Orascom Construction Sees Tax Settlement Agreement This Week

Omar Derwaza – Head of Investor Relations at Orascom Construction Industries – announced that the ongoing negotiations between OCI and the Egyptian Tax Authority are likely to conclude very soon, expecting that the two parties are going to reach a final settlement agreement within the current week.

Derwaza declined to give a comment when he was asked about the value and the schedule of the installments OCI pledged to pay off. He said OCI is going to disclose within days all the details of the anticipatory agreement with the Tax Authority.

On Saturday afternoon, sources close to the ongoing negotiations told Amwal Al Ghad that Orascom Construction Industries (OCIC.CA) is offering to pay off US$ 350 million as a first installment to reconcile with Egypt’s Tax Authority over taxes dues worth EGP 7.1 billion.

For the remaining sums, they will be paid over a number of years to be defined in coordination between the company and the Tax Authority, sources said.

The sources further added that OCI has refused to pay the EGP 7.1 billion as one tranche due to reasons related to default on payments besides the lack of a sufficient liquidity for the current phase.

Amwal Al Ghad has quoted Tax Authority Chief Mamdouh Omar by saying the negotiations with the OCI are still ongoing, asserting that the reconciliation option is very attainable at any moment. Omar has denied that the ETA’s negotiations with OCI have reached a deadlock.

The anticipatory settlement agreement comes after 7-month tax disputes  over EGP 14 billion tax evasion claims against OCI erupted by selling Orascom Building Materials to French Lafarge for EGP 68.6 billion in 2007.