Egypt’s March Economic Summit, dreams and realities
A year ago, Egypt’s President Abdel Fattah al-Sisi launched the Egypt Economic Development Conference (EEDC) in Sharm el-Sheikh. It was an attempt to put Egypt back on the world map for investors and trumpet the reforms that have coincided with improving economic data.
At the conference, Egypt has presented $35 billion worth of projects, as well as showcased opportunities for foreign investors.
Egypt signed deals worth a total of $60 billion during the conference. Thus, investment deals worth $36.2 billion were signed, in addition to $18.6 billion for engineering, procurement and construction (EPC) contracts and loans totaling $5.2 billion.
Furthermore, Egypt’s wealthy Gulf allies Saudi Arabia, the United Arab Emirates, Kuwait and Oman pledged an additional $12.5 billion in aid and investments.
Yet a year later the results look somewhat less impressive. Most of MOU’s haven’t seen the light such as the US$45 billion New Capital Cairo project that has been signed with Emirati Aabar. Other projects, such as a proposed “$8 to $10 billion transport project” from Chinese Port Engineering seem to have silently shelved. Others are progressing, but slowly—such as real estate deals that have only recently reached the contract stage but are nowhere near breaking ground
Egypt’s government does not maintain a public database tracking EEDC commitments, so we couldn’t trail the real results. Here is everything we know about the projects announced during the conference whether they have been revived or have been shelved.
The New Administrative Capital Project
The Egyptian government has decided to build a new capital city east of Cairo, smack in the middle of the desert. By far it was the largest and most ambitious project announced at the summit. It was presented as a US$45 billion scheme to build, from scratch, on an area of 700-square km.
Emirati firm Capital City Partners signed an MoU to construct the project, yet the Housing Ministry failed to reach an agreement with Al-Abbar, the founder of CCP regarding the contract’s terms, the start date of construction, and the share of each party. So, the deal broke down in June 2015.
However, the government was determined to keep the project alive. In September, Egypt signed an MoU with Chinese mega-firm China State Construction Engineering Corporation (CSCEC) The first phase of the plan covers 10,500 feddans of land.
In October 2015, President Sisi has set a two-year deadline for the completion of the first phase of an ambitious plan to build the proposed capital, thus the clock started ticking in January 2016.
Recently, , Minster of Housing Mostafa Madbouly said that China State (CSCEC) is set to start working on the yet unnamed capital city by the beginning of April 2016, the plan is to construct the new cabinet’s building along with 12 other ministerial buildings, starting with the Ministry of Housing. It also includes building the new convention centre, a fairground, and 15,000 residential units for low and middle income citizens.
Real estate projects
Media reports at the time of the EEDC listed eight real estate deals worth a combined total of more than US$33 billion dollar. Mostly, these were Non-binding agreements and haven’t advanced towards contracts.
In December 2015, Egypt’s leading property firm, Palm Hills Developments has conversed one of the memorandums of understanding into an agreement with the state-run Egyptian New Urban Communities Authority (NUCA), for co-developing an integrated residential community in East Cairo.
The project is an integrated community with complete residential complex offering apartment buildings, standalone units complemented with a commercial center, educational and leisure facilities. The project is planned to utilize renewable energy with the aim of creating a green community.
Moreover, the Ministry of Housing has reached agreements with a consortium of Egypt’s Mountain View and Saudi Arabia’s Sisaban for projects in 6th of October City and New Cairo; with Arabia Group for its “City of the Sun” project in 6th of October City. Another deal, ARCO’s South Marina project, made it into contract negotiations at the beginning of the year, but the two parties failed to agree on terms.
Energy deals
The energy sector has captured the lion share of the deals announced at the conference, and most of them do appear to be showing some movement.
China’s State Grid has signed with the state-run Egyptian Electricity Transmission Company an agreement to develop Egypt’s electricity transmission grid at the cost of $1.8 billion. In addition, During Sisi’s recent visit to china the MoU progressed to the signing of a contract.
During the conference, Germany’s Siemens has signed a group of memoranda of understanding with Egypt’s Electricity Ministry to establish power stations at the cost of $10 billion. One of the MoUs has turned into a deal on 14 March 2015.
Siemens announced it had reached firm agreements to build a 4.4 GW combined-cycle power plant, a project to generate 2 gigawatts of wind power and new wind rotor blade factory.
The company also agreed to develop an additional 6.6 gigawatts of combined cycle power plants, as well as 10 electricity substations. This deal was expanded to an 8 billion euro megaproject in June 2015. Last month, the first two turbines were shipped from Germany to Egypt, and they are expected to arrive in Beni Suef in May. Egypt is also in the process of securing loans for the wind plant.
A pre-existing US$1.9 billion gas turbine deal with US-based GE also appears to be progressing. However, a timeline for a US$200 million “multimodal manufacturing, engineering, services and training center” has not yet been announced.
During the conference, Egypt’s Electricity Minister Mohamed Shaker also signed two memoranda of understanding with Saudi Arabia-based power and water project developer ACWA Power and the United Arab Emirates’ state-owned renewable energy firm Masdar worth US$11.5 billion.
The first memorandum of understanding was signed with ACWA Power and Masdar to establish a 2200 megawatts electricity power station, a 1500 megawatt solar energy station and a 500 megawatt wind energy station, at the cost of $2.4 billion.
On the other hand, the second memorandum was signed with ACWA Power to establish a power station generating 2000 megawatts of electricity through the use of coal, costing $7 billion. The power station is scheduled to expand to generate 4000 megawatts of electricity.
Yet, the projects are still in negotiations, with at least one deal running into trouble over pricing disputes.
Gas and Oil
The gas deals announced at the EEDC included previously negotiated deals, such as a US$12 billion deal with the British BP announced in 2014 and finalized before the conference.
BP deal is set to provide Egypt with a quarter of local energy production and will contribute to filling the gap in demand of petroleum products by 2020. It will develop 5 trillion cubic feet of natural gas and 55 million barrels of condensates in the West Nile Delta area.
Furthermore, Italy’s oil company Eni signed with Egypt a framework agreement worth around $5 billion to develop the country’s oil resources over the next four years among the deals.
However, Eni’s successive discovery of a giant gas field named Zohr in the offshore Shorouk concession can’t likely be credited to this deal: Eni was awarded the concession in 2013.
Egypt’s government has also signed an agreement with British energy company BG to invest $4 billion over the next two years, but the future of the investment commitment from BG is uncertain after the company’s buyout by Shell.
Dana Gas, which pledged $350 million in investments, is still struggling thanks in part to Egypt’s unpaid gas bills, but is still drilling new wells in Egypt.
Manufacturing
The international Beyti Company – a joint venture between Saudi Arabia’s Almarai and Pepsico, announced during the conference that would invest $4 billion in Egypt’s food industry. The investment involved establishing a new juice factory in Beheira, a plan that date back to 2014.
Last Saturday the company has laid the cornerstone for new juice factory in Nubariah worth one billion Egyptian pounds of the total targeted investments. Pepsi has complained about Egypt’s currency shortage, although it said production has not been affected.
Further plans announced by Orascom to increase production capacity at Nile Sugar do not appear to have progressed. Nor is there news about a US$4 billion beverage project by the International Company for Food Industries.
