Thursday, 22 October 2015

Hisham Ramez out, ex-NBE chief Tarek Amer in as governor of Central Bank of Egypt

TL;DR

Tarek Amer to take over Central Bank of Egypt as Ramez tenders resignation (Spotlight)

Nestlé, Intel deny rumors they’re planning on exiting Egypt (Speed Round)

About one quarter of eligible voters cast ballots in the first stage of elections for the House of Representatives (What We’re Tracking)

Market shortage of Hep-C cure Sovaldi due to FX constraints (Speed Round)

Abbott could finalize Pentapharma Egypt acquisition within two weeks (Speed Round)

Egypt elected president of World Tourism Organization executive council for 2016 (Tourism)

Where does the British Museum’s keeper of Ancient Egypt get his kicks when in Cairo? (Tourism)

By the Numbers + Will Egypt get budgetary assistance for hosting Syrian refugees?

WHAT WE’RE TRACKING TODAY

Hisham Ramez is out as governor of the Central Bank of Egypt. Ramez, who tendered his resignation during a meeting yesterday with President Abdel Fattah El Sisi, will be succeeded by former NBE chief Tarek Amer, as we discuss in today’s Spotlight, below. The issue: In the absence of policy guidance, a one-month transition period between central bank governors is in many ways an eternity, particularly when some in the community appear to be engaged in magical thinking. Amer is a bold leader who succeeded in bringing meaningful change to the National Bank of Egypt before his tenure was cut short in the turmoil post the 25 January revolution. But the notion that his mere appointment heralds imminent economic salvation — as many suggested yesterday — is a near-textbook definition of magical thinking.

Turnout in the first stage of parliamentary elections reached 26.5%, according to the head of the High Elections Committee (HEC), Ayman Abbas, in a press conference on Wednesday evening. There will be 222 individual seats contested in the runoff round which will take place next week, Ahram Online noted. Some surprising results of the elections so far are that both former NDP figures and the Salafist Nour Party have fared poorly, with Reuters reporting that the “loyalist” For the Love of Egypt bloc has won all 60 list-based seats in this round of elections. According to Ahram Online: “‘25 [Nour Party candidates] out of ‎a total of 160 candidates who ran for individual seats ‎qualified for the runoff,’ while the Free Egyptians Party posted on its Facebook page earlier on Wednesday that 65 out of a total of 112 candidates also qualified for the runoff.”

Amer Holding and Porto Holding are set to begin trading on EGX today, the result of the demerger of Amer Group. Details in Speed Round, below.

Former US Secretary of State Hillary Clinton will testify before the House Select Committee on Benghazi today. Following House Majority Leader Kevin McCarthy’s public gloating that the Benghazi committee hurt Clinton in the polls, The Atlantic suggests that the hearing has a good chance of actually working in Clinton’s favor, with the LA Times agreeing with this assessment. Nancy A. Youssef at the Daily Beast details how Clinton, to this day an unrepentant advocate for intervention in Libya — which has the left the country a thoroughly failed state and source of existential crisis to Egypt — was part of a coalition of advisers who pushed US President Barack Obama to intervene in Libya against then-US Secretary of Defense Robert Gates’ objections. “Smart power at its best” is how Clinton described the intervention during the most recent Democratic debate, Youssef notes.

Wikileaks has published what it claims are work-related documents from the hacked personal email account of CIA Director John Brennan.

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LAST NIGHT’S TALK SHOWS

Ibrahim Eissa’s expectations for new CBE Governor Tarek Amer: Eissa kicked-off last night’s show on Al Kahera Wal Nas with a brief digression about the parliamentary elections —  claiming the low turnout is not the end of the world, but that Egypt “can’t see it as something that’s normal in a democratic transition period… What are our priorities as a country? We need an administrative revolution that focuses purely on investment and tourism. … Prices are going down worldwide, except for Egypt, they’re always rising.”

In his main segment, Eissa questioned the timing of Tarek Amer’s appointment as the new governor of the Central Bank of Egypt: “Will Amer change the fiscal policies of [former CBE governor] Hisham Ramez?” Eissa asked, before answering his own question: “I believe no structural changes will transpire.”

Eissa’s top ten list for the evening: Top 10 reasons Koshari is the Egyptian people’s food. List highlights: None. Enterprise hates Koshari. (Well, at least one editor does, and he has the clout to ban it from the office.)

Youssef El Housseiny’s obsession with Salafis and Borhami: Commenting on the appointment of Tarek Amer, Youssef El Housseiny said he was hopeful the move would complement the country’s economic reform program.

In line with Ibrahim Eissa’s sentiment on the parliamentary elections, El Housseiny said that the low voter turnout was a “disgrace” before going on to mock the weak showing at the polls by Salafis in West Alexandria. He also derided Salafi Call deputy head Yasser Borhamy, whose political arm Hezb Al Nour’s defeat in their stronghold of Alexandria came as something of a surprise to some political observers. El Housseiny zeroed-in Borhamy’s recent comments on Al Mehwar TV channel, where the latter said “El Sisi has abandoned us [Salafis],” (Watch in Arabic, running time: 2:16).

“Salafis were working hand-in-hand with Ikhwan,” Housseiny commented. “These factions are taking us down the dangerous path of destruction of the state.”

El Housseiny then switched gears to address conditions in Egypt’s prison system, highlighting a message posted on social media by the wife of journalist Youssef Shaaban, who has been in solitary confinement for over a year. Shaaban’s wife claims prison authorities have neglected inmates with medical conditions and refuse family requests to deliver books and clothes to their loved ones behind bars.

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SPOTLIGHT on Tarek Amer replaces Hisham Ramez as central bank governor.

Hisham Ramez won’t get a second term after all: A presidential decree issued yesterday appoints former National Bank of Egypt chairman Tarek Amer to replace Ramez as central bank governor effective 26 November 2015, local media reported. Amer will serve a four-year term. President Abdel Fattah El Sisi accepted Ramez’s resignation yesterday, and the veteran banker will stay on through the end of November to hand over to Amer. “Ramez has faced increasing criticism in recent months as the Egyptian pound has come under pressure,” Reuters writes. Al Masry Al Youm profiled “strongman” Amer and prefaced Ramez’s resignation by noting a reported dispute between the cabinet members and Ramez after the latter asked for stricter measures to control the FX black market and to impose tighter restrictions on imports.

Amer’s views on policy and politics, culled from past interviews:

  • I support obtaining a loan from the IMF, and I do not think to postpone it until after the elections,” he said, speaking ahead of the 2012 presidential elections
  • We should focus our efforts on raising GDP before we begin to speak on social justice” (Read in Arabic)
  • On Hisham Ramez’s appointment as CBE chairman: “He is the best choice as he is an monetary policy expert and will effectively manage forex reserves” (Read in Arabic)
  • On the state of the nation post-25 Jan 2011: “we are heading towards isolationism, and heading down a path worse than 1967.” (Read in Arabic)

One of the better interviews with the straight-shooting Amer remains this highly quotable piece by Ahmed Feteha for Ahram Online back in 2012:

  • On the public sector: “Failures always attack those who succeed under the cover of ‘justice.’ This kind of socialist justice, where everyone becomes equal, is, in fact, unjust … That is why government employees in Egypt are the ones who always protest, while the government is full of corruption… We have to change this socialist mindset in Egypt to be able to develop.”
  • On salary caps for heads of public banks: “The government… has the absolute right to choose someone who would accept a salary that would appease public opinion. They could save a few mns in exchange for putting bns of the country’s money in jeopardy.”
  • On public debt: “The Egyptian people are responsible for whatever debts Mubarak took because they let him rule for 30 years. And if Mubarak was corrupt, we — as the people — are also corrupt because we did not hold him accountable.”

Ahmed Feteha at Bloomberg quotes Mohamed El-Bahey, an executive board member of the Federation of Egyptian Industries, as saying Amer’s posting is a “step toward reform.” El-Bahey spoke for many when he said he hopes Amer removes capital controls and floats the pound against a basket of currencies: If this results in “a weaker pound, so be it — as long as foreign currency is available,” he said.

Amer’s appointment was widely welcomed by business leaders, investors and importers. The business community at large is hoping that Amer will scrap caps on USD deposits and proceed with a more aggressive float of the pound. The ICT Chamber of Commerce plans to send a letter formally requesting that deposit limits be removed, Al Borsa reports. Osama Rostom, VP of the Pharmaceuticals Chamber of Commerce, blames the policy for medicine shipments languishing in customs. Mohamed Naggar, who heads the Importers Chamber of Commerce, feels that the policy had largely failed in eliminating the black market.

Ramez’s televised remarks that the New Suez Canal and power stations were behind the FX crunch may have contributed to his downfall, Al Masry Al Youm would have you believe. According to “well-placed sources” speaking to AMAY, the decision to “remove” Hisham Ramez from office came days after the FX crisis exploded. They add there was a wide disconnect and a lack of coordination between the Cabinet and the CBE on how to approach the problem, despite Ismail himself touting protectionist rhetoric.

Ahram Online has a translated a somewhat contentious interview with outgoing CBE Governor Hisham Ramez in which he defends decisions made during his term. It would appear that the interview was given before yesterday’s announcement. Although the exact date is unclear, it would appear to be the same interview which appeared in Al Shorouk last week.

Daily News Egypt outlines the six challenges awaiting Tarek Amer once he assumes his new duties, namely: Adjusting the exchange market, rebuilding FX reserves, controlling inflation, employing banks’ domestic liquidity, balancing interest rates, and financing the budget deficit. (Read)

International coverage on the new appointment has been brief and perfunctory, with the FT giving the most in-depth coverage, reiterating the points mentioned above. The AP, Xinhua and Turkish Anadolu Agency both give short, terse takes on the news.

Expectations of quick action could be dashed: “I think there will be quick decisions taken and this will reflect on the stability of the USD market, and I expect that there will be weakening in the pound versus the USD because he has expertise and he will take control,” the head of the importers’ division at the Cairo Chamber of Commerce told Reuters. The reality may be more stark: Among the many conditions for a successful float (beyond, say, a coherent government strategy to win FDI and tourism) is the CBE having the reserve firepower it needs to meet market demand. Also: Amer’s views on a switch to a trade-weighted basket of currencies against which to set the pound are — to the best of our knowledge — unknown.

Against that backdrop, Ziad Bahaa Eldin’s most recent essay is worth a read: The devaluation of the pound, he writes, is only “an expression of more profound problems in the management of the economy.” The real problems are: “low levels of investment, export, and employment combined with high levels of foreign and domestic debt and, most important, a lack of clarity and direction in state economic policy.”

Indeed, nearly all of the levers at Amer’s disposal — beyond a rate cut, which could be made as early as next Thursday’s Monetary Policy Committee meeting — are levers that take time and political will to pull: Landing new tourism inflows, FDI, Suez Canal revenues and remittances. Marshalling the political will to ask for an IMF facility. Accelerating the scrapping of a ruinous energy subsidy program. Even delivery of the megaprojects Bahaa El Din notes could play role — in the fullness of time.

**Speaking of the Suez Canal, recommended reading this morning is The Banker’s look at the project in its October issue (pdf). “While some of the government’s projected figures for revenue generation and employment around the canal appear optimistic, they are certainly achievable, provided the investment climate heads in the right direction,” says AmCham President Anis Aclimandos. Also quoted in the piece to good effect: CIB Chairman and MD Hisham Ezz Al-Arab, with an example of how private-sector innovation can help business and government alike wring the most benefit out of megaprojects.


Nestlé Egypt’s not going anywhere: Nestlé Egypt on Wednesday issued a press release denying media reports, such as those appearing in Al Shorouk citing anonymous sources, that it was looking to divest and exit operations in the country. The reports had stated that the company is being challenged by the USD shortage domestically and the restrictions on repatriation of profits. A source said Nestlé Egypt has had to resort to having the company’s Dubai office pay its suppliers, most of whom are based abroad. Nestlé Egypt imports the majority of its raw materials but has been unable to transfer the funds to pay its suppliers abroad despite having the liquidity, the report says. The source noted that the company is considering shutting down the company in Egypt and resorting to managing operations from the Dubai office. In its statement: Nestlé Egypt CEO and Chairman, Yasser Abdul Malak said: “Nestlé has been delighting consumers in Egypt since 1870 and we have strong roots in the country where we have long been an integral part of the local community. Over the past four years, Nestlé Egypt has invested close to EGP 1 bn behind manufacturing & distribution facilities in addition to skill development.” He also added: “We are committed to grow our operations & to continue investments in Egypt as a strategic market in the region.”

And neither is Intel: Intel Egypt denied rumors it is planning on exiting the Egyptian market, Al Borsa reported. A source told the paper that Intel’s business and investment are growing. The rumours, the source said, aim to cause a stir among multinationals operating in Egypt.

Additional reports confirm Sovaldi shortage due to lack of hard currency, as noted earlier this month. Following previous reports that hepatitis-C cure Sovaldi has all but disappeared from the local market, the Customs Authority is said to be holding 20k packs out of 30k imported by a domestic affiliate of Gilead Sciences. The shipments are held because the company has been unable to source FX to pay for the shipment. 10k packs were released after the company managed to secure USD 2.7 mn from the National Bank of Egypt and the bank promised it an additional USD 5.3 mn in two instalments to clear the balance. Al Borsa says this is the second time the Customs Authority holds shipments of Sovaldi due to payment issues. As we’d noted in our 8 October issue, disinformation given to AMAY blamed the shortage of the drug on a “lack of follow-up” by the health ministry, while a more credible explanation had been noted by Al Borsa at the time that said a shipment held up in Customs since 30 September was due to a lack of FX.

Abbott could finalise the acquisition of Pentapharma Egypt within 2 weeks: Abbott could finalise the acquisition of Pentapharma Egypt within the next two weeks, Al Borsa was informed. PwC is currently finalizing the due diligence for Abbott and is expected to be completed this week and Pentapharma has reportedly commissioned a local firm to value the company. Al Borsa says Pentapharma is targeting EGP 45 mn in sales by the end of the year, and to produce 30k packages of generics of hepatitis-C cure, Sovaldi. (Al Borsa, print edition)

Valeant down 28% in Wednesday trading: Canadian pharmaceutical company, Valeant, whom we had previously reported was in the final stages of placing a bid to acquire Egypt’s Amoun Pharmaceuticals, say trading in its shares stopped yesterday when circuit breakers kicked in after a 28% drop in price. Valeant shares tumbled on negative sentiment about the company’s third quarter earnings, concern over its dealing with a specialty pharmacy called Philidor Rx, and a notoriety for buying pharmaceutical companies, and criticism for raising prices (which threatens to become an issue in the U.S. presidential race) reports Reuters.

Amer Holding and Porto Holding are set to begin trading on EGX today following the demerger of Amer Group. Amer Holding Group gets the real estate, hotel investment, and the restaurant portfolio and will commence trading at EGP 0.58 per share, while Porto Holding, which oversees resorts and spas in Ain El Sokhna, will begin trading at EGP 0.29 per share. CI Capital was the exclusive financial advisor on the transaction. Porto Holdings Group’s pipeline of projects for the year includes breaking ground on Porto Pyramids and Porto Heliopolis, said Mansour Amer chairman of Amer Group. Porto Holdings will begin work on Porto Port Said concurrently with its expansions of Porto Marina and Porto Sokhna in 2016. Amer said Porto Holding will invest EGP 2.5 bn to build five hospitals and considering plans to build a Porto development in Ras Sedr. Amer also noted that Tharwa Capital will be taking care of its planned EGP 500 mn securitization, Al Borsa reports.

The Ismail Cabinet held its weekly meeting on Wednesday. Few policy decisions appear to have been made, with the cabinet statement on the meeting emphasizing pedestrian approvals:

  • Ratifying a one-year agreement with Rosneft to import petroleum products to EGPC with payment facilities of up to 90 days. The agreement is extendable for another three years.
  • Extending the ban on Nile barges operating between sunset and sunrise until December 2015.
  • Establishing the Egyptian Company for Self-Maintenance, that will specialize in road maintenance, with a paid-in capital of EGP 85 mn. The General Authority for Roads and Bridges will own 98% of the company, with the remaining 2% divided between the General Nile Co. for Road Construction and the General Nile Co. for Roads and Bridges.
  • Allocating EGP 25 mn from the Tourism Ministry for vital tourism projects and security measures in Luxor.
  • Reassigning and replacing companies working on national roads network, specifically those working on stage 3 of Wadi El Natroun-Alamein Road, and the Regional Ring Road.

Jay Z cleared in case regarding sampling of Baligh Hamdi’s Khosara Khosara: Following a week of testimony including that of Jay Z himself, a US district judge has ruled that the case involving the sampling of Baligh Hamdi’s Khosara Khosara, (written for Abdel Halim Hafez and later sampled for a Jay Z song), will not be heard in front of a jury. As Micah Singleton and Jamieson Cox write for The Verge: “The claim is based on the Egyptian copyright concept of ‘moral rights,’ which persist despite the fact that Hamdi’s family sold the rights to ‘Khosara Khosara’ to label Sout El Phan in 2002. Sout El Phan then licensed the song to EMI Arabia for use outside of Egypt. Under Egyptian law, moral rights are the original author’s non-transferrable right to approve and decline works derived from the original piece of content. Moral rights are rarely enforced in the United States, and the debate over their application in this case was one of the lawsuit’s core battles.” (Read)

Cyprus is interested in developing the Aphrodite gas field together with the Leviathan gas field, Energy Minister Georgios Lakkotrypis told Globes. Cyprus, however, cannot wait for the Israelis if there are more delays on Leviathan as the unitisation programme has been delayed for about five years already. Lakkotrypis says the current plan projects a beginning to gas flow by 2020. Israel’s Energy Minister, Yuval Steinitz, made a separate statement saying that “by the end of this year, and in a few weeks’ time” Noble Energy will likely to have already gotten the green light to press forward with its projects in Israel, ending a regulatory dispute. Both countries claim to be unfazed by the discovery of Zohr and expect Egypt to be a major buyer for their produced gas, and to cooperate in forming a regional gas hub. An alternative to that would be to build a pipeline from Israel’s waters via Cyprus and from there to Crete, to Greece and the European continent, Lakkotrypis remarked.

LEGO may run short of bricks before Christmas: Cue your “running into a brick wall” jokes now, ladies and gentlemen — and stock up on Space Lego, Star Wars Lego or whatever else it is that the kids desire. The iconic toymaker is unable to cope with a “remarkable” surge in demand. “LEGO’s factories, although running at full speed, may not be able to make enough plastic bricks to keep up with demand from toy stores in Europe. The Danish company has become the world’s largest toymaker by sales … but difficulties in forecasting demand accurately means some orders may not be filled on time,” Reuters reports. The Guardian also gets in on the act. Alternatively: Check out the “best Lego sets of 2015“ (including Minecraft, Star Wars and Dr. Who), 10 of the best-selling Lego sets, or the 35 largest Lego sets of all time as of September 2015.

Ahmed Mohamed, the 14-year old whose clock, or whatever it was, led to his arrest in his Texas high school, and whose story attracted international media attention, including our own here at Enterprise, has had a busy few weeks since then. After posing for a photo op with Sudanese President Omar Al Bashir (in Sudan, we presume, given the latter is effectively unable to travel after that pesky war crimes indictment), he and his family have decided to move to Qatar, where the Qatar Foundation has agreed to fully fund his indoctrination — sorry, education, The Atlantic reports.

CORRECTIONS: We had erroneously reported yesterday that the EGX had approved raising Qalaa Holdings’ paid-in capital from EGP 9 bn to EGP 10 bn. The EGX approved raising the firm’s authorized capital to EGP 10 bn, and its issued capital to 9.1 bn from EGP 8 bn. We also incorrectly reported that Orascom Construction had signed with Housing Ministry for a power plant. Orascom had actually signed the agreement for the Abu Rawash wastewater treatment plant.

EGYPT IN THE NEWS

The top story on Egypt in the foreign press this morning was not Tarek Amer’s appointment and the positive sentiment attached to it, but rather the raid by masked police on the NGO Mada Foundation for Media Development [no relation to Mada Masr] on Wednesday, where 20 male employees were detained, the AP reports — even a food delivery guy, as noted by Amnesty. The head of the NGO, Hisham Gaffar, was among those arrested. The raid reportedly took place during a training program for mothers, Aswat Masriya reported. Aswat Masriya also notes that the NGO owns and operates OnIslam.net. The website grew out of IslamOnline.net, until its editorial team, led by Gaffar, rebelled against the increasing pressure from its Qatari owners to stray from a moderate message of Islam. The journalists and editorial team staged a several month-long sit-in against the Qatari owners before taking pay cuts to start OnIslam.net to ensure they could maintain editorial independence and a moderate image of Islam.

Commentary: Given the context of OnIsam.net’s history, Wednesday’s raid comes as something of a surprise, as, ostensibly, Gaffar and his team from their own account would seem in line with mainstream political and religious opinion in Egypt.

Sisi’s silent victory: Despite a lack of serious opposition and dismal turnout, Reuters reports that rather than highlighting Sisi’s falling favour with Egypt, this month’s elections may instead suggest “that, four years after they revolted against one-man-rule, Egyptians still look to the presidency as the main seat of power”. Arguing that it “could be interpreted as a green light to consolidate his own rule”, Sisi’s mandate is set to be comparably strengthened against that of the coming Parliament and the hundreds of laws created by the president are expected to be approved with little fuss. Amr Adly, non-resident scholar at the Carnegie Middle East Centre is quoted as saying “This adds to his mandate and takes away from that of the parliament. This is part of this depoliticalisation process within which Sisi rose to power. All in all, I don’t think he is a loser from what happened.” (Read)

WORTH READING

The Futile Pursuit of Happiness, The New York Times, 2003. Reading this article feels a little like trying to maintain your composure and dignity as you silently, determinedly walk into the ocean, never to re-emerge. “If Daniel Gilbert is right, then you are wrong. That is to say, if Daniel Gilbert is right, then you are wrong to believe that a new car will make you as happy as you imagine. You are wrong to believe that a new kitchen will make you happy for as long as you imagine. You are wrong to think that you will be more unhappy with a big single setback (a broken wrist, a broken heart) than with a lesser chronic one (a trick knee, a tense marriage). You are wrong to assume that job failure will be crushing… That’s because when it comes to predicting exactly how you will feel in the future, you are most likely wrong… Our emotional defenses snap into action when it comes to a divorce or a disease but not for lesser problems. We fix the leaky roof on our house, but over the long haul, the broken screen door we never mend adds up to more frustration.” Abandon hope, all ye who click here.

WORTH WATCHING

Freaks and Geeks – Lady L. (Watch, running time: 3:12)

DIPLOMACY

Indian Cabinet clears India-Egypt accord on maritime transport: A maritime transport agreement between India and Egypt was approved by India’s Cabinet on Wednesday, ahead of the India-Africa Summit taking place next week from 26-29 October in New Delhi. “The agreement will help both countries develop their maritime relationship and stimulate the growth of maritime traffic, as well as in setting up joint ventures in the maritime sector, India’s shipping ministry said in a statement,” as reported by the Indo Asian News Service.

Putin and El Sisi discuss Syria: Russian President Vladimir Putin discussed the ongoing crisis in Syria with President Abdel Fattah El-Sisi over a phone call on Wednesday, said the president’s spokesperson Alaa Youssef. President Putin briefed President El-Sisi on Bashar Al-Assad’s visit to Moscow. President El-Sisi reaffirmed his support for a political end to the crisis that would retain Syria’s territorial integrity and its government institutions, said Youssef. (Read in Arabic)

El Sisi meets with UN’s Envoy to Syria de Mistura on Syria and migrant and refugee crisis: President Abdel Fattah El Sisi met on Wednesday with the UN’s Special Envoy to Syria Staffan de Mistura. The two discussed the Syrian war and the resulting migrant and refugee crisis, in light of its Egypt’s non-permanent Security Council seat and its chairing of the Arab League. President El-Sisi stressed that any resolution to the conflict hinges on both a political solution and a commitment to fighting terrorism. (Read in Arabic)

ENERGY

BP awarded three new exploration blocks by EGAS, to invest USD 229 mn
BP Egypt was awarded three new exploration blocks by the Egyptian Natural Gas Holding Company (EGAS) latest bid round at an investment of USD 229 mn over different phases by BP Egypt and its partners. The three blocks awarded are North El Tabya (BP 100% equity), North Ras El Esh block (BP 50% equity with ENI subsidiary IEOC as the other partner) and North El Hammad (BP with 37.5% equity, Total 25%, and IEOC with 37.5%). (Read)

Apache completes studies assessing unconventionals at the Obayed field
Apache Corp completed the necessary studies for E&P operations for unconventionals at the Obayed field in the Western Desert, an EGPC source told Daily News Egypt. The results of the studies were reportedly sent to the “head office in the US for revision, to put forth a work plan for drilling the first exploratory well.” The EGPC source added that “Shell and Apache are working together on the project in the upper layers of the land, called the Safa layers. These layers have a high-quality thickness, but require irregular operation methods. However, Apache will be responsible for implementing the work due to its expertise.” Shell and Apache are now looking to lock-in the price of produced gas from the site as the extraction cost is expected to be significantly higher compared to conventional sites. (Read)

Badr City Authority to issue 160 MW power plant tender next month
The Badr City Authority is preparing to issue a tender to build the city’s largest power station with a capacity of 160 MW next month, according to authority head Mostafa Fahmy. Construction should take a year, with the station’s funding coming out of the city’s budget for the current and next fiscal years. (Read in Arabic)

INFRASTRUCTURE

Ministry of Irrigation contracts Vodafone to electronically monitor water wells
The Ministry of Irrigation aims to implement the automated controls for monitoring the wells in the 1.5 mn feddan land reclamation project by the beginning of November, according to Sameh Sakr, head of the underground water division at the Ministry of Irrigation. The Ministry had reached an agreement with the CIT Ministry and Vodafone to establish a network with its necessary infrastructure, added Sakr. The cost of this system is less than 1% of the cost of the well, but with far bigger rewards. (Read in Arabic)

BASIC MATERIALS + COMMODITIES

Agriculture Ministry to build food testing facility by the Red Sea
The Agriculture Ministry said it is building a new food testing lab by the Red Sea to serve Hurghada and Sharm El Sheikh. The facility will ensure biosafety in tourist destinations and certify that meat served is fit for human consumption, the Ministry said. Al Borsa said the food testing facility will also provide a guidance and training role for the sector. (Read in Arabic)

MANUFACTURING

Industry Ministry extends support to factories
Industry Minister Tarek Kabil gave plants that are part of the 1,000 factories program one more year to meet the terms and conditions set forth by the ministry. This extension was granted to guard against closing down of factories and to motivate investors relying on government support to boost the pace of development of their factories. (Read in Arabic)

REAL ESTATE + HOUSING

New regulations for NUCA within a week?
New real estate regulations which govern all dealings with the New Urban Cities Authority (NUCA) will be ratified during a meeting next week, said Housing Minister Mustafa Madbouly. These new regulations are designed to minimize disputes between NUCA and outside investors. At a meeting with NUCA officials, he urged staff to resolve disputes with investors and to expedite EECD contracts, Al Ahram reports.

Misr Italia secures EGP 600 mn loan to fund Cairo Business Park
Misr Italia Holding announced it would receive an EGP 600 mn loan from a consortium led by the National Bank of Egypt (NBE) to complete the development of Cairo Business Park in New Cairo. The loan is to be repaid over six years. The total cost of the project is EGP 1.2 bn, will be executed over three phases, and is expected to be completed before end of 2019. (Read in Arabic)

TOURISM

Egypt elected president of World Tourism Organization executive council for 2016
Egypt was elected on as president of the executive council of the World Tourism Organization (WTO) for 2016 on Tuesday, according to a short statement from SIS. The elections were held on the sidelines of the 21st session of the WTO general assembly held in Colombia. Tourism Minister Hisham Zaazou reportedly said that the win will have a positive impact on the tourism sector in Egypt. (Read)

German expert restores King Tut mask after botched glue job
German newspaper DW details the ongoing work led by German restoration expert Christian Eckmann to repair the damaged and hastily repaired beard from the gold mask of King Tutankhamun after its damage last year. “We have not yet taken off the beard,” Eckmann is quoted as saying by DW during a press conference at the museum on Tuesday. In addition, the specialist said “We are using this chance to gain new information.” The German-Egyptian team should complete the work with a month or two, according to Eckmann. (Read)

** Further reading in Tourism: Where does the British Museum’s keeper of Ancient Egypt get his kicks when in Cairo? British Museum curator and archaeologist at the Ancient Egypt and Sudan department of the British Museum takes Guardian readers on a brief trip to a Cairo museum that fascinates him the most, in his own words: the wonderfully weird Agricultural Museum. (Read)

AUTOMOTIVE + TRANSPORTATION

ICT and Transport Ministry to issue Intelligent Transportation System tender in December
The ICT and Transport Ministries will issue a tender to install Intelligent Transport Systems (ITS) next week, with the project slated to begin this December. ITS applies IT systems and technology to efficiently manage, monitor and regulating transportation networks. The first phase of the project will include building a control centers to manage road traffic, and to install traffic control systems, CCTV, and other data gathering sensors. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Banks ordered to accept USD deposits by exporters dealing with six Arab countries
The CBE ordered domestic banks to ignore its directive on USD deposit limits for depositors exporting to Libya, Syria, Sudan, Palestine, Iraq, and Yemen. The exemption is to accommodate the nature of trading with these countries, Trade and Industry Minister, Tarek Kabil said. He added that the move is the beginning of a series of attempts to restore the growth rates of Egyptian exports. (Read in Arabic)

NATIONAL SECURITY

Russia is prepared to provide Egypt with 80 attack helicopters: Russia and Egypt are expected to begin negotiations on the delivery of 80 Ka-52 attack helicopters for the Mistral class helicopter carriers, Russian presidential aide for military-technical cooperation Vladimir Kozhin. He adds that these negotiations would take place once Egypt concludes signing contracts for the warships with France. According to Russian news agency Tass, President Putin’s Chief of Staff Sergei Ivanov had said earlier that the cost of the helicopters might exceed USD 1 bn. (Read in Arabic)

11 conscripts were injured in the North Sinai town of Arish on Wednesday from a blast from an IED, according to state news agency MENA as reported by Ahram Online. The conscripts sustained minor injuries from the explosion.

ON YOUR WAY OUT

Alexandria receives second batch of solar powered recycling machines
The Alexandria governorate will receive 800 solar powered recycling machines as the second batch of the total 2000 machines provided by a grant by the EU, announced Alexandria Governor Hani El Mesery. The machines recycle plastic water bottles and soda glass bottles, and through a system of scanning barcodes, will reward the user with prepaid mobile phone credit.

Movie villain Biff Tannen was based on Donald Trump, Back to the Future screenwriter admits, (Daily Beast).

13 Days of Halloween — Day Three: That gum you like is going to come back in style. That single tweet a little over a year ago today by David Lynch set off intense excitement from fans of his television series Twin Peaks, especially considering that he was announcing he was picking up the story where it had left off 25 years ago, in direct reference to one character promising another (in a dream) that they would see them again 25 years later. The new series will air on American cable network Showtime, and has a number of the old cast members returning (the actors portraying the Log Lady and the killer Bob have sadly passed away). While defying categorization in one particular genre or another, horror is definitely a key element to the series, as seen in the following doppleganger scene. While it’s not necessarily the most easily accessible scene for those unfamiliar with the series, it still gives a rough idea of the show’s surreal aspects. (Watch, running time: 1:18)

BY THE NUMBERS
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QUICK FACT: Egypt consumed 3.3 mn tons of oil products in July 2015, excluding natural gas.


USD CBE auction (Wednesday, 21 October): 7.9301 (unchanged since Sunday, 18 October)
USD (CBE market rate): Buy: 8.0074 | Sell: 8.0301
USD parallel market (Wednesday. 21 October): 8.60 (+0.18 since Sunday, 18 October)
EUR (CBE market rate): Buy: 9.0916 | Sell: 9.119

EGX30 (Wednesday): 7,669 (0.1%)
Turnover: EGP 530.9 mn
EGX 30 year-to-date: -14.1%

Foreigners: Net Long | EGP +46.9 mn
Regional: Net Short | EGP -35.4 mn
Local: Net Short | EGP -11.5 mn

Retail: 65.3% of total trades | 64.3% of buyers | 66.3% of sellers
Institutions: 34.7% of total trades | 35.7% of buyers | 33.7% of sellers

Foreign: 11.8% of total | 16.3% of buyers | 7.4% of sellers
Regional: 11.6% of total | 8.3% of buyers | 15.0% of sellers
Domestic: 76.6% of total | 75.4% of buyers | 77.6% of sellers


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PHAROS VIEW

The truth about the USD 3.0 bn World Bank loan? Possible BoP relief from hosting Syrian refugees.

Government officials have recently disclosed ongoing negotiations with the World Bank for a USD 3.0 bn loan to be disbursed over three years, surprising, because the World Bank and its affiliates primarily fund projects, rather than provide support to central banks. So what’s going on?

We think it may be a case of selling “asylum services” as a low-cost external funding option. On 10 October 2015, the Secretary General of the UN and the Presidents of the World Bank Group and the Islamic Development Bank announced a joint initiative to scale-up financing in the Middle East and North Africa to help countries hosting significant refugee populations, countries impacted by conflict, as well as countries that have significant investment needs to achieve economic recovery.

We believe Egypt is eligible for both funding mechanisms. According to UN figures, the size of Syrian refugees in Egypt is estimated at cc 133,000, which ranks Egypt fifth in the list of five countries that host the bulk of refugees from the Syrian conflict. Within the same context, Germany has recently pledged EUR 3bn to Turkey alongside other concessions to fund its role in hosting existing Syrian refugees and help shield Europe from the influx of thousands more.
What does this mean for Egypt’s BoP? Tap here to read more.
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WTI: USD 45.16 (-2.44%)
Brent: USD 47.77 (-1.93%)
Gold: USD 1,164.8 / troy ounce (-1.08%)

TASI: 7,479.0 (-2.7%)
ADX: 4,530.3 (-1.2%)
DFM: 3,625.4 (-1.6%)
KSE Weighted Index: 390.8 (-0.2%)
QE: 11,669.6 (-0.7%)
MSM: 5,918.4 (flat)

 

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