Egyptian News: 2012-10-15

It seems the government is seriously gonna close down shops early? but what kind of proprietors will stay open. it is ridicoulous to think bars/clubs and any other tourist industry shops will close early...  

EGX30 closed at 5712.41 (-0.19%) on what seems to be quite a volatile day



Government details fuel subsidy rationing

According to its latest announcement, Egypt's government plans to cut energy subsidies by setting a universal limit on how much cheap fuel and cooking gas every household can buy, Petroleum Minister Osama Kamal said, Reuters reported. The plan outlined by Kamal in an interview with Al-Shorouk newspaper would mean both rich and poor receive the same allocation of the subsidized fuel, and would then pay a higher price for additional amounts consumed. The government "is committed to subsidizing petrol for only one car per family", the paper quoted Kamal as saying. Each car with a maximum 1.6 liter engine would be allocated around 1,800 liters of subsidized fuel a year, enough to travel 60 km per day, he said, a "suitable estimate for average daily consumption of private cars in Egypt". He was referring to 80-, 90- and 92-grade gasoline, while prices of the higher-grade 95 gasoline would be raised to what the government pays for it. Unspecified amounts of subsidized diesel, known as solar in Egypt, would be issued for trucks, three-wheeler passenger vehicles, mini-buses, and buses for transporting children to schools whose fees are regulated by the state, he said. Kamal added that each Egyptian family would receive 1.5 to 2 cylinders of fully subsidized butane cooking gas per month, and further consumption would be partially subsidized. "The government can't move prices in one go so as to avoid raising average inflation significantly," he said. "All citizens will be treated equally, so whoever has a luxury villa will be treated equally to the rest in receiving butane gas cylinders." He did not provide a deadline for the start of subsidy rationing or specify what would constitute a family for the purposes of the plan. Another minister had said last week that coupons for subsidized butane would be issued towards year-end, saying that the scale of subsidy cuts planned for in the government's 2012/13 fiscal year budget would not be realized "because it was put on the basis that the restructuring would begin from early July and this has not happened".

Ministry of Investment to launch 4 new PPP projects with investments amounting to USD3 billion

Minister of Investment Osama Saleh said that four new Public-Private Partnership (PPP) projects in infrastructure are expected to attract USD3 billion in investments, from a targeted total of USD9 billion that the government wants to raise through PPPs, Al-Borsa reported. These projects include a water plant in Upper Egypt, a road construction plan that links Upper Egypt to the Red Sea, as well as hotels and renewable energy plants across that road. Saleh also said that the ministry will open a new branch in the 10th of Ramadan City next month.

Minister of Trade: new closing hours for Egypt shops will save EGP6 billion in electricity

The decision by the Egyptian government to enforce strict new closing times for shops and restaurants will save the country up to EGP6 billion (USD1 billion) a year in electricity, said the Trade and Industry Minister, Ahram Online reported. Minister Hatem Saleh said that earlier closing hours for business establishments would reduce their reliance on state-subsidized electricity, in turn benefiting the state budget. Starting from November 2012, Egypt's shops will have to turn off their lights by 10pm, while cafes and restaurants will have to shut by midnight. Places officially counted as catering for tourists will be exempt, as well as pharmacies. Local Development Minister Ahmed Zaki Abdeen warned of harsh penalties for violators, but said that business owners who wish to keep their premises open later could apply for a license from the Ministry of Tourism.

Port strike forces redirection of shipment via Israel

Freezing of operations at Ain Sokhna port prompted a local firm shipping Turkish goods to Saudi Arabia to bypass Egypt and go through Israel instead, Ahram Online reported. Turkish shipments for Saudi Arabia, set to pass through Ain Sokhna, will now use the Israeli port of Haifa and transfer overland, said Mohamed Abdel Gawad, head of the Suez office of Kadmar, the Egyptian firm organizing the transport. Workers at Ain Sokhna port on the southern edge of the Suez Canal launched a full strike on October 13th, bringing shipping operations to a standstill. Kadmar sent a statement on Sunday to DP World, indicating that, if the freeze continues, the port's deal with the Turkish exporters might be cancelled. The deal brings Egypt around EGP25 million per week in port, transit, and customs fees, according to Abdel Gawad.

Calls for fresh protests in Egypt on Friday

Protests have been called for Friday in response to clashes at the 'Accountability Friday' demonstration, Ahram Online reported. The Constitution Party and the Popular Egyptian Current called for protests to condemn Friday's violence, which they blamed on President Morsi and the Muslim Brotherhood. The groups have also demanded an investigation into the violence which left hundreds injured. Last Friday's protests, which turned into violent clashes, were initially called for by leftists and liberals to protest against what they described as Morsi’s failure to deliver on his promises during his first 100 days in office. The Muslim Brotherhood called for their supporters to go to the square on the same day, ostensibly to protest the acquittal of defendants in the Battle of the Camel trial. The group also called for demonstrations in support of Morsi's decision to replace the prosecutor general following the verdict.

GB Auto inaugurates Geely facility; officially increases manufacturing capacity to 70,000 cars p.a.

In a ceremony that witnessed the attendance of the Chinese Ambassador to Egypt, the Minister of Trade and Industry, and the General Manager of Geely China, GB Auto (AUTO EY, Price: EGP29.00, FV: EGP30.82, Hold, P/E FY2013f: 10.5x) inaugurated its Geely manufacturing facility, unveiling the Emgrand 7 model. The ceremony also marked the official increase in GB Auto's manufacturing capacity to 70,000 cars p.a. (versus 30,000 previously). The commercial introduction of the Emgrand will be on Tuesday, October 16th, and management is expecting to sell c.1,000 Emgrand 7’s during 2012. Comment: Geely's Emgrand 7 was brought in by GB Auto to replace the manufacturing of the Hyundai Verna, which will stop being produced as of the end of 2013. We expect the Emgrand 7 to slowly start being recognized in the Egyptian market, as the market is still unfamiliar with the manufacturer and the product. We are forecasting GB Auto to sell 6,000 Emgrand 7 cars in FY2013, and we expect this figure to steadily increase, reaching 23,000 in FY2016.
OTMT to assign France Telecom its GSA with the ECMS

OTMT (OTMT EY, Price: EGP0.53, FV: EGP0.81, Buy, P/E FY2013f: N/A) announced today that it has received a notice that France Telecom exercised its right to require OTMT to assign to FT the general services agreement (GSA) governing the provision of services by OTMT to the Egyptian Company for Mobile Services (ECMS), along with certain related deferred receivables, in compliance with the Master Agreement between FT and OTMT. OTMT and FT also expect to enter into a transition services agreement with ECMS, where OTMT and FT will assist ECMS in the review of other related party agreements ECMS has with OTMT, FT, and certain related companies, to consider ways to further improve the ECMS's cost structure; such an agreement would not impose additional financial obligations on ECMS. FT will pay OTMT a transfer fee of EUR110 million, to be marginally increased pursuant to the terms of the Master Agreement. Following the assignment of the GSA, OTMT expects to continue to offer management support services to ECMS as an integral local partner and as a key advisor with respect to ECMS's future operations in Egypt.

Sidi Kerir in negotiations to increase its share of natural gas

As reported by Al-Mal newspaper, Sidi Kerir (SKPC EY, Price: EGP13.61, Consensus FV: EGP15.43, Buy, Consensus P/E FY2013f: 7.75x) is currently in negotiations with EGAS to increase its share of natural gas to 600 tons p.a., thereby raising its polyethylene capacity by 50% from the current 250,000 tons p.a.

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