10 PPP projects with EGP 14 bln for investors

Atter Hannoura , Director of PPP Central Unit, Ministry of Finance:

‘We managed to sign the Smouha Maternity University Hospital & Blood Bank project at a cost of EGP 2.5 billion in spite of the current turmoil.’

Atter Hannoura, Director of the PPP Central Unit, Ministry of Finance, insisted that the current government attaches great importance to the private sector’s role in supporting large projects that lack finance in the state’s general budget. The PPP Central Unit is launching 10 projects during the coming period at EGP 14 billion total cost, Hannoura mentioned.

During his interview with Amwal Al-Ghad, Hannoura revealed that the Egyptian PPP Program –working since 2006 – has managed to issue one of the best participation laws in the world, in addition to launching two projects after the January 25 revolution.

PPP Central Unit won six international awards from various bodies, which in turn encouraged investors to invest in Egypt and supported the inviting of Egypt to all international and regional PPP conferences, he added.

Hannoura highlighted Safaga Industrial Port as one of the most prominent projects currently at EGP five billion total cost, including EGP one billion allocated for the first phase. The project was expected to be launched last July but it was postponed due to the political unrests.

The Unit managed to sign Smouha Maternity University Hospital and Blood Bank project at EGP 2.5 billion total cost despite the recent turmoil. The new University Hospitals PPP Project is one of the key PPP pilot projects. The Ministry of Higher Education, represented by Alexandria University, with the technical assistance of the PPP Central Unit, has invited private sector participation through a competitive bidding process to enter into PPPs for the financing, designing, constructing, equipping, furnishing, maintenance, operating and provision of non-clinical facility services for Smouha University Hospital & Blood Bank. The project will be implemented through Bareeq Hospitals Company, a consortium comprising Bareeq Capital, Detac, G4S and Siemens.

Hannoura said that they are about to decide on the consortium that will handle the implementation of Abu Rawash Wastewater Treatment Plant Project atEGP five billion total cost. The list of qualified bidders included Orascom Construction, Veolia, Aqualia, I – Cat, Kharafi National KSC, Hochtief, Metitto Utilities, PWT and Degremont. The project guarantees raising the capacity of the plant from 1.2 million m3/day to 1.6 million m3/day.

He also pointed that the delay of launching some projects goes back to the delay of finalizing pre-feasibility studies. Owing to the recent political unrest, some foreign consultants, hired by the unit, were unable to come to Egypt, which led to a massive decrease in the number of foreign investment companies competing on implementing PPP projects. The number had decreased from 18 local and international firms competing in implementing the project to only eight. This was in addition to the other restrictions imposed by banks and private sector to obtain guarantees from The Ministry of Finance.

Hannoura explained that the political stability we have recently experienced has led to the lifting of travel bans; consultants have begun to come to Egypt aiming to finalize pre-feasibility studies, and the influx of companies has started, especially of Gulf located companies.

Due to the State’s tight budget, the PPP Central Unit had to finance the studies of eight projects raised by Global Donor Organizations including the Islamic Development Bank (IDB), European Bank for Reconstruction and Development (EBRD), European Union (EU), International Monetary Fund (IMF) and World Bank (WB). Those eight projects included Abu Rawash Wastewater Treatment Plant Project, Safaga Industrial Port, whose studies will cost more than $300 000, Recycling Solid Waste Projects, Suez Canal Specialized University Hospital Project, Cairo Contact Centers Park Project in Maadi, Hurghada Sea Desalination Plant and Sharm el-Sheikh Sea Desalination Plant. He pointed out that the study cost ranges from $100 000 to $400 000 per project.

Atter Hannoura disclosed that some bodies had offered to open an account and sign donation agreements for funding such studies. However, the PPP Central Unit rejected the offers, because it lacks a certain agreement with the Ministry of International Co-operation, legislative approval and special supervision from internal authorities.

He also remarked that the PPP Central Unit had rejected demands from banks and some private sector companies regarding paying their dues in US dollars instead of EGP by the time there was a raise in exchange rate. Foreign companies can never enjoy the features of local investment of 18% return rates versus 5% or 6% return rate upon US dollar investment abroad, while enjoying paying their dues in US dollars, Hannoura added.

Regarding the former government’s intention to move the PPP Central Unit to the Ministry of Investment, he explained that this requires amending law no.67 of year 2010. He also said that a draft law of two articles was prepared as an amendment to law no.67 of year 2010 after some discussions with Yehia Hamed –former Minister of Investment. The legislative committee of the Cabinet of Ministers approved the draft but it was not adopted by Shura Council due to The Revolution of 30 June; as a result, the unit is still under the supervision of the Ministry of Finance. Now, there is integrated co-operation between the Ministry of Finance and the Ministry of Investment aiming to complete the unit’s procedures by a presidential decree.

Hannoura also revealed that the government seeks to establish sub-units in every ministry owing to full co-operation with the private sector due to law article no. 16, adding that the procedures have already started in some ministries such as the Ministry of Housing, Ministry of Environmental Affairs and Ministry of Communications and Information Technology.