CAIRO: Business activity in Egypt grew at its sharpest rate in eight months in August, a survey showed on Wednesday, as the economy rebounded strongly from the initial shock of cuts in energy subsidies last month.
Egypt’s economy has been hit by more than three years of political and economic turmoil following the 2011 uprising that toppled Hosni Mubarak after 30 years in power.
The government is walking a fine line in an attempt to boost revenues and cut its deficit while luring investors. Increased output and a sharp rise in new orders last month, however, appeared to suggest that confidence was beginning to return.
The HSBC Egypt Purchasing Managers Index (PMI) for the non-oil private sector stood at 51.6 points in August, its most marked improvement since December 2013. Purchasing activity overall increased at the fastest pace since data collection began in April 2011.
By Maha El Dahan
ABU DHABI, Sept 3 (Reuters) – Egypt’s state grain buyer, the General Authority for Supply Commodities (GASC), said on Wednesday it bought 120,000 tonnes of French and Romanian wheat.
Of the total, GASC bought 60,000 tonnes of French wheat from Granit and 60,000 tonnes of Romanian wheat from Bunge, GASC Vice-Chairman Mamdouh Abdel Fattah said.
GASC said it bought the wheat at an average price of $258.89 a tonne on a cost-and-freight basis.
Traders gave the following breakdown of the purchase:
– 60,000 tonnes of French wheat from Granit at $240.40 a tonne free-on-board and $17.50 a tonne freight from Mina Shipping
– 60,000 tonnes of Romanian wheat from Bunge at $247.24 a tonne free-on-board and $12.64 a tonne freight from National Navigation
Wednesday’s tender marked GASC’s first purchase of French wheat since January, when it introduced a specification ruling out wheat with a moisture content of more than 13 percent.
January’s more stringent specification hurt the prospects for shipments from France, where the average moisture content in the 2013 harvest was 13.5 percent.
In June, GASC raised its tolerance again for moisture content to 13.5 percent with heavier penalties.
Egypt, the world’s top wheat importer, has so far bought 1.185 million tonnes of wheat from the international market since the start of the fiscal year on July 1.
The supply ministry said last month its stocks had increased to six months’ worth, to last until the end of 2014.
Egypt purchased 5.46 million tonnes of wheat from abroad in the 2013-2014 fiscal year in addition to 3.7 million tonnes of local wheat.
Traders said the following offers were presented in the tender, in dollars a tonne, on a free-on-board basis, unless otherwise stated:
* Bunge: 60,000 tonnes Romanian wheat at $247.24, 60,000 tonnes French wheat at $248.01
* Cargill: 60,000 tonnes Russian wheat at $252, 60,000 tonnes French wheat at $245.5
* Louis Dreyfus: 60,000 tonnes Russian wheat at $256
* Granit: 60,000 tonnes French wheat at $240.40
* Glencore: 55,000 tonnes Russian wheat at $253.28, 60,000 tonnes French wheat at $247.48
* Soufflet: 60,000 tonnes French wheat at $245.94
* Nidera: 60,000 tonnes Russian wheat at $256.24
* Noble: 60,000 tonnes Russian wheat at $251.95
* Vitol: 60,000 tonnes Russian wheat at $257
* Venus: 60,000 tonnes Russian wheat at $252.50
FREIGHT Traders also said the following freight (ocean shipping) offers were made in the tender, in dollars a tonne:
* National Navigation: $12.64
* Mina Shipping: $11.54
* Mina: $17.50 and $17.70
* National Navigation: $12.60
* Mina Shipping: $11.75, $11.90 for 60,000 tonne cargo and $12.25 for 55,000 tonne cargo
* Glencore: $16.43 for 55,000 tonnes (for own cargo) (Reporting By Maha El Dahan; additional reporting by Valerie Parent in Paris and Sarah McFarlane in London; editing by David Evans and Susan Thomas)
Billionaire Nassef Sawiris plans to return a part of his business to Egypt amid growing demand for construction in the Middle East, 13 months after he moved Orascom Construction Industries to Holland.
Amsterdam-based OCI NV (OCI), of which Sawiris is chief executive officer and the biggest shareholder, approved separating its fertilizers and construction businesses and will seek to sell shares in the latter, the company said in an e-mailed statement today. The initial public offering in Egypt will take place in either the fourth quarter of 2014 or the first quarter of next year, Sawiris said in a conference call with investors and analysts.
“We will have a presence in Egypt, that’s our intention,” Sawiris said. The “nationality” of the company that will be listed and size of the share sale are still being decided, he said. Sawiris and his family will participate in the capital increase if the IPO raises new money, he said.
Sawiris relocated Orascom through a buyout by OCI, an entity he helped set up amid a tax dispute with the Islamist-led former Egyptian government. Having settled the case by agreeing to pay 7 billion Egyptian pounds ($979 million) in April 2013, Sawiris appealed after the military seized power less than three months later.
“We’re making our case that there was no tax claim justification and that this was politically motivated under the Muslim Brotherhood,” Sawiris said. The next hearing in the case is Sept. 16 and a final decision is expected shortly after, he said.
OCI shares declined 0.8 percent to 27.16 euros as of 2:48 p.m. in Amsterdam. That values the company at 5.59 billion euros ($7.37 billion), and takes its retreat from a record high in March to 27 percent.
OCI’s first half profit fell to $39.5 million from $55.9 million a year earlier as finance income dropped and a natural gas shortage in Egypt cut operations at its fertilizer plants, the company said today. Its construction backlog grew by $1.1 billion in the three months ended in June, to $5 billion.
Splitting OCI’s businesses will create value for shareholders and enable the two units to focus on their separate growth strategies, the company said. Construction project awards in the company’s main markets of Egypt, Saudi Arabia and the United Arab Emirates are expected to grow, Sawiris said.
Saudi Construction Products Holding Company (CPC) has acquired Sphinx Glass from Egyptian private equity firm Qalaa capital (formerly known as Citadel Capital) in a deal worth LE1.3 billion (roughly $180 million), the signatories announced at a press conference on Tuesday.
The acquisition deal is part of CPC’s expansion strategy in the Middle East and North Africa region and Qalaa’s strategy to sell off their non-core projects.
Sphinx Glass is a float glass plant established in Egypt in 2008 by Glassworks, a platform company of Citadel Capital, a leading investment company in the Middle East and Africa.
“We are investing in Egypt as we expect a boom in development projects in the country and as part of our expansion in the region,” Al-Motaz Al-Sawaf, CEO and deputy chairman of CPC, said.
CPC will raise Sphinx Glass’ productivity through additional production lines, said Saleh Bin Laden, chairman of the Saudi company.
The Middle East is witnessing a boom in construction projects, with up to $8 billion worth of contracts in July alone, according to recent data released by MEED.
MEED, a Middle East-focused business intelligence firm, has tracked 200 megaprojects with an aggregate value of $1.5 trillion in key economies in the region to be delivered by 2020.
Egypt, Oman, Bahrain and Iraq are expected to see 40 megaprojects worth $500 million, reported Reuters subsidiary for Middle East business intelligence, Zawya, citing a MEED report.
Egypt’s top construction projects include Uptown Cairo residential compound with a contract value of $2.1 billion, New Giza with a value of $1.8 billion and Grand Heights worth $1.2 billion, according to data compiled by MEED.
In an attempt to revive the country’s ailing economy, Egypt’s recently elected president, Abdel-Fattah El-Sisi, has focused on mega development projects.
This month, the government announced a $4 billion project to dig a new waterway alongside the Suez Canal, a plan to build an industrial hub in the same area estimated at LE60 billion ($8.4 billion), and a mega development project on the north coast, with calls for further investments.
Daily News Egypt
The government has agreed to allow the private sector to participate in the production of new and renewable energy as part of government efforts to remedy the electricity crisis, said Minister of Electricity Mohamed Shaker.
Shaker told Daily News Egypt: “During its meeting late Monday the government agreed to private sector participation in new and renewable energy production,” in accordance with a tariff policy for government purchase of private sector production in addition to a feed-in tariff.
Egypt is facing one of its worst fuel shortages in recent years, with the government unable to supply factories and houses with their power needs, leading to blackouts. The government is currently hoping to find alternative sources to provide electricity and pay its debts to foreign partners for oil well development, a factor that further complicates the situation.
According to Shaker, the cabinet economic group will conduct a financial review followed by a legal study of the purchase agreement between the government and the private sector during its next meeting, before approving the move and making an announcement for investors in the sector.
“We have received bids from multiple companies to produce electricity from solar and wind energy. Investors are feeling positively about investment in Egypt especially after the plan to develop the Suez Canal was announced,” said Shaker, who believes that an appetite for investment in Egypt is growing.
According to a cabinet statement issued on Monday evening, Shaker said that the reasons behind the electricity deficit include natural circumstances, operational issues and a fuel shortage. He pointed out that a maintenance schedule has been set for all power stations across Egypt which also details each station’s fuel needs and the extent of productive capacity that will be recovered. This forms a part of government efforts to regulate electric loads fairly.
Shakir added that coordination has taken place with the Ministry of Petroleum to increase quantities of natural gas, increase pressure on power plants north of Cairo and carry out urgent repairs. This will lead to recovery of 2,560 MW by the end of August, 520 MW in September, and 1,080 MW in October, totaling 4,160 MW.
The minister stressed that units with capacities of 3,350 MW are expected to be added starting in September through the end of 2015. He explained that Ministry of Petroleum efforts are intensifying to provide fuel while electricity ministry employees have recently realised their responsibility, leading to an improvement in the situation over the past few days.
Regarding the policy of easing energy loads during peak usage times, the minister stressed that the process will take place fairly and that no exceptions will be made except for service facilitations, such as hospitals, water and sewage plants, and so on. At these locations, electricity will only be cut under narrow circumstances.
In the same framework, the Minister of Petroleum discussed recent steps taken by the ministry to supply gas to power stations.
During the meeting, Prime Minister Ibrahim Mehleb tasked the Minister of Scientific Research with taking an interest in two crucial issues, namely, new and renewable energy and water desalination.
Mehleb emphasised the necessity of addressing complaints registered at ministry hotlines, and holding officials that are inefficient in their work accountable. “This is a matter of credibility, and we will not deceive people. I will follow up on the matter myself.” He added that it was crucial for various ministries to respond to these complaints under the personal supervision of the minister.
Sun and Wind Energy News
Asunim Türkiye, the Turkish subsidiary of the Asunim group, cooperates with the engineering company Rebat Systems in Alexandria to develop solar projects in Egypt together. Both companies are satisfied with the new partnership.
“We have been looking into the Egyptian market since a long time and we see a huge potential for solar energy in this dynamic and sunny country. After several attempts, we believe we have now found a reliable partner for addressing the photovoltaics sector on the ground in Egypt”, says Asunim Türkiye founder Umut Gürbüz.
Ali Nasr, CTO of Rebat Systems, is sure that with the partnership they will become an important player in the promising photovoltaics sector in Egypt. “We are already waiting for the results of the very first tenders we have participated in with Asunim and we are very optimistic about the results”, he says.
The contracts duration is three years, said bourse statement.
The deal requires equipment to carry out maintenance and restoration of government buildings and any other construction work in the State of Kuwait.
On other hand , Equipment Holding said its interim financial statements for H1-FY14 have reflected KWD 497 thousands net profit, with regression by 84.2% from KWD 3.17 million in the corresponding period of previous year.
The company posted operating profit of a round KWD 98.4 thousands in H1-FY14, against KWD 120.3 thousands in H1-FY13.
An Indian company today won a major USD 14 million contract for a World Bank-funded project in Egypt’s power sector.
“We are delighted that Dee Development Engineers have won another important contract for a World Bank project in Egypt’s power sector,” India’s Ambassador to Egypt Navdeep Suri said.
The Ambassador made the remarks after his meeting with Egyptian Minister of Electricity Mohamed Shaker following the signing of the contract with Indian Dee Development Engineers Limited (DDEL).
Suri said he is delighted that Indian companies have very successfully won bids and executed contracts in the power sector in Egypt.
“This is in addition to earlier contracts to the tune of USD 250 million won by KEC, Kalpataru and Jyoti Structures for sophisticated power transmission systems in Egypt,” Suri said.
“The ability of Indian companies to win these contracts in the face of tough international competition shows that they can make an important contribution to Egypt’s energy sector,” he said.
Dee Development Engineers Limited today signed a contract with East Delta Electricity Production Company for supplying critical piping and valves to a thermal power in Suez Governorate. The company has previously also won a similar contract.
“In last two years, companies from India have won several major World Bank-funded projects for transformers and power transmission in Egypt,” the Ambassador said.
Indian companies have previously also won bids and executed contracts in the power transmission sector, some of them in excess of USD 100 million.
Four Indian power companies have won international tenders.
Today’s contract is the DEE Development Engineers’ second international contract in Egypt and it was signed in the presence of the Minister of Electricity and the Ambassador of India.
In February 2013, DEE Development Engineers signed a contract with a Cairo-based Company for Electricity Production (CEPC) to execute a project for setting up of combined Cycle Power Plant in Giza North.
The value of the contract was USD 20 million, which included furnishing, fabrication and delivery of critical piping and valves for the project and on-site technical assistance.