Back to the complete issue
Wednesday, 4 August 2021

El Gouna developer fighting USD 34 mn fine

The Environment Ministry is asking Orascom Development Egypt to cough up almost USD 34 mn, alleging that the company has caused environmental damage in El Gouna. The company said in a bourse filing (pdf) yesterday that it received a USD 33.9 mn compensation claim from the ministry’s Environment Protection Agency (EPA) in relation to its flagship Egypt destination. The ministry reportedly claims ODE inappropriately disposed of building materials, damaging the marine environment in the process.

The problem is, ODE says it doesn’t know what it’s being fined for: The EGX-listed company, part of the Sawiris family empire, said in a statement that the EPA has not provided evidence of its claims and has not responded to the company’s request for further information. ODE also says that a formal request was sent to the authority asking to be provided with technical reports or to reach a settlement on the compensation claims, which ODE says it was only informed about verbally. “ODE has not been given the opportunity to respond, whether technically or legally, to the allegations before the issuance of the claim,” the company wrote. We spoke yesterday with a company official confirmed ODE still hasn’t heard back from the authority.

Two separate letters from the EPA and ODE — copies of which were obtained by Hapi Journal — suggest some of the fines cover damage caused to El Gouna at the time of the “dragon” storm, which slammed into Egypt in March 2020. The total sum also allegedly includes an EGP 333k fine for breaching the Environment Act by failing to submit reports to the EPA on the project’s environmental impact before beginning work, as well as an EGP 33k fine for breaches of other other articles of the law.

The Environment Ministry declined to comment on the issue yesterday when we reached out asking for more information.

ODE has a reputation for being a good steward of the environment and has made its destinations’ natural beauty one of its primary marketing pillars. The company said yesterday that it has “always been strongly committed to the environment” and claims it is compliant “with all environmental laws.”

ODE’s shares slumped 9.3% in trading yesterday.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.