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Tuesday, 13 July 2021

Tobacco license tender to be rolled out on 1 August

Tobacco license tender goes live in August: Tobacco players will be able to bid for a license to establish Egypt’s second major tobacco company from 1 August in the second iteration of a tender that was pulled earlier this year after attracting criticism for containing unfair terms, Al Shorouk reports. The Industrial Development Authority (IDA) has now revised the conditions booklet and plans to open the tender for bidding at the beginning of next month, Federation of Egyptian Industries’ (FEI) tobacco division Ibrahim Imbaby told the newspaper.

Take one: The conditions booklet has been redrafted by the government more than two months after several tobacco players filed a couple of complaints with the FEI, the IDA and the Egyptian Competition Authority (ECA), alleging that the license would provide preferential treatment to current tobacco monopoly Eastern Company and would set up a new monopoly over e-cigarettes and heated tobacco. Under the first tender, the new market entrant would have had to price its products 50% higher than Eastern, and allow the state company to own a 24% stake.

Take two: The new terms slash the number of cigarettes the company will have to produce to 1 bn each year, down from 15 bn in the original tender. The government has also agreed to issue more licenses following the tender, scrapping a rule that would have prevented new licenses in the decade following the tender.

One controversial condition doesn’t seem to have changed: Eastern Company will still own 24% of the new market entrant, according to Al Shorouk.

And we’re still none the wiser about the others: We don’t know whether the new company would still be required to effectively price itself out of the market, nor is it clear how the new conditions would prevent an emerging e-cigarettes monopoly.

The potential bidders: JTI-Nakhla Tobacco, British American Tobacco Egypt, Imperial Tobacco and Al Mansour International Distribution Company were all invited to bid in March but it's unclear which will submit bids under the new conditions.

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