Tuesday, 28 June 2022

AM — Gov’t is working to get car imports flowing again -PM Madbouly

TL;DR

WHAT WE’RE TRACKING TODAY

Two more work days to the long weekend, ladies and gentlemen. And so far, the news has been very positive this week, particularly on the FDI front, and now for the auto sector.

THE BIG STORY here at home is a possible chink of light at the end of the tunnel for the local automotive industry, after Prime Minister Moustafa Madbouly directed his ministers, the central bank, and the banking sector to coordinate on setting up “a mechanism for the orderly release of car shipments” from ports. Local car dealers have faced challenges in recent months getting vehicles imported to the country, after a change in rules that required importers to get letters of credit (L/Cs) in order to purchase non-essential goods.

We also have more potential investments from our neighbors, with Finance Minister Mohamed Maait revealing that some USD 2-3 bn in potential FDI could be coming in from Qatar. Maait made a speech during the Amcham annual meetings, where he said that attracting local and foreign investors is a “presidential priority,” according to a statement by the Finance Ministry. More on that in today’s Investment Watch.

We’re getting Kudos for our GCC push: Gulf investments coming into the country will act as “stabilizers for the EGP” in the medium term, giving the currency upside potential towards the end of the year, Standard Chartered MENA economist Carla Slim told Bloomberg TV (watch, runtime: 5:25). We’ve received some USD 7 bn of the more than USD 22 bn pledged by our Gulf neighbors to support our economy, with the remainder expected to come through in coming months, Slim noted. The EGP is now trading at EGP 18.79 to the USD.

This is particularly important as it has not been a great month for the EGX: After a slight reprieve that saw the benchmark index rise less than 0.1% at Sunday’s close, the EGX30 fell by 2.0% yesterday with a turnover of EGP 828 mn (0.1% above the 90-day average). By our count, the index has now lost around 10% of its value in less than three weeks.

As long as demand remains weak, we won’t likely be seeing sales of stakes in state-owned companies on the bourse. Delays to public offerings in the state privatization program are down to weakness in demand on the EGX as well as global headwinds triggered by conflict in Ukraine, Public Enterprise Minister Hisham Tawfik suggested to Ahram Online in an interview. “The EGX is currently not at its best,” Tawfik said, adding that the offering of Eastern Company in 2019, and of state-owned fintech firm e-finance last year, had thrown up “some structural issues in the local demand that need to be considered before resuming the program.”

Pay attention, advisors: It is “the job of investment banks that set the stake that will be offered for the private sector and the shares that will be offered” to tackle those issues, he added.

Egypt had hoped to sell shares in as many as 10 state-owned companies on the EGX in 2022, before Russia’s invasion of Ukraine upended the global economy. It’s hoped that stake sales will resume in September, Tawfik said back in May.


THE BIG STORY ABROAD this morning continues to be shifting geopolitical tectonics in Europe, as the G7 summit continues against the backdrop of the Russian war on Ukraine and discussions to bring new members into the Nato security alliance to combat fears of aggression from Moscow. Here are the headlines leading the conversation:

  • Russian missiles struck a crowded shopping mall in central Ukraine. Ukrainian officials say at least 16 people were killed and 59 wounded. (Reuters)
  • G7 leaders condemned the “abominable” attack as a war crime. (Bloomberg).
  • Ukraine’s Volodymyr Zelensky called on G7 nations to back his country’s military against Russia in a video address to the summit. (Associated Press).
  • The G7 continued discussions of a potential price cap on Russian oil, pushing Brent crude up 1.7% above USD 115 per barrel. (Reuters)

AND ON NATO-

  • The leaders of Sweden and Finland are set to meet with Turkish President Recep Tayyip Erdogan in Madrid today to discuss his objections to their NATO membership. Erdogan effectively blocked their bid to join the alliance earlier this month. (Twitter | Reuters)

MEANWHILE- Russia has defaulted on its foreign debt for the first time in over a century, after months of attempts to maneuver around Western sanctions. The country missed a Sunday deadline to meet a 30-day grace period on interest payments of USD 100 mn on two Eurobonds, Bloomberg reports. Taiwanese holders of Russian Eurobonds also claim they have not received interest payments due from Russia, two sources told Reuters.

Sweeping sanctions from the West have effectively cut off the Kremlin from the global financial system by freezing its FX reserves abroad. Moscow says the default is “artificial” because it has the means to make the payments, but is blocked from doing so. The Guardian, CNBC and the Wall Street Journal also had the story.

WHAT’S HAPPENING TODAY-

President Abdel Fattah El Sisi is in Bahrain today for talks with Bahraini King Hamad bin Isa Al Khalifa, according to a State Information Service (SIS) statement. The visit comes on the heels of El Sisi’s trip to Oman yesterday, where he discussed increasing Omani investment to Egypt with Sultan Haitham bin Tareq. The trip topped coverage on the airwaves last night, the details of which you can find in Last Night’s Talk Shows.

Public consultations on the state’s privatization plans continue. Today it’s the turn of the ICT sector, including telecoms. The government will today hold the latest in its series of public consultations over its state ownership policy document laying out privatization plans. Every Sunday and Tuesday sees workshops on how privatization plans will affect specific industries. The government has already heard from the electronics, food, and agriculture industries and today the ICT sector gets its say. Look for detailed coverage on the talks in EnterpriseAM or across our various industry features. You can find more details on the schedule of the meetings here.

SMART POLICY- The Madbouly cabinet’s new ministerial committee for competitive neutrality held its first meeting yesterday, according to a cabinet statement. The committee will work alongside the Egyptian Competition Authority (ECA) to set policies that allow a level playing field between private and state-owned companies.

Speaking of competition, will we get some news on amendments to the Competition Act today? The House Economic Affairs Committee had been expected yesterday to wrap its discussions on the contentious amendments to the Competition Act, which give greater powers to the ECA to regulate M&As — but we haven’t heard any updates yet.

A week of competition controversy: This week has been one of discussions between officials from the central bank, the Financial Regulatory Authority (FRA), the EGX, and the Egyptian Competition Authority (ECA) to iron out differences of opinion on the proposed amendments, including on (but not limited to) the fees the ECA would collect for looking into proposed M&A transactions.

What’s next? Once the committee’s done with discussions, it is expected to prepare its report on the amendments and debates, before sending them to be discussed in a House-wide plenary session.


AND TOMORROW- State grain buyer GASC launches a fresh wheat tender. The General Authority for Supply Commodities (GASC) is seeking an unspecified amount of wheat on a free-on-board (FOB) basis in an international tender, the state-run MENA agency reported, citing a statement from the authority. The deadline for offers is tomorrow, with the grain set to be shipped between August and October. If successful, this will be only GASC’s third purchase since war broke out in Ukraine, sending international wheat prices sky-high.

MARKET WATCH-

Another blow to global oil supply? OPEC member Libya may suspend oil exports from its key export terminals in the Gulf of Sirte for three days due to ongoing political turmoil, Libya’s state oil company National Oil Corp.(NOC) said yesterday. The country’s crude production has almost halved since mid-April to 600k barrels a day, Bloomberg estimates — piling pressure on a market already struggling to contain price hikes on the back of Russia’s war on Ukraine and an already tight supply chain.

Better news out of Libya’s oil sector: Egypt’s Petrojet will make a comeback to the country after a 11-year hiatus, NOC announced in a statement on Facebook. Petroject representatives were briefed on how NOC envisages the company helping to up production capacity by renovating dilapidated infrastructure and reopening closed fields.

CIRCLE YOUR CALENDAR-

The deadline for companies to submit bids for the redevelopment of the National Democratic Party headquarters is this Thursday, 30 June.

The government’s fuel pricing committee will likely meet to review fuel prices as part of its quarterly review sometime next week.

The national dialogue to set Egypt’s political and economic roadmap will also kick off next week. President Abdel Fattah El Sisi had called for the dialogue in April. Check out our explainer on the dialogue, its agenda, participants, and targeted outcomes here.

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

enterprise

*** 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: As Egypt jumps on the growing global interest in green hydrogen facilities as a clean energy source, New York-headquartered energy firm H2-Industries recently signed an MoU to set up Egypt’s first waste-to-hydrogen facility in East Port Said. We sat down with H2-Industries’ founder and CEO Michael Stusch for details on the planned facilities and his views on how Egypt can best capitalize on the push towards green hydrogen.

enterprise

A sizzling summer awaits you by the bay as we’ve saved you the hassle of planning by bringing you a lineup of unmatched energy and fun packed vacation activities to last you all season long. It’s time to create magical memories with relaxed beach-side days and excitingly fresh nights. From pumping up the adrenaline with Footgolf and Go-Karting to turning up the music and heat at Sobar with Ladies’ nights, groovy beats and lots of dancing. From BBQ beach parties at S-cape to riding horses by the sea — there’s a little special something for everyone. We look forward to seeing you at the Bay.

AUTOMOTIVE

Could the auto industry get some much-needed reprieve?

PM Madbouly seeks to reassure automotive players on stymied car imports: Prime Minister Moustafa Madbouly has directed his ministers, the central bank, and the banking sector to coordinate on setting up “a mechanism for the orderly release of car shipments” from ports, according to a cabinet statement. Madbouly’s directive came during a meeting with automotive industry reps, cabinet ministers, and banking officials meant to address supply constraints in the industry, after new import rules created challenges for local car dealers to get shipments through ports.

Measures have been taken to accelerate the release of imported vehicles, Trade and Industry Minister Nevine Gamea said, without providing any details. Industry reps, meanwhile, expressed their thanks to the government, the central bank, and the banking sector for efforts to facilitate imports, adding that they understand “the exceptional circumstances the world is going through, and that this situation is temporary and imposed by the unprecedented current events.”

Finding a balance: The state is keen to find a balance between meeting import needs for basic commodities like food and oil, and “maintaining market movement” for local car companies and dealerships “despite the difficult and unfavorable global economic conditions,” Madbouly said.

Background: Several foreign car manufacturers have suspended sales to Egypt after a change to how imports are paid for left local dealers incapable of purchasing vehicles, industry sources told Enterprise last month, with one estimating that some 29k vehicles are stranded at ports. This followed new rules handed down by the Central Bank of Egypt (CBE) in March requiring importers to use letters of credit (L/Cs) to purchase non-essential goods, instead of documentary collection.

Dire straits: Car sales collapsed almost 20% y-o-y in April for the second consecutive month, as the automotive sector is being buffeted by a multitude of headwinds, including a lack of financing for imports, rising inflation, component shortages and the EGP devaluation in March.

INVESTMENT WATCH

More promising sounds on incoming Qatari investment, this time from Maait

Qatari officials have discussed investing USD 2-3 bn in the local market in talks with the Madbouly government, Finance Minister Mohamed Maait told reporters on the sidelines of Amcham’s annual general meeting yesterday, according to Al Mal. The inflows would come in the form of purchases in “company stakes and the real estate sector,” Maait said, without providing further details.

That’s only around half of the total investments pledged by Doha, which in March said it would invest USD 5 bn in Egypt to help shore up our finances amid the crisis in Ukraine — part of more than USD 22 bn of support pledged by Gulf neighbors, led by the KSA and the UAE.

There’s been plenty of promising signs that Qatari inflows are on the way – but no concrete agreements yet. A landmark visit over the weekend by Qatari Emir Sheikh Tamim bin Hamad Al Thani to Cairo saw him discuss “maximizing Qatari investments in Egypt.” Trade Minister Nevine Gamea and other officials have been in Doha to drum up investment in the past few weeks, where big Qatari names including Ezdan Holding and Qatari Diar expressed their interest. That said, we’re still waiting for Doha firms to sign on the dotted line.

The gov’t still wants to slash dependency on hot money, with Finance Minister Mohamed Maait echoing during the Amcham gathering earlier statements on the necessity of boosting foreign direct investments, Reuters reported him as saying.

DEBT WATCH

Tasaheel securitizes USD 150 mn of its loan book

MNT-Halan’s microfinance subsidiary Tasaheel has closed a USD 150 mn (c.EGP 2.8 bn) securitized bond issuance as part of a wider USD 600 mn securitization program with CIB, backed by Tasaheel’s loan book, according to a press release (pdf). MNT-Halan did not disclose the total value of Tasaheel’s loan book when asked by Enterprise.

The details: The issuance was 2x oversubscribed, and is being billed as the largest securitization in Egypt’s microfinance sector to date. Proceeds from the bonds will be used to finance “the company’s accelerated growth across multiple lending business lines and MNT-Halan’s expansion into new verticals,” the press release said.

MNT-Halan will issue the rest of the program through Tasaheel and its consumer finance arm over the next three years, Andre Valavanis, vice president of investments and corporate strategy, told Enterprise.

Who bought in? Abu Dhabi Commercial Bank, Al Ahli Bank of Kuwait, Al Baraka Bank, Agricultural Bank of Egypt and the Housing and Development Bank.

What they said: “This transaction marks our first securitization and ensures our continued growth as we expect our loan book to exceed USD 2 bn over the next couple of years,” MNT-Halan CEO Mounir Nakhla said.

By our count, MNT-Halan’s offering takes the total value of securitized bonds sold this year to almost EGP 14.3 bn. That’s just north of 90% of the total value of EGP 15.8 bn taken to market last year.

Advisors: CIB acted as financial advisor and general arranger of the transaction, while the National Bank of Egypt acted as co-financial advisor and underwriter. Arab African International Bank and NI Capital served as underwriters, and Matouk Bassiouny & Hennawy served as counsel.

enterprise

HEALTHCARE

IFC, EHCS partner on mega medical complex in Badr City

IFC partners with local healthcare player EHCS on medical complex: The International Finance Corporation (IFC) will advise private healthcare developer Egyptians for Health Care Services (EHCS) on its CapitalMed integrated healthcare park in Badr City, a joint press release (pdf) read. The IFC is set to advise on “designing, structuring, budgeting, and managing the project while identifying strategic investors,” according to the statement.

Construction has already begun on the first phase of the project, which should open its doors next year and is set to cost EGP 5.5 bn split between equity and debt, EHCS Chairman and Managing Director Hassan El Kalla told Enterprise. The IFC will manage the equity side of the financing, he said.

Further down the line: The private medical complex is set to include a general hospital and 19 specialist centers, and hopes to serve some 20 mn people. El Kalla described the project — which local media has previously reported to be worth EGP 18 bn overall —- as “the largest ever development for healthcare in Egypt,” adding that its four phases will take 10-12 years to complete. Huawei is reportedly responsible for the park’s smart infrastructure.

What they said: “Given the challenges facing the public healthcare system, increasing the role of private providers will be essential if Egypt wants to meet its ambitious goal of universal healthcare coverage within the next eight years,” said Cheick-Oumar Sylla, IFC regional director for North Africa.

WORTH NOTING- The IFC last year launched a three-year advisory program that aims to help at least 100 local private-sector healthcare providers improve patient care

enterprise

LAST NIGHT’S TALK SHOWS

Leading the airwaves yesterday: A two-day visit by President Abdel Fattah El Sisi to Oman led the conversation among the talking heads yesterday. El Sisi will land in Bahrain today, Ittihadiya Spokesperson Bassam Rady told Ala Mas’ouleety (watch, runtime: 4:25).

Investment from Muscat? Oman's Sultan Haitham bin Tariq told President Abdel Fattah El Sisi that he wants to increase the country’s investments in Egypt during their meeting in Muscat yesterday, according to an Ittihadiya readout.

Yesterday’s meeting was the first between the duo since bin Tareq assumed power in 2020, Rady said, describing the meetings between the two leaders as “productive.” Al Hayah Al Youm also covered the story (watch, runtime: 1:13).

Kelma Akhira’s Lamis El Hadidi highlighted the USD 586.2 mn worth of trade between Egypt and Oman last year, up 7.2% y-o-y, according to figures from statistics agency Capmas (watch, runtime: 1:50).

EGYPT IN THE NEWS

It’s a quiet Tuesday for mentions of Egypt in the international press. Making headlines:

  • The impact of the global wheat crunch on our bread subsidy program continues to make international headlines. (Wall Street Journal)
  • Egyptians raised EGP 40 mn through social media to give a life-saving injection of the world’s most expensive prescription drug to an Egyptian toddler with spinal muscular atrophy. (The National)
  • University student Naira Ashraf’s murder at the hands of a male classmate is garnering more international attention. (CBS News)

ALSO ON OUR RADAR

The government has formed a committee to reconsider some of the penalties it imposed this harvest season on wheat farmers who fail to sell the required grain quotas to the state, Al Borsa reports, citing comments by Supply Minister Ali El Moselhy on the sidelines of his big presser on wheat earlier this week. The state is reportedly finding it hard to impose some of the penalties — including money fines and withholding fertilizer subsidies for next year’s crop from those who don’t provide the required amount of wheat — due to confusion over whether landowners or their tenant farmers should be penalized, and land changing ownership, unnamed sources told Al Borsa.

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

  • Honeywell will use its tech to automate systems at the Anchor Benitoite petrochemicals complex in the Suez Canal Economic Zone, under an MoU it signed with Anchorage Investments. (Press release, pdf)
  • EFG Hermes’ buy-now-pay-later platform valU has partnered with real estate developer Arab Developers Holding to provide residents with home improvement and maintenance finance. (Statement, pdf)
  • The National Bank of Egypt is opening its first branch in Juba, South Sudan today. (Statement)

PLANET FINANCE

Powered by
EFG Hermes - https://efghermes.com/

Our friends at Chimera Capital have launched two US sharia-compliant exchange-traded funds (ETFs), one for value stocks and the other for growth stocks listed on the S&P, according to a statement (pdf). The first of the Abu Dhabi-based investment management firm’s new indices will track the S&P Composite 1500’s 30 most liquid sharia-compliant value stocks, including Johnson & Johnson, Procter & Gamble, and Exxon Mobil. The second index will cover the S&P 500’s 30 biggest sharia-compliant value-stock constituents, such as Apple, Tesla, and Amazon. Chimera will list both ETFs on the ADX, giving investors direct access to the US market. Authorized participants (who can create and redeem the ETFs’ shares) are International Securities, EFG Hermes, Arqaam Capital, Daman Securities, and BHM Capital. BNY Mellon is the ETFs’ global custodian.

Speaking of ETFs: Their heavy penetration in emerging markets leaves EMs exposed to global shocks because “passive funds and ETFs investing in EMEs assets are more subject to redemption pressures during periods of market turbulence,” economists at Italy’s central bank said in a research paper.

For example: When markets are volatile, passive funds were more likely than active funds to drop EM bonds, the researchers found in their analysis of global market data. ETFs tend to be fickle with their investments, meaning they are not “a reliable long-term source of investment that countries need,” Renaissance Capital Chief Economist Charles Robertson told the Financial Times.

Egypt saw that ETF volatility firsthand back in 2018 during the emerging market meltdown. Our portfolio investments had jumped to USD 70 bn in 2018 from USD 70 mn in 2016. Around half of these investments left the country in mid-2018, only to flow back a year later, Robertson notes.

ALSO IN PLANET FINANCE-

  • Tecom IPO was massively oversubscribed: Dubai business park operator Tecom Group drew USD 9.6 bn in orders for its USD 454 mn IPO as the Gulf IPO rush continues. (Bloomberg)
  • VW’s EV charging business worth bns of USD? Volkswagen is close to selling a minority stake in its US EV-charging business Electrify to a Siemens subsidiary. The transaction would value Electrify at more than USD 2 bn. (WSJ)

Up

EGX30

9,255

-2.0% (YTD: -22.5%)

Down

USD (CBE)

Buy 18.71

Sell 18.79

None

USD at CIB

Buy 18.73

Sell 18.79

None

Interest rates CBE

11.25% deposit

12.25% lending

Down

Tadawul

11,427

-0.7% (YTD: +1.3%)

Up

ADX

9,268

+0.3% (YTD: +9.2%)

Up

DFM

3,218

+0.5% (YTD: +0.7%)

Down

S&P 500

3,900

-0.3% (YTD: -18.2%)

Up

FTSE 100

7,258

+0.7% (YTD: -1.7%)

Up

Euro Stoxx 50

3,539

+0.2% (YTD: -17.7%)

Up

Brent crude

USD 115.09

+1.7%

Down

Natural gas (Nymex)

USD 6.39

-1.8%

Down

Gold

USD 1823.90

-0.1%

Down

BTC

USD 20,716

-1.6% (YTD: -55.0%)

THE CLOSING BELL-

The EGX30 fell 2.0% at yesterday’s close on turnover of EGP 828 mn (0.1% above the 90-day average). Local investors were net buyers. The index is down 22.5% YTD.

In the green: Oriental Weavers (+0.8%) and Eastern Company (+0.6%).

In the red: GB Auto (-11.0%), Fawry (-9.6%) and Orascom Development Egypt (-7.2%).

Asian markets are up/down in early trading this morning and futures suggest xx

DIPLOMACY

Second Negev meeting sees US, Israel, Arab allies form working groups on key issues: Officials from Bahrain, Egypt, Israel, Morocco, the UAE and the US agreed to form working groups for closer ties on clean energy, education, food and water security, health, regional security, and tourism at a steering meeting of the recently formed Negev forum in Manama yesterday, a joint statement released by the State Department read. The statement made no mention of the Iranian nuclear threat, which Israeli officials had suggested ahead of the meeting would be on the table.

AROUND THE WORLD

Sudan is submitting a formal complaint to the UN Security Council against Ethiopia for allegedly kidnapping and killing seven Sudanese soldiers and a civilian last week, according to SUNA. Sudan has also summoned Ethiopia’s ambassador in Khartoum over the incident, for which President Abdel Fattah El Sisi extended his condolences to Sudan’s military leader General Abdel Fattah Al Burhan over the incident, according to an Ittihadiya statement, while Ethiopia’s foreign ministry denied the accusation, Reuters reports.

Warming Israel-KSA ties through easier Hajj access? Israel and Saudi Arabia are reportedly negotiating a potential agreement that would see Riyadh allow Palestinians with Israeli citizenship to board flights from Israel to conduct Hajj and Umrah, the Financial Times reports, citing people with knowledge of the matter. The negotiations are backed by the US and come ahead of US President Joe Biden’s trip to the two countries next month.

greenEconomy

Enterprise sits down with: Michael Stusch, CEO and chairman of H2-Industries: Egypt is looking to capitalize on the growing global interest in green hydrogen as a clean energy source. Scatec, Fertiglobe and Orascom Construction are beginning work on the country’s first hydrogen facility in Ain Sokhna and the government has signed some USD 14 bn worth of preliminary agreements for further green hydro and green ammonia projects, giving it a potential pipeline of 11.62 GW (equal to around 1.57 mn tons of hydrogen a year).

One such project is H2-Industries’ proposed waste-to-hydrogen facility: New York-headquartered energy firm H2-Industries plans to establish Egypt’s first waste-to-hydrogen plant in East Port Said, and signed a memorandum of understanding with the Suez Canal Economic Zone (SCZone) this month. The USD 3 bn facility would produce 300k tons of hydrogen each year, consuming 4 mn tons of municipal solid waste. The company, founded in 2010 by Michael Stusch, has also announced plans to build a USD 1.4 bn plant in Oman, and is also working on projects to generate, transport and store green energy in 20 countries including Germany, Botswana, South Africa, Namibia, and other countries in the MENA region.

We sat down with H2-Industries’ founder, executive chairman and CEO Michael Stusch (LinkedIn) to discuss plans for the facility, and why Egypt is well placed to capitalize on the turn towards green hydrogen — and potentially ease its waste management challenges in the process.

Key takeaways: H2-Industries could sign final agreements on its waste-to-hydrogen facility at COP27. The facility is unique in that it uses only water and waste (and solar power), Stusch says. Given the rising demand for our green energy from European offtakers, our strategic location, and our waste management challenges, Stusch sees Egypt as an ideal location in which to locate the project.

Edited excerpts from our conversation follow.

ENTERPRISE: What is H2-Industries’ timeframe to get Egypt’s first waste-to-hydrogen plant up and running, and how will it be financed?

MICHAEL STUSCH: After signing an initial agreement last month, we’re now conducting a feasibility study for the plant which is subject to final approval by the SCZone. Final agreements could be signed at COP27. Once approved, we’ll begin site-specific development.

We plan to implement the project in three phases: Phase one will cover 20% of the plant’s total capacity, and should take approximately 24 months to start producing green hydrogen. phase two should be operational a year later, and phase three a year after that.

The project will be financed by a combination of equity investment from foreign investors and financing from international banks, including development finance institutions. We are currently speaking to financial partners and development experts but can’t disclose names at this stage.

E: You’re aiming to produce 300k tons of hydrogen each year at half the cost of current production technologies, consuming 4 mn tons of organic waste and non-recyclable plastics in the process. What can you tell us about how it works?

MS: H2-Industries’ power plants use only water and waste. There’s no outside electricity or other fuels used as feedstock, so we’re not dependent on power or fuel prices. It’ll be powered by 1.5 MW of roof-top solar systems and some of the hydrogen produced by the plant. This makes our process not just energy autarch and truly emission-free, but also opens chances to set-up power plants where electrical grids are weak or non-existing.

Generally, the challenge in making electrolysis cost-competitive is the cost of the electricity itself. Electricity has to either be generated from polluting fossil fuels or renewable sources, which are expensive and not readily available.

With fuel prices increasing as a result of the war in Ukraine, our costs are lower than fossil-fuel based hydrogen production. And they’re less than half the levelized cost of current green hydrogen production.

The output from our thermo-chemical process — which doesn’t involve burning waste — is hydrogen and captured CO2, both high-value products that can be sold on the world market.

E: How much CO2 do you expect to be capturing from the facility?

MS: In the final phase, we will capture roughly 4 mn tons of CO2 per year.

E: What do you plan to do with the hydrogen produced by the facility?

MS: Green, emission-free hydrogen is currently a highly sought-after energy source. Governments and large industrial producers are trying to secure supplies to meet their energy needs amid national decarbonization efforts.

Potential off-takers for emission-free hydrogen — besides governments and government entities in Europe and Asia — are private companies in the German and US aviation industries, as well as European utilities, gas and fuel, cement, glass, and steel sectors. Whether we also supply local Egyptian offtakers will depend on the demand. H2-Industries will use liquid organic hydrogen carrier (LOHC) technology to store and transport the hydrogen produced by our plant.

Another possible use for the green hydrogen we will produce in Egypt is as essential feedstock for synthetic fuel production. Over 1.4 bn vehicles, some 27k aircraft and over 100k ships worldwide will continue to form the basis for global mobility for the coming two decades at least. Carbon-neutral fuels are a sustainable solution for better climate protection.

E: What makes green hydrogen “green” is the fact that its primary feedstock is renewable energy, like wind or solar. So would the hydrogen produced by H2’s waste-to-hydrogen facility be considered green?

MS: As waste-to-hydrogen is such a new concept, it’s yet to be classified within the current hydrogen color spectrum, but this process is underway.

Waste isn’t considered a renewable energy source, but the hydrogen it produces is closer to green than any other color on the spectrum as the CO2 is captured. We know that plastic waste is harmful, but it’s also a feedstock society will continue to produce in the future. Using waste as an energy source helps to clean up our planet.

In the future, some of the hydrogen colors may fade in importance or new ones may appear. What’s certain is that the hydrogen rainbow will play a significant role in decarbonizing our homes, businesses and transport. Specific technologies and their environmental impact will determine the real value of any kind of hydrogen — not the color allocated by a certification body.

E: Egypt’s waste-to-energy sector has faced challenges getting off the ground, with players in the field saying it just isn’t financially viable without other incentives. Why is Egypt an appealing destination for this waste-to-hydrogen project?

MS: Egypt generates approximately 22 mn tons of waste per year and faces waste management challenges, as do many other countries worldwide. With COP27 coming up, Egypt has also been ramping up its green hydrogen ambitions and has set targets to accelerate renewable energy use. The amount of waste produced by the region, renewable energy targets, and the government’s willingness to implement green hydrogen projects have naturally resulted in Egypt being an attractive market for hydrogen production.

The SCZone is also a perfect location for our project. It’s centered between Europe, Africa and Asia, and provides modern infrastructure, access to waste, water, and skilled human resources. It also has a supportive and committed administration.

Egyptian authorities have so far been very responsive and willing to work with us. The challenges are known and are being constantly addressed. In our case, the regulation of the waste sector is vital, since a regular supply of waste is key to our production process. We require the right regulatory and market framework for us to secure this input for at least the next 35 years.


Your top green economy stories for the week:

  • Concrete giant CEMEX is partnering with the VeryNile initiative to expand solid waste collection at the Nile River under a three-year cooperation protocol.
  • COP27 will help ramp up agreements in Egypt’s green ammonia sector: The summit will focus on agreements to finance fuel and power projects, especially climate-friendly ones like ramping up green ammonia for shipping in the Suez Canal.
  • We’re getting a new solar plant: Alhokair Group subsidiary FAS Energy is planning to invest some USD 450 mn to construct a 500 MW solar plant in Egypt in partnership with the Electricity Ministry and the Egyptian Electricity Transmission Company (EETC).
  • And one of the largest onshore wind farms in the world: Saudi Arabia’s ACWA Power and Hassan Allam Holding signed a 25-year power purchase agreement (PPA) with the Egyptian Electricity Transmission Company (EETC) to develop a 1.1 GW wind farm in the Gulf of Suez.

CALENDAR

OUR CALENDAR APPEARS in two sections:

  • Events with specific dates or months are right here up top
  • Events happening in a quarter or other range of time with no specific date / month appear at the bottom of the calendar.

JUNE

30 June (Thursday): June 30 Revolution Day, national holiday.

30 June (Thursday): Deadline for bids for National Democratic Party HQ redevelopment contract.

June: Egypt will launch a unified ticketing system for all means of transport at the Adly Mansour Interchange Station.

June: Eastern Company meets to decide on prices of its tobacco products amid rising production costs and scarcity of raw materials.

JULY

July: A law governing ins. for seasonal contractors will come into effect.

July: Actis’ expected sale of its majority stake in Lekela to Infinity and Masdar’s Infinity Power.

First week of July: Fuel pricing committee meets to decide quarterly fuel prices.

First week of July: The national dialogue called for by President Abdel Fattah El Sisi kicks off.

1 July (Friday): FY 2022-2023 begins.

1 July (Friday): Official rollout of e-receipt system begins.

8 July (Friday): Arafat Day.

9-13 July (Saturday-Wednesday): Eid Al Adha, national holiday.

21 July (Thursday): European Central Bank monetary policy meeting.

26-27 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

30 July (Saturday): Islamic New Year.

Late July-14 August: 2Q2022 earnings season.

AUGUST

August: Work to extend the capacity of the Egypt-Sudan electricity interconnection to 600 MW to be completed.

August: Sharm El Sheikh will host the African Sumo Championship.

18 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

SEPTEMBER

September: Egypt will display its first naval exhibition, Naval Power.

September: Estate Waves Egypt real estate exhibition through metaverse technology.

September: Central Bank of Egypt’s Innovation and Financial Technology Center to launch incubator for 25 fintech startups.

September: The sixth session of the Egyptian-German Joint Economic Committee.

September: A delegation from Germany’s Aldi will visit Egypt to look at potential investments.

6-9 September (Tuesday-Friday): Gate Travel Expo 2022, El Kobba Palace, Cairo.

8 September (Thursday): European Central Bank monetary policy meeting.

18 September (Sunday): Deadline for brokerage firms, asset managers and financial advisors to register with the Egyptian Securities Federation.

20-21 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

22 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

26–27 September (Monday-Tuesday): The Africa Women Innovation and Entrepreneurship Forum (AWIEF) at the Cairo Marriott Hotel.

OCTOBER

October: Air Sphinx, EgyptAir’s low-cost subsidiary to commence operations.

October: Fuel pricing committee meets to decide quarterly fuel prices.

October: The finals of the IEEE’s Arab IoT & AI Challenge will be held during GITEX Technology Week in Dubai next October, with participants from 11 Arab countries.

1 October (Saturday): Use of Nafeza becomes compulsory for air freight.

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

8 October (Saturday): Prophet Muhammad’s birthday, national holiday.

10-16 October (Monday-Sunday): World Bank and IMF annual meetings chaired by CBE Governor Tarek Amer, Washington, DC.

18-20 October (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

27 October (Thursday): European Central Bank monetary policy meeting.

Late October-14 November: 3Q2022 earnings season.

NOVEMBER

November: Cairo Water Week 2022.

1-2 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

3-5 November (Thursday-Saturday): Egypt Fashion Week.

4-6 November (Friday-Sunday): The Autotech auto exhibition kicks off at the Cairo International Exhibition and Convention Center.

6-18 November (Sunday-Friday): Egypt will host COP27 in Sharm El Sheikh.

7-13 November (Mon-Sun): The International University Sports Federation (FISU) World University Squash Championships, New Giza.

21 November-18 December (Monday-Sunday): 2022 Fifa World Cup, Qatar.

13-14 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 December (Thursday): European Central Bank monetary policy meeting.

DECEMBER

22 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

December: The Sixth of October dry port will begin operations.

JANUARY 2023

January EGX-listed companies and non-bank lenders will submit ESG reports for the first time.

January: Fuel pricing committee meets to decide quarterly fuel prices.

MAY 2023

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

EVENTS WITH NO SET DATE

2Q2022: The Sovereign Fund of Egypt will invest in two companies in the financial inclusion and non-banking financial services sectors.

End of 2Q2022: The Financial Regulatory Authority’s new Ins. Act should be approved.

End of 2Q2022: Door for bidding for the contract to redevelop the site of the former National Democratic Party HQ to close.

1H2022: Target date for IDH to close its acquisition of 50% of Islamabad Diagnostic Center.

1H2022: The government will respond to private companies’ bids to build desalination plants.

1H2022: Egypt’s second corporate green bond issuance expected to be announced.

End of 1H2022: Emirati industrial company M Glory Holding and the Military Production Ministry will begin the mass production of dual fuel pickup trucks that can run on natural gas.

2H2022: The inauguration of the Grand Egyptian Museum.

2H2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

2H2022: The government will have vaccinated 70% of the population.

3Q2022: Ayady’s consumer financing arm, The Egyptian Company for Consumer Finance Services, to release its first financing product.

End of 2022: e-Aswaaq’s tourism platform will complete the roll out of its ticketing and online booking portal across Egypt.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

**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 above between the actual holiday and its observance.

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