firming up their military alliance: Ethiopia and Russia signed “various agreements” that will strengthen military ties between the two countries, the Ethiopian News Agency reported yesterday. The agreements, signed during a three-day bilateral military meeting, will “modernize the army’s capacity with knowledge, skills and technology,” Ethiopian Defense Minister Martha Luiji said.

Lebanese leaders to face EU sanctions as economic crisis intensifies: The EU plans to impose sanctions on senior Lebanese politicians in a bid to pressure them to form a government and agree to economic reforms vital for pulling the country out of one of the most serious financial crises in its history, Reuters reports. The French-led move could see a sanctions framework agreed by the end of July, though it remains unclear when it could be introduced.

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.