AM — Saudi sovereign wealth fund PIF is eyeing Wataniya + Siemens-built power plants

Good morning, wonderful people, and welcome to the first hump day of Ramadan — and the lightest news day we’ve had in more than a month.

Awards shows are becoming obsolete / we’re getting old / we got caught up in the Ramadan of it all. We can’t decide which excuse to settle on as to why music’s biggest night of the year passed us by, but the Grammys went ahead on Sunday night — for the first time in Las Vegas — after an omicron-induced delay. Bruno Mars’ and Anderson .Paak’s old-school soul / funk group Silk Sonic picked up record of the year and song of the year for “Leave the Door Open” (watch: runtime: 4:08), which we admit to hearing for the first time this morning. Nineteen-year-old ex-Disney TV star Olivia Rodrigo snatched the best new artist award. On second thought: we’re definitely getting old. Catch the highlights here (watch, runtime: 1:32).

One Ramadan TV meta-drama put to bed: Ramadan mosalsal Donya Tanya is back on our screens. The national media authority had pulled the first episode of the show for what it claimed were inappropriate depictions of incest. The ep showed the main character (played by star Laila Elwi) catch her husband in unmentionable acts with her sister. The showmakers have now edited the series to bring forward the revelation that what was not strictly an incest storyline was never even slightly an incest storyline, since Elwi’s sister isn’t her sister after all, director Ahmed Abdel Aal told ET Bel Araby. So that clears that up. For suggestions on somewhat more coherent Ramadan viewing, check out our recent roundup.

YOU MUST TRY THIS if you’re Gen X or an Elder Millennial: Go back in time and with a single click boot up a real, working Macintosh System 7 or Mac OS 8 in your browser. Unbelievably, the OS 8 emulator includes a real, working copy of Maelstrom and other vintage games.

Other pre-iftar distractions from the dumpster fire that is our social media:

• This thread is a slang of the youts-to-corporatese translator.
• Want to contemplate a cosmic mystery before you break your fast? Go read Peptides on stardust may have provided a shortcut to life. (Wired)
• George’s mom is dead. (Rolling Stone)

PSA- The mercury is due to hit 40°C this afternoon, according to our favourite weather app. Look for a daytime high of 39°C tomorrow and 40°C on Thursday before temps slide to a more seasonally appropropriate low-30s on the weekend.

SO, WHEN DO WE EAT? You’ll be breaking your fast at 6:16pm CLT this evening in the capital city, and fajr prayers are at 4:09am.

DEADLINE CHECK- Where’s the LRT? Trials for the light rail train (LRT) project were set to wrap by the end of March, with an eye to launch in April — but companies involved in the project weren’t able to tell Enterprise when it should be up and running when we reached out for an update. The 103.3 km network (which runs primarily through East Cairo’s new desert cities) had begun test runs and was about 95% complete as of the end of last year. We’re keeping our ears to the ground for fresh news.

SIGN OF THE TIMES- Turkish inflation hit a fresh 20-year high in March as the country’s economic crisis worsens. Consumer prices rose 61.1% y-o-y last month, up from 54.4% recorded in February.

WHAT’S HAPPENING TODAY-

It’s PMI day: Purchasing managers’ index figures for March for Egypt will land here at 6:15 CLT — shortly after we hit ‘send’ this morning. Egypt’s PMI has been in contraction since November 2020, and headwinds intensifying last month due to the conflict in Ukraine are unlikely to have changed that. Figures for Saudi Arabia, the UAE and Qatar are also out today.

Foreign Minister Sameh Shoukry is in Warsaw with an Arab League delegation trying to broker peace for Ukraine. The delegation met with Russian Foreign Minister Sergey Lavrov yesterday and will hold talks with his Ukrainian counterpart, Dmytro Kuleba, today. We have more on the Arab mediation efforts in today’s War Watch section, below.

WATCH THIS SPACE- Gov’t to release fair price list for basic commodities: The government is working with the Federation of Egyptian Chambers of Commerce to publish a list setting fair prices for basic food commodities to ensure that retailers aren’t using current inflationary pressures to hike prices unfairly, according to a cabinet statement. “We will not allow unjustified and exaggerated increases in the prices of basic commodities,” Madbouly said.

MARKET WATCH-

European natural gas prices closed lower after see-sawing yesterday as traders chew over threats to supplies amid calls for new sanctions against Moscow, Bloomberg reported. Benchmark futures closed down 2.3% on stable LNG inflows, after rising near 7% earlier yesterday.

Brent crude, on the other hand, soared past USD 107 per barrel on Monday on worries over fresh sanctions, Reuters reported. The fluctuation in energy markets comes as traders fret over fresh sanctions to be imposed by the EU against Moscow over reports of war crimes near Kyiv (more on that in today’s War Watch section, below).

CIRCLE YOUR CALENDAR-

Expect movement on fuel prices this week or the next: The government’s fuel pricing committee is due to have its quarterly meeting at the beginning of this month, when it will likely opt to hike prices in 2Q for the fifth time in less than a year. The committee increased prices of 80, 92 and 95-octane by EGP 0.25 when it last met in February in response to rising international prices, and since then, the war in Ukraine has sent Brent up another 15% past USD 107 a barrel. Prices at the pump have risen by up to 16% since April last year.

ALSO THIS WEEK AND NEXT-

• Foreign reserves: March’s foreign reserves figures will be announced some time this week;
• Inflation figures for March are expected on Sunday, 10 April.

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: Everyone who calls Cairo home knows that air pollution is a major issue. Poor air quality damages our health and productivity — and comes with an annual USD 30 bn price tag, according to a new report from the World Bank. In this week’s issue of Going Green, we dig into the report’s findings on why Egypt pays the highest cost for poor air quality of any country in the MENA region.

Wataniya + Siemens power plants on the table for Saudi PIF: Saudi Arabia’s sovereign wealth fund could take stakes in military-owned Wataniya Petroleum (a national operator of filling stations) and the three Siemens-built power plants as part of its proposed USD 10 bn investment in Egypt, the head of Egypt’s wealth fund said yesterday. The Sovereign Fund of Egypt (SFE) is offering both companies to the Public Investment Fund (PIF), which is looking at green- and brownfield projects in Egypt’s healthcare, education, agriculture and financial services sectors, SFE head Ayman Soliman told Al Arabiya TV (watch, runtime: 9:45).

The sale of some or all of Wataniya has attracted significant investor interest for more than a year, while there has been talk of selling stakes in the power plants going back to 2019 when the SFE was first established. The fund has in the past suggested that it could acquire significant minority stakes in both as a prelude to their sale.

The news comes as ministers are scheduled to meet this week to discuss which state-owned companies will be offered on the EGX this year. The government is reviewing the program “in light of recent developments,” with an eye to offer four to five companies during 2022 in the energy, ins. and financial sectors. The government had originally aimed to sell shares in as many as 10 firms in 2022, but the deteriorating global market conditions have forced it to rethink its plans.

ALSO FROM THE SFE BOSS- Abu Dhabi wealth fund ADQ could acquire stakes in both listed and unlisted Egyptian companies as part of its investment in Egypt, Soliman told the broadcaster. The investment would come as a move of support, especially to companies that are preparing to list on the EGX, with details set to be announced within days, Soliman said.

Refresher: Bloomberg reported last month that ADQ could acquire state-held stakes in five EGX-listed companies: private firms CIB and Fawry, and state-owned Abu Qir Fertilizers, Mopco, and Alexandria Container & Cargo Handling. The planned acquisitions are part of a USD 2 bn investment to shore up Egypt’s finances amid surging food and energy prices.

Our GCC neighbors have recently stepped up M&A, investment and (in the case of KSA) deposits at the central bank.

It goes both ways: The SFE also plans to invest in Saudi Arabia’s fintech and financial inclusion sectors, Soliman told the news channel, without disclosing the size or value of the investments it plans to make.

OTHER INVESTMENT NEWS-

Mexican concrete giant Cemex could cut back on spending in Egypt and the UAE this year due to the war in Ukraine, the company’s Egypt and UAE CEO Carlos Emilio Gonzalez told Bloomberg Asharq. The company could now invest USD 10-15 mn in 2022, down from a planned USD 20 mn, he said, adding that some investments could be delayed to next year.

STC is taking a majority stake in Giza Systems: A subsidiary of Saudi Telecom (STC) is on course to take an 89.5% stake in Giza Systems, after the board of the Egyptian systems integrator accepted its bid, it announced in a statement (pdf) yesterday. Solutions by STC went public with the move a couple hours after we hit ‘send’ on yesterday’s AM edition, saying in a disclosure to the Saudi stock exchange that it had signed a binding offer with Giza Systems’ stakeholders for the acquisition.

By the numbers: STC will pay USD 158 mn in cash for both the company and a 34% stake in its Saudi subsidiary Giza Arabia, it said in the disclosure. The transaction values Giza Systems at USD 145 mn.

Who’s selling? SPV Inergia Technologies, which holds a 65.7% stake in Giza Systems, is the only named seller so far. As we reported yesterday morning, Inergia’s majority stakeholder, B Investments, said it had agreed to sell the 44.7% stake it holds in Giza Systems through the SPV. Giza Systems declined to say who else was selling when we asked yesterday.

Next steps: The parties have 12 weeks from Sunday (when the offer was finalized) to conclude the SPA and obtain corporate approvals, according to the STC disclosure. The sale is also still pending regulatory and legal nods and is expected to close in “the next few months,” according to Giza Systems’ statement.

The main message: Business as usual. The company stressed that it will remain independent and there will be no change in organizational structure and governance if the transaction closes, with Shehab El Nawawi staying on as chairman and Osama Sorour helming the organization as CEO.

What’s in it for everyone? Giza Systems said that access to the Saudi market and STC’s resources would accelerate its growth and expand its services. For the Saudi company, the acquisition will offer a “significant step in line with the company's international expansion strategy to enter new markets and expand business lines,” it said in the disclosure.

Advisors: SNB Capital is providing financial advice to STC. Giza Systems declined to say who was advising it, and B Investments hasn’t appointed advisors.

Our strategic wheat reserves have taken a dip: Egypt currently has enough wheat to cover the next 2.6 months’ worth of consumption, cabinet spokesman Nader Saad said in a statement, down from the four-month figure announced by the government in early March.

Depleted reserves shouldn’t come as a surprise. Russia’s war in Ukraine has caused turmoil in global wheat markets, leading the government to halt all international wheat tenders until at least mid-May. We received all our backlogged orders of Russian wheat in March, but blockaded ports mean there’s little to no grain coming out of Ukraine. The two countries together supply more than 80% of our imported wheat in peacetime.

Don’t panic: The local harvest kicks off on Friday — and the government has roughly doubled its purchase budget from last year. With global markets in disarray, the Madbouly government has shifted its wheat procurement focus to local sources. The government will spend around EGP 36 bn to purchase 6 mn tons of local wheat this year, the Finance Ministry confirmed yesterday. That tallies with our math: Farmers will receive EGP 865-885 per ardeb of wheat they sell to the state, and at 150 kg each, there are 6.66 ardebs in a metric ton. This would be a bit more than double what the government spent on local wheat last season, when it bought 3.5 mn tons — or 23.3 mn ardebs — at a top price of EGP 725 per ardeb.

FinMin has made EGP 1.1 bn available for downpayments to wheat farmers this season, according to a cabinet statement. The General Authority for Supply Commodities (GASC) and the Agricultural Bank of Egypt now have access to the funds to start making purchases.

Recently announced incentives could help the government meet supply goals: The carrots (and sticks) include price hikes for local wheat, minimum selling quotas, and bans on selling to third parties without a license. Those who sell 90% or more of their wheat to the government will also receive subsidized fertilizers for summer planting.

Reserves of other at-risk commodities are in better shape: We have enough sugar to last 5.6 months, nearly six months’ worth of oil and rice, and 7.8 months of poultry reserves, according to the cabinet statement. We also have enough meat — which is not as exposed to war in Europe — in reserve to last well over a year.

The government is working to secure at least 3-6 months of reserves in all basic commodities, Prime Minister Mostafa Madbouly previously said.

The Arab League is trying to negotiate peace for Ukraine: An Arab League delegation including Foreign Minister Shoukry said at a press conference in Moscow yesterday (watch, runtime: 26:21) that it had offered to mediate ceasefire talks between Russia and Ukraine. Russian Foreign Minister Sergey Lavrov met with the delegation — which also includes Shoukry’s Algerian, Jordanian and Sudanese counterparts as well as Arab League Secretary General Ahmed Aboul Gheit — for talks ahead of the presser.

The AL drive aims to broker a ceasefire between the two countries and work out a number of confidence-building measures, Shoukry said. The delegation also spoke with Lavrov about the need to ensure the safe exit of Arab citizens from conflict areas and mitigate fallout from the conflict on third countries, he added.

What does the war have to do with the Arab League? It’s the economy, stupid. The Arab push for peace was triggered by pressure the war is putting on global food and energy markets, Shoukry said at the presser. “Our efforts stem from our awareness of the seriousness of the crisis in Ukraine and its negative repercussions on various economic levels, such as global energy and food security,” he said.

Lavrov used the presser to reiterate Russian claims that images of alleged war crimes coming out of Ukraine are fake, saying that Russia is the victim of a misinformation campaign. “Ukraine should forget the idea of ​​joining NATO,” he added, reiterating a call for Kyiv to declare neutrality.

The delegation will head to Warsaw today for talks with Ukrainian Foreign Minister Dmytro Kuleba, according to a statement.

REMEMBER- Russia and Ukraine are two of our biggest friends, and we’d like it to stay that way. The two countries together supply the bulk of our imported wheat and are key markets for inbound tourism.

THE WAR IN TOURISM-

Russia is making it easier for its citizens to fly to Egypt and other “friendly” countries… The country will lift all remaining covid restrictions on flights to 52 “friendly states” including Egypt from this Saturday, state news agency TASS reported citing Prime Minister Mikhail Mishustin. Algeria, Bahrain, Jordan, Iraq, Kuwait and Lebanon also made the list.

…and harder for Europeans to visit Russia: Russia is suspending simplified visa procedures for some European Union countries, as well as Norway, Switzerland, Denmark and Iceland, which it deems “unfriendly,” Reuters reports, as a response to sanctions placed on Moscow over Ukraine. The move is largely symbolic, given that Russian airspace is already closed to European airlines.

BUCHA MASSACRE-

Biden says “war criminal” Putin should be put on trial + promises more sanctions: “You saw what happened in Bucha … he [Vladimir Putin] is a war criminal,” US President Joe Biden told reporters yesterday, responding to reports of executions of unarmed civilians and other atrocities allegedly committed by the Russian military against Ukrainian citizens in western Ukraine. Biden called for the Russian president to face a war crimes trial and said the US would soon announce more sanctions against Russia.

The massacre in Bucha prompted France to call for a ban on Russian coal and oil, with President Emmanuel Macron leading the charge (though he was silent on all-important gas, as the Financial Times points out).

We’re getting a new Chinese partner for EVs: State-owned El Nasr Automotive will sign next week with an unnamed Chinese company to locally assemble electric vehicles (EVs), El Nasr CEO Hany El Kholy told Enterprise. The upcoming agreement for the assembly of the EVs will be “very different” from the abandoned pact with Chinese auto firm Dongfeng, he said, declining to get into further details right now.

Operation Replace Dongfeng: The government has been in talks with companies to replace Dongfeng since negotiations with the Chinese firm collapsed in November over an import pricing dispute.

It doesn’t look like the new partner is going to be helping out with production or stumping up capital: El Kholy said that the company will not be involved in the assembly process and won’t make any investments into the project. Instead, it will give us the “know-how,” he said. The government is currently in talks with a separate private-sector firm to assemble the vehicles alongside El Nasr, El Kholy added.

Dongfeng had been set for a bigger role under the previous plan, which saw it earmark USD 12 mn for EV assembly with El Nasr as part of a USD 60 mn plan. The company would also have rehabilitated a mothballed factory owned by the state-owned firm.

We have the dealer lined up: El Nasr and the National Automotive Company (NATCO) will jointly set up Egypt’s first EV dealer, which will be the sole distributor of the vehicles that roll off the production line.

The dampened newsflow courtesy of Ramadan meant another slow night on the talk shows. With not much happening locally, the country’s talking heads shifted their attention to Lebanon and the confusion that erupted when the country’s deputy prime minister said the central bank had gone bankrupt. Both Al Tasea (watch, runtime: 1:04) and Al Hekaya (watch, runtime: 10:43) cleared up the misunderstanding. We have more on the kerfuffle in our Around The World section, below.

It’s getting hot in here: We’re in for highs of between 38-39°C over the next few days, head of the Egyptian Meteorological Authority’s analysis and forecast center Mahmoud Shahin said in a phone-in with Al Hekaya’s Amr Adib (watch, runtime: 2:31). Shahin warned people against direct exposure to the sun while fasting and stripping off layers too quickly.

Your mandatory Ramadan drama coverage: Touba star Diab virtually joined Adib to praise his co-stars (watch, runtime: 4:07), while Al Tasea showed Al Ekhtyar 3 some more love (watch, runtime: 2:23).

Budgets and international backing are getting attention in the foreign press this morning: Reuters is picking up on pledges from the UAE, Qatar and Saudi Arabia of up to USD 22 bn in investment and central bank deposits to support Egypt’s finances through the fallout from the war in Ukraine.. The newswire also names Egypt in an analysis of “frontier economies” facing risks on the back of the volatility stirred up by the war. Meanwhile, rights groups have urged the IMF to prioritize social protection during ongoing talks with Cairo on a new financial package.

Also making headlines:

• PHOTO ESSAY- “Give us our daily bread”: Cairo-based photojournalist Hamada Elrasam captures the lives of Egyptians struggling with rising food prices caused by the Ukraine war. (The Guardian)
• Egypt is trying to consolidate ties in East Africa amid its rift with Ethiopia over the disputed Grand Ethiopian Renaissance Dam. (The Africa Report)
• Egypt’s banks increase focus on consumer finance. (Euromoney)
• More love for Khazna’s big USD 38 mn round. (TechCrunch)

Egypt’s first open-access internet exchange point is live: An internet exchange built by Telecom Egypt and the Amsterdam Internet Exchange (AMS-IX) went live on Friday, according to a joint statement over the weekend. The EG-IX is an open-access platform that allows large network, cloud and telecom providers to directly exchange data. The Amsterdam exchange is providing infrastructure, software, firewalls and technical support for the project, which is housed in the country’s largest data center, launched last year. The center is connected to TE’s 14 Mediterranean and Red Sea subsea cable systems, which will be increased to 18 by 2025.

ALSO- Alexandria’s Elite Hospital has partnered with US-based medical device company Medtronic to launch an advanced stroke care center (pdf).

The Lebanese central bank is still solvent and performing its role, Banque du Liban Governor Riad Salameh said in a statement picked up by Reuters, denying claims by Deputy Prime Minister Saade Chami that the bank had gone bankrupt. “Unfortunately, the state is bankrupt, as is the central bank, so we have a problem … the loss has occurred,” Chami said in an interview (watch, runtime: 3:02). Prime Minister Najib Mikati also sought to clarify his deputy’s statements, saying he believed Chami was referring to “liquidity, not solvency.” The country is facing runaway inflation and a currency crisis after defaulting on over USD 30 bn worth of debt last year, but could soon land IMF funding to help dig it out of the hole.