Wednesday, 14 July 2021

Dabaa nuclear plant to be delayed by two years, thanks to covid

TL;DR

WHAT WE’RE TRACKING TODAY

GOOD NEWS- We’re officially getting a four-day vacation: Government agencies and public sector companies will receive a four-day break next week in observance of Eid Al Adha, the cabinet announced yesterday. Eid holiday will run from Monday, 19 July until Thursday, 22 July, while Saturday, 24 July will also be a national holiday in observance of the 23 July Revolution. The EGX and banks are yet to announce their plans for the break.

The timing of Thanaweya Amma exams will not change, and will go ahead according to the original timetable set by the Education Ministry.

And before we get down to business: It’s finally gone! The Ever Given finally left Egyptian waters yesterday morning, setting sail for Rotterdam at 4:00am, a canal source told Reuters. The mega vessel left the Suez Canal last Wednesday following the signing of a final settlement agreement but had to have its hull inspected in Port Said before continuing its journey to Europe.

WHAT’S HAPPENING TODAY-

It’s election day at the EGX: The EGX will hold its board elections for the 2021-2025 term today. You can check out the list of candidates vying to fill board positions here (pdf).

Lebanon’s sort-of prime minister Saad Hariri is in town today for talks with Foreign Minister Sameh Shoukry, who appears to be finally getting a day off from the GERD to attend to other regional issues. Al Shorouk says that the two will discuss ongoing negotiations in Lebanon to form a government ahead of crunch talks with President Michel Aoun on Wednesday.

Irrigation Minister Mohamed Abdel Aty is on a three-day visit to the Democratic Republic of the Congo, Al Shorouk reports.

GERD on the agenda? The article doesn’t make mention of the Grand Ethiopian Renaissance Dam (GERD) but we’d find it hard to believe if the subject does not feature prominently in discussions over the next few days. The DRC currently chairs the African Union and has played a leading role in the negotiations since assuming the presidency earlier this year. The visit comes after global powers urged Egypt, Ethiopia and Sudan to continue with the AU-led talks during a meeting at the UN Security Council last Thursday.

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

  • New ESG reporting requirements next year: EGX-listed companies + NBFS players will be required to submit ESG disclosures at the same time as they file their annual financial statements, under a decree issued by FRA.
  • Subsidized mortgages for low- and middle- income earners: The CBE has launched its EGP 100 bn mortgage finance initiative, which is offering 30-year mortgages at a subsidized rate of 3% to low- and middle-income homebuyers.
  • Elmenus closes USD 10 mn pre-series C funding round: The round was led by Fawry, Marakez, and Luxor Capital, and Elmenus will use the funding to expand their operations and increase their user base.

THE BIGGEST BUSINESS STORY OF THE DAY- US inflation jumps most in 13 years in June: US inflation accelerated at its fastest pace since 2008 in June, surpassing all forecasts and calling into question policymakers’ theory that recent price increases will only be temporary. Figures released by the Bureau of Labor Statistics yesterday showed that consumer price inflation rose 5.4% y-o-y in June, it’s highest rate since August 2008, and well above the 4.9% predicted by economists. On a monthly basis, prices rose 0.9% — the biggest monthly gain since June 2008.

Giving the Fed comfort: “The fact that the recent run-up in inflation has been dominated by a few categories should give the Fed leadership continued confidence in their view that it is mostly a transitory increase,” said a JPMorgan economist. The largest price increases have so far been limited to sectors affected by the pandemic: used car prices, which accounted for a third of the overall gains, have risen due to the semiconductor shortage, while airfares and hotel prices have increased. Some inflation drivers, however, could remain beyond next year such as higher rents and rising wages amid labor shortages.

On the flip side: The longer inflation continues to climb, the greater pressure the Fed is going to come under to start rolling back monetary stimulus, and potentially bring forward rate hikes. Policymakers have remained adamant that inflation will be short-lived and is being driven by supply-side constraints caused by the reopening of economies from the pandemic, but while inflation rises speculation about whether the central bank will change course will continue to grow.

The markets reacted as you’d expect: Bond yields climbed and stocks fell back from record highs as concerns over rising inflation rippled through the markets. The S&P 500 fell for the first time in three days while rates across the entire yield curve rose, sending US 10-years to weekly highs.

Strong earnings didn’t hold up stocks: US investment banks Goldman Sachs and JPMorgan both reported strong earnings yesterday. Goldman smashed expectations as its investment banking arm posted its second-highest 2Q earnings ever, fuelled by the booming US IPO market. JPMorgan also beat Wall Street’s forecasts, posting USD 31.4 bn in revenues after releasing bns of USD set aside last year as loan loss provisions.

The story dominated the conversation in the global business press for much of the day yesterday: Reuters | AP | WSJ | FT | Bloomberg.

CIRCLE YOUR CALENDAR-

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.

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

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

In today’s issue: Earlier this month, we looked at what the Economist Intelligence Unit had to say about the development of Egypt’s renewables sector over the coming decade. This week, we’re examining what the 2020s have in store for non-renewable energy in Egypt, including the coming natural gas boom, and what that means for oil.

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M&A WATCH

Bank ABC launches Blom MTO

Bahrain’s Bank ABC has submitted a mandatory tender offer to acquire up to 100% of Blom Bank Egypt, the Financial Regulatory Authority (FRA) said (pdf) yesterday. The transaction would see the Gulf lender purchase up to 300 mn shares in Blom Egypt at EGP 22.33 apiece, valuing the business at USD 427 mn (EGP 6.7 bn). Bank ABC must pay the amount in USD at the exchange rate stated by the CBE during the seven days preceding the FRA’s approval on the MTO, the statement said. The purchase includes the bank’s physical and non-physical assets, and customer accounts.

When could Bank ABC finalize its acquisition of Blom Bank? This depends on when the FRA and the Central Bank of Egypt give the all-clear to the sale. Both the Lebanese and Bahraini central banks reportedly approved the transaction in March. A report in the local Egyptian press in May suggested that CBE approval was weeks away, potentially allowing the transaction to be finalized in the second quarter. Now in 3Q, we’re still yet to hear anything from the CBE.

A refresher: Bank ABC reached an agreement to purchase Blom’s Egypt unit in January this year following several months of speculation about whether fellow GCC lender Emirates NBD would compete for the acquisition. ABC already has a presence in Egypt with Bank ABC Egypt, in which it owns a 93% stake. Blom and Bank Audi are both leaving Egypt as they cope with fallout from a severe financial crisis in their home market of Lebanon, with Bank Audi due to finish transferring its Egypt assets to First Abu Dhabi Bank next year. The National Bank of Greece (NBG) is also set to terminate its activities in the Egyptian market after years of unsuccessful attempts to divest its portfolio here.

ENERGY

Dabaa delayed

Dabaa delayed by two years, thanks to covid: The Dabaa nuclear plant will likely be finished two years later than planned due to disruption caused by the covid-19 pandemic, the spokesperson for Egypt’s nuclear regulator told Enterprise yesterday. Work on the 4.8 GW facility will likely now finish in 2030 rather than in FY2028-2029, Egyptian Nuclear and Radiological Regulatory Authority spokesperson Karim Al Adham said.

What happened? Al Adham declined to provide further information, saying only that the pandemic had caused some procedures to be delayed. He said that financial issues were not responsible for the delay.

The new timeline: Construction of the first reactor will now finish in 2028 rather than 2026, and the remaining three reactors will be completed in the subsequent 1.5-2 years, Al Adham said.

Construction won’t start for another year: The regulator will likely issue the construction permits for the USD 30 bn facility in mid-2022, he told us, meaning that construction will be on hold for another year. The head of the Nuclear Power Plants Authority (NPPA) said last year that the license would be issued in the second half of 2021.The NPPA last week submitted the documents required to obtain permits for the first two reactors.

The project was already behind schedule: Construction work was initially slated to begin in the second half of 2020.

The plant in numbers: Russian state-owned nuclear company Rosatom was contracted in 2015 to construct the 4.8 GW plant. 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.

SUEZ CANAL

Gone but not forgotten

The Ever Given has left Suez. But Suez hasn’t left the Ever Given. The owner of the ship responsible for blocking the Suez Canal for almost a week in March is set to be hit by “many hundreds of thousands” of lawsuits, according to Bloomberg. Two subsidiaries of owner Shoei Kisen won a court order in London yesterday that will put claims on hold for two months, amid expectations that individual cargo owners will soon file thousands of claims against the company, as will the ship’s charterer Evergreen Marine Corp.

The company could be in for years of litigation as everyone affected by the incident — which had global ramifications, heavily disrupting trade across the world — files claims and seeks damages. Fitch Ratings earlier estimated that claims can easily surpass hundreds of mns of EUR, and that it would affect marine reinsurers in particular.

Yesterday’s court order could ease the process a little: The stay could help reduce legal costs for the company by giving the court time to bundle together similar and overlapping claims.

The cost: USD 540 mn and counting. Shoei Kisen and its ins. companies have reportedly paid out USD 540 mn in compensation to the Suez Canal Authority.

The Ever Given was released from the Suez Canal on 7 July after the ship's owners agreed to a compensation settlement with the SCA after months of negotiations.

DIPLOMACY

In diplomatic miscellany: Shoukry continues GERD talks in Brussels; Greek-Arab ties continue to warm

IN DIPLOMATIC MISCELLANY- Here’s a round-up of diplomatic stories you should know about this morning.

Shoukry continues GERD talks in Brussels: It was Foreign Minister Sameh Shoukry’s third day in Brussels yesterday, where he has been holding meetings with European foreign ministers following Egypt’s unsuccessful bid to get the UN Security Council to intervene in the dispute over the Grand Ethiopian Renaissance Dam. Earlier this week Shoukry discussed the situation with a number of foreign ministers, Nato Secretary-General Jens Stoltenberg and president of the European Council Charles Michel, while yesterday saw him sit down for meetings with the EU’s foreign policy chief Josep Borrell and his Belgian counterpart Sophie Wilmès.

The EU appears to be taking the same approach as the Security Council: Following a joint meeting this week, EU foreign ministers declined to condemn Ethiopia’s decision to unilaterally fill the dam without an agreement, and appeared to rule out acting as mediators in the dispute. Like the Security Council, ministers expressed support for the African Union-led negotiations and called on all three sides to resume talks. Borrell reiterated the same points in yesterday’s meeting, saying that he “regrets” Ethiopia’s decision to fill the dam but urging all three countries to continue with the AU process, according to a statement put out by the EU.

Greece-Arab ties are warming: Greek Foreign Minister Nikos Dendias was in Cairo yesterday for talks with Arab League Secretary General Ahmed Aboul Gheit, during which the two signed an agreement that allows the “establishment of political consultations,” the Greek foreign ministry said in a statement without disclosing further information. Dendias said the meeting was aimed at “reaffirming Greece’s strong ties with the Arab World and forging closer ties of cooperation to address common challenges.”

Greece to join the Arab League? It was reported in Egyptian and Greek media ahead of the meeting that Greece will join the Arab League as an observer, but this wasn’t mentioned in the official Greek or Arab League post-meeting statements.

Planning minister talks SDGs at UN forum: Planning Minister Hala El Said has discussed its latest voluntary national review at a UN forum on sustainable development taking place from 6-15 July, the ministry said in a statement (pdf) yesterday. The report covers 17 sustainable development goals including ending poverty, increasing public investment in human capital, ensuring health for all, boosting economic growth and combating climate change.

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ENTERPRISE+: LAST NIGHT’S TALK SHOWS

The new mortgage finance initiative for low- and middle-income earners came top of the agenda on the nation’s talk shows last night. Launched yesterday, the CBE initiative will see EGP 100 bn lent out to low- and middle-income homebuyers. It offers 30-year mortgages at a subsidized 3% interest rate. On hand to discuss the program last night were CBE deputy governors Rana Badawi and Gamal Negm, and Social Housing Fund Executive Director Mai Abdel Hameed.

Here’s a recap of the fine print as told to us yesterday by the CBE:

You’re considered a low-income borrower if you earn less than EGP 4.5k per month (EGP 6k per household). Borrowers in this bracket will be required to pay a 10% down payment and can access finance for homes worth up to EGP 350k. Middle-income borrowers are those with monthly net salaries of up to EGP 10k for individuals (EGP 14k per household). People in this bracket will need to cough up a down payment of at least 15% for homes worth up to EGP 1.1 mn and 20% for homes valued at EGP 1.1 mn to EGP 1.4 mn.

Affordable homes will be built to support the new initiative: The government will build fully-finished homes across a range of governorates and new cities with price tags ranging from EGP 165k up to EGP 310k, Abdel Hameed told Kelma Akhira’s Lamees El Hadidi (watch, runtime 11:49).

The initiative is likely to benefit 220k families, and cost the state coffers some EGP 120 bn over 30 years, CBE Deputy Governor for Banking Stability Gamal Negm said in an interview on Ala Mas’ouleety (watch, runtime 46:21).

But this has to be your first home, Deputy Governor of the Central Bank of Egypt Rana Badawitold Yahduth Fi Masr. Applications for second homes or holiday homes won’t be given access (watch, runtime 3:57 I 2:23).

A boost for the real estate sector? Badawi expects there to be high demand for the program, which she says will help to support the real estate sector.

But there are some concerns over how the program will be implemented: Homebuyers have in the past faced lengthy waiting times and bureaucratic hurdles when applying for mortgages, Tarek Shoukry, head of the Federation of Egyptian Chambers of Commerce’s real estate division, told Kelma Akhira (watch, runtime 10:23). He called on policymakers to set clear criteria and a timeframe for make banks and mortgage finance companies speed up the procedures, else the lengthy process may deter potential buyers from participating in the program.

Is the private sector getting involved? Most big developers don't currently offer homes within the price range set under the initiative, but they are ready to cater to these income brackets if they're assured that the amount allocated for the initiative won't run out by the time they place the homes on the market, he added.

The story also got more coverage on Al Hayah Al Youm (watch, runtime 15:26) and Al Kahera Wel Nas (watch, runtime 9:08).

GERD is still the talk of airwaves: Samuel Warberg, a regional spokesperson for the US State Department, made an appearance on Ala Mas’ouleety to explain US’ position from the GERD crisis while reiterating his call for resuming negotiations and avoiding any unilateral actions (watch, runtime 19:32). Slovenia Foreign Minister Anže Logar (watch, runtime 1:43) and Austrian Foreign Minister Alexander Schallenberg (watch, runtime 1:12) were also on the program to discuss the GERD. Foreign Minister Sameh Shoukry’s third day in Brussels also got coverage in Al Hayah Al Youm (watch, runtime 1:03 I 2:57). Yahdoth Fi Masr also had an interview with politician Mostafa El Feki to share his insights on the issue (watch, runtime 4:10 I 3:43). We have more on Shoukry’s day in Brussels in this morning’s Diplomacy story, above.

EGYPT IN THE NEWS

It’s a quiet morning in the pages of the foreign press. Reuters has a short video of Egyptian boxer Yousry Rezk speaking about his chances of claiming a medal in the upcoming Olympic games. This would be the first time Egypt has won an Olympic boxing medal in more than 15 years.

ALSO ON OUR RADAR

CIB launches new services for small businesses: CIB rolled out yesterday a new business banking segment, dubbed CIB Growth, which will target small companies with an annual sales turnover from EGP 1 mn to EGP 50 mn, the local press reports. The new segment will provide a package of banking products and digital solutions including credit facilities with flexible payment terms, dedicated customer service teams and a secure channel for online salary transfers. Small businesses will also have access to non-financial services at discounted prices including advisory, e-commerce and digital transformation, as well as marketing and market research services.

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

  • Digital healthcare platform Vezeeta is rolling out a new SaaS product dubbed “Vezeeta-in-a-Box” (pdf) that allows healthcare providers to make real-time bookings, order medication and coordinate telehealth services.
  • The government will provide artificial intelligence training in Arabic under an MoU signed between the Communications Ministry and the National University of Singapore’s AI Singapore center.
  • The Red Sea National Refining and Petrochemicals Company signed an agreement with French company Axens to carry out engineering works at the former’s petrochemical complex in the Ain Sokhna industrial zone. Red Sea and the Suez Canal Economic Zone signed a USD 7.5 bn agreement for the project in May.

COVID WATCH

Slovenia donates vaccines to Egypt

Slovenia donates vaccines to Egypt: The 250k doses of the AstraZeneca vaccine heading to Egypt this week have been donated to us by Slovenia, the Health Ministry said in a statement.

This means that the shipment is not part of the 4.5 mn vaccines allocated to Egypt by the Covax scheme, as we suggested earlier this week. The initiative has so far delivered 2.6 mn, leaving us with 1.9 mn doses still to receive, which the health minister previously said would happen this month.

Reminder: AstraZeneca jabs won't get you into Europe after the EU announced yesterday that it would not recognize the India-manufactured AstraZeneca shots — the ones being administered in Egypt as part of the Covax program.

More vaccine doses expected this week: Egypt will receive its first 2 mn-dose shipment of the Pfizer / BioNTech mRNA vaccine by the end of this week, while the first unspecified shipment of Johnson & Johnson vaccines will also arrive this week.

The Health Ministry reported 108 new covid-19 infections yesterday, down from 110 the day before. Egypt has now disclosed a total of 283,320 confirmed cases of covid-19. The ministry also reported nine new deaths, bringing the country’s total death toll to 16,412.

IN GLOBAL COVID NEWS-

Covid cases are again surging in the US and Europe as the highly-infectious delta variant continues to spread. Daily cases have more than doubled over the past three weeks spurred by delta, slowing vaccination rates and mass gatherings over the Independence Day holiday, the Associated Press reports. In Europe, countries are also seeing a resurgence of cases, forcing France, the Netherlands, Greece and Spain to introduce new restrictions. Vaccines will now be mandatory for healthcare workers in France and Greece, some areas of Spain have reintroduced curbs on gatherings, and a digital “health pass” needed to access large cultural and leisure venues will be rolled out in France.

In contrast, the UK is still pushing ahead with ending all precautionary measures on 19 July even as infection rates continue to rise.

J&J, AstraZeneca could modify covid-19 vaccines to prevent blood-clotting: AstraZeneca and Johnson & Johnson are carrying out early stage research to see if modifications could be made to their vaccines to reduce or eliminate the rare cases of blood-clotting, according to the Wall Street Journal. Scientists are discovering clues into the cause of extremely rare blood-clotting events, with AstraZeneca expected to possibly reengineer its shots next year. The clotting risk is 1 to 2 per 100k vaccinations for the AstraZeneca shot, while the J&J vaccine has a lower rate of 0.3 instances of the clotting issue per 100k doses.

PLANET FINANCE

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US oil hit its highest price in more than two-and-a-half years yesterday as the International Energy Agency warned of an intensifying supply crunch as prospects of OPEC+ agreeing to raise supply remain low, Bloomberg says. WTI futures in New York gained 1.6% yesterday to close to USD 75.25/bbl, the highest price since October 2018. Brent, meanwhile, rose back above USD 76/bbl for the first time since last week’s OPEC+ meeting, closing at USD 76.39/bbl, up 1.6%.

The International Energy Agency (IEA) has joined the chorus of voices warning about tightening oil supply, saying in a report yesterday that prices would remain volatile until oil producers agree to raise production, Reuters reports. “The OPEC+ stalemate means that until a compromise can be reached, production quotas will remain at July’s levels. In that case, oil markets will tighten significantly as demand rebounds from last year’s covid-induced plunge,” the energy body said. Lockdown-era production curbs have helped to push the price of oil up more than 50% so far this year amid surging global demand.

And about the possibility of a price war if Saudi Arabia and the UAE can’t find common ground: “The possibility of a market share battle, even if remote, is hanging over markets, as is the potential for high fuel prices to stoke inflation and damage a fragile economic recovery,” the IEA said.

Meanwhile, our biggest natgas customers are paying through their noses for shipments as supply tightens: Some areas of Europe are paying record gas prices as huge global demand, droughts and reduced output at US facilities last year combine to squeeze supply, the Wall Street Journal reports. The effects of huge Chinese demand are being intensified by a drought in Brazil, which has reduced the availability of hydroelectric power, and heatwaves in Canada and the Pacific Northwest.

The shortages are hitting places in Europe the hardest where prices are expected to remain high for another year, according to S&P Global Platts. A trading hub in the Netherlands has seen prices hit a record USD 13.10/mmBtu this month. “There just isn’t enough [liquefied natural gas] to supply Europe,” said one S&P analyst. “The LNG, of course predominantly coming out of the U.S., is being pulled into Asia and also into Latin America.”

Up EGX30 10,432 +1.9% (YTD: -3.8%)
None USD (CBE) Buy 15.64 Sell 15.74
None USD at CIB Buy 15.64 Sell 15.74
None Interest rates CBE 8.25% deposit 9.25% lending
Up Tadawul 10,735 +0.4% (YTD: +23.6%)
Up ADX 7,046 +0.3% (YTD: +39.7%)
Up DFM 2,760 +0.1% (YTD: +10.8%)
Down S&P 500 4,369 -0.4% (YTD: +16.3%)
None FTSE 100 7,124 -% (YTD: +10.3%)
Up Brent crude USD 76.39 +1.6%
Down Natural gas (Nymex) USD 3.70 -1.4%
Up Gold USD 1,809.90 +0.2%
Down BTC USD 32,554 -1.0% (as of midnight)

THE CLOSING BELL-

The EGX30 rose 1.9% at yesterday’s close on turnover of EGP 1.35 bn (10.3% above the 90-day average). Local investors were net sellers. The index is down 3.8% YTD.

In the green: Fawry (+7.5%), Ezz Steel (+3.8%) and CIB (+2.5%).

In the red: Edita (-2.5%), Eastern Company (-1.4%) and Abou Kir Fertilizers (-0.4%).

Asian markets are reacting negatively to the unexpected jump in US inflation yesterday and are in the red this morning. It’ll be a similar story in Europe and the US later today according to index futures, which suggest that exchanges in both continents will fall in early trading today.

AROUND THE WORLD

Iran nuclear talks will likely get harder from here: The seventh round of talks between Iran and global powers is expected to be held in mid-August after conservative hardliner Ebrahim Raisi has been sworn in as president, two unnamed official sources told Bloomberg.

Israel wants Gaza to receive its foreign aid through a voucher system to prevent funds being repurposed for terrorist activities by Hamas, with reconstruction costs for the enclave estimated at USD 500 mn, Reuters reports.

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Besides renewables, what do risks/returns look like in other energy sub sectors? Earlier this month, we looked at the Economist Intelligence Unit’s (EIU) latest forecasts for Egypt’s renewables sector over the coming decade. This week, we’re examining what the 2020s have in store for non-renewable energy in Egypt, including the coming natural gas boom and what this means for oil.

Quick recap on the macro picture: Egypt’s energy sector = moderate returns, moderate risk. “The global economic contraction caused by the pandemic will remain a major risk in the medium term,” EIU writes, as social distancing norms and lockdowns undermine productivity and demand. The global uncertainty will also continue to negatively affect investor sentiment. At the local level, opposition to increased energy prices, currency volatility and fiscal pressure are considered moderate threats to energy investments.

Ranking the sub sectors: Electricity, and oil and gas definitely come out at the top with relatively high returns and moderate risks. Egypt has a healthy pipeline of energy investments, and the government has allocated EGP 43 bn to the sector in FY2021-2022. This pipeline is underpinned by the creation of the East Med Gas Forum, and resuming LNG exports from the Damietta liquefaction plant after eight years in hibernation.

Electricity investment is considered a beacon of high returns with moderate risks. Egypt ranks 24th among 67 countries for projected consumption for 2029, according to the EIU. Given the power surplus that the country has witnessed over the past years, Egypt is well on its road to become an electricity hub. But sporadic power outages will continue should the government fail to upgrade infrastructure.

What electricity glut? From 2021 until 2030, electricity demand is expected to grow by an average 3.3% per year, as supply and manufacturing outputs increase, and people buy more ACs and refrigerators. More EVs, electrified rail transport and desalination plants will also cause demand to rise. State subsidies will be gradually phased out by 2025.

Investing in oil and gas yields high returns. In the EIU’s forecast, Egypt ranks 17th in natural gas consumption and 11th in national gas production, out of 67 countries, primarily thanks to the giant Zohr gas field. While low crude oil prices during the pandemic made drilling unprofitable and reduced investor interest in the sector, oil prices have since recovered, while the lifting of fuel subsidies could place the industry on a more sustainable footing.

But is underpinned by moderate risk. There still remains a risk of opposition to fuel price increases, as subsidies are scaled back, coupled with rising inflation. But eventually, the removal of subsidies will hinder demand growth. “Even as use of gas for electricity rises, the increased uptake of EVs that this facilitates will put downward pressure on oil demand during the forecast period,” the report adds.

The (almost) loser in Egypt’s energy future: oil. The investment in and development of the monorail, metro network and other rail projects will curb the demand for petroleum products, especially when it comes to urban transport and freight. While the demand will not decrease, its annual growth will be curbed more and more, with the last few years of the coming decade probably seeing more EVs on the road. While oil consumption in 2020 stood at 33.6 mn tonnes oil equivalent (toe) and is expected to grow by 1.5% in 2021 to 34.2 mn toe, the year 2030 will hit 37.2 mn toe with an annual growth rate of just 0.7%. Toe is equivalent to the amount of energy that can be extracted from one tonne of crude oil.

Gas is looking brighter though. Expected to yield a steady flow of growth over the next 9 years, natural gas consumption will grow by 2.1% in 2021, with similar growth spurts for the years to come. The thing holding gas consumption growth back is an increase in renewable energy generation and the enhanced efficiency of combined-cycle power stations. These plants use both a gas and a steam turbine, and can produce up to 50% more electricity from the same fuel than a traditional simple-cycle plant, according to GE. “The power sector will remain the principal source of demand for natural gas, followed by industries such as fertilisers, metals, ceramics and cement,” EIU tells us.

After coal made a comeback in 2012, its consumption growth may soon retract. In 2012, the steel and cement industry started heavily relying on coal for the factories and plants due to a natural gas supply decline. But as Egypt is on the track to become a gas hub with several natural gas fields coming into operation, these sectors may reverse their tracks again. With a recovered supply of natural gas and no foreseeable domestic coal production, plants and factories are likely to switch back. The yearly growth of coal consumption in 2030 is expected to grow by 0.1%, with consumption going from 1.5 mn toe from 2020 to 1.6 mn toe in 2030.

Your top infrastructure stories for the week:

  • Bechtel inks two agreements for Africa’s largest petchem complex: The US construction giant will lead the design and construction of the USD 7.5 bn petchem complex in Ain Sokhna.
  • Damietta container terminal contracts signed in Sept/Oct: The Transport Ministry will sign in September or October new contracts with Italy’s Eurogate for the management and operation of the new container terminal at Damietta port.
  • Orascom Construction added awards worth USD 1.1 bn to its backlog during 2Q2021.
  • EFG Hermes makes first USD 200 mn close for Vortex Energy: The investment bank announced its first close of USD 200 mn for the fourth fund of its flagship renewable energy platform Vortex Energy.

CALENDAR

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).

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.

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

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.

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