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Thursday, 22 March 2018

What’s happening with CFLD’s USD 13.4 bn new capital contracts?

What’s happening with CFLD’s USD 13.4 bn new capital contracts? Talks with China Fortune Land Development Company (CFLD) and the government over the contract to develop 14k feddans in phase one of the new administrative capital appear to be at a critical juncture. The city developer sent its final proposal for the project to the government this month, and Egyptian officials say they are currently studying the offer. “All I can say is that we are in the last stage of negotiations and hoping that this will be settled soon,” Allen Ma, president of CFLD Egypt, told Bloomberg.

Government officials appear to hint at the possibility of further delay: “This is a huge project,” Assistant Housing Minister Khaled Abbas said. “We should take our time to study the project well and ensure it will benefit the country.” Talks on CFLD’s component of the new capital have been plagued by constant delays. MoUs for the project were signed back in 2016, and the last we heard of the project was that contracts would be signed by last December.

Haggling over how sales revenue from the development would be shared appear to be the reason why the talks have dragged on, according to Bloomberg. Investment Minister Sahar Nasr had said last year that the government will retain 60% of revenues from CFLD’s projects.

Then there’s the matter of the inconsistent stated value of the investment. CFLD has said last year that it would invest USD 4 bn in the coming four years on the project. But a copy of the proposal obtained by Bloomberg shows that CFLD commits to bringing in FDI worth USD 2 bn in the first five years. The scope of the project was supposed to see the company invest USD 20 bn over 25 years. Talk of that soon disappeared in the press and all we’ve heard for a year now is USD 13.4 bn over 10 years.

Don’t be confused: The CFLD contact is separate from China State Construction Engineering Company (CSEC)’s contract to build the skyscraper district of the new capital, which is at the heart of the new capital’s 1.71 mn sqm central business district. Prime Minister Sherif Ismail broke ground on the district this week; CSEC will spend some USD 3 bn building the district, with USD 2.55 bn in financing coming from Chinese banks and the balance from Egypt’s Housing Ministry.

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