Enraged exporters

PRIME MINISTER Atef Ebeid has affirmed that exporters are free to manage hard currency revenues from their exports. Ebeid's statement dismisses rumours that the government aims to control exporters' hard currency revenues. Indeed, Egyptian exporters had reacted angrily to the possibility of this move.

"This would be an illegal requirement. The business climate in Egypt will be done great harm if such a decision was put into action," said Osama Kheiralla, head of the Council of Agricultural Commodities.

Egyptian exporters have also warned against any attempts to link exporter access to government subsidies with their commitment to the decision.

"Subsidies are a right. This is what most governments do in order to boost their exports," said Ali Eissa, head of the Exporters Division at the Egyptian Union of the Chambers of Commerce. "Statements of this nature must be negotiated with the businessmen's associations before announcement. It is ridiculous to ignore the opinion of those who will be most affected by such a decision," he added.

Delinking gas

THE EGYPTIAN Ministry of Petroleum is currently studying a plan to delink the price of natural gas from that of crude oil. Addressing a gas conference in Qatar last week, Petroleum Minister Sameh Fahmi said that the move would make business more transparent and fair.

"Why should people in Europe suffer from my [high] gas prices because of what's happening in Venezuela?" Fahmi said. He was referring to an increase in oil prices due to a two-month general strike in Venezuela, the world's fifth biggest oil producer.

Fahmi also pointed out that 20 years ago it might have been realistic to link gas prices to crude oil but that things have changed since the growth of the gas industry.

The move is part of the ministry's plan to attract more investments to its fledging gas and petrochemical sectors. Egypt has proven gas reserves of 58.5 trillion cubic feet (1.656 trillion cubic metres). As for petroleum and gas related products -- petrochemicals -- Egypt has a $10 billion investment plan: 24 projects will be set up to generate annual export revenues of $4 billion by 2021.

This has not been the first time that Fahmi has revealed plans to change the pricing strategy. In a keynote speech delivered during a petrochemical conference in Cairo two weeks ago, Fahmi talked about the need to link gas prices to end products rather than crude.

While the entire plan has not been revealed, Fahmi pointed out that, according to the new pricing system, prices agreed upon between supplier and consumer will be reviewed annually based on changes in international inflation rates as well as other variables. There will also be a price band for fluctuations in gas prices, especially in long term contracts, as a way to secure prices for buyers and sellers.

Fahmi said that while the issue of divorcing gas and crude prices has been on the table for many years, a committee has now been established to produce a proposal for next year.

MobiNil profits

THE EGYPTIAN Company for Mobile Services (MobiNil) posted net profits of LE422 million in 2002, a 24 per cent rise over the previous year.

The company's earnings before interest, tax, depreciation and amortisation rose to LE1.36 billion from LE1.07 billion.

MobiNil Chief Executive Osman Sultan, said that the results included an LE40 million charge, "as a foreign exchange loss [due to a] restating of all monetary assets and liabilities denominated in foreign currency using the year- end market rate." Analysts have praised this move, seeing it as a kind of provisioning against the effects of last week's devaluation of the pound.

"We have continued to hedge aggressively and we have reduced our [foreign currency] exposure significantly. Our total debt-related, foreign currency exposure is now in line with our annual roaming revenues. This significantly reduces one of the main concerns of our shareholders and investors," Sultan said.

MobiNil's total debts as of 31 January this year, following two debt repayments, were $141 million in hard currency (LE1.268 billion). "Net debt-related foreign exchange exposure was $38.3 million, down from just over $40 million at end of the third quarter of 2002 and from $94 million at the beginning of 2002," Sultan said.

MobiNil, which has been operating since May 1998, is currently the largest mobile service provider in the Middle East. The company's network covers over 93 per cent of Egypt's populated areas. It has also signed roaming agreements with over 75 international carriers.