Tuesday,17 October, 2017
Current issue | Issue 1291, (14 - 20 April 2016)
Tuesday,17 October, 2017
Issue 1291, (14 - 20 April 2016)

Ahram Weekly

New Saudi support for Egypt

Some $25 billion worth of investment agreements were signed during Saudi King Salman’s recent visit to Egypt, reports Niveen Wahish

Al-Ahram Weekly

At a time when Egypt was believed to have seen the end of Gulf funds owing to dwindling oil prices, significant Saudi support came through last week during King Salman’s visit to Egypt.

Multiple agreements were signed between the Egyptians and Saudis, providing funding for everything from ports to roads and hospitals, with the value of these agreements amounting to around $25 billion, according to the Egyptian Ministry of International Cooperation website.

Not since the Egypt Economic Development Conference in March last year have so many projects been committed to. Back then, commitments exceeded by four times this week’s figure in the form of memoranda of understanding (MOUs), but only a fraction of the commitments have materialised.

This time around the offerings are mostly final loan agreements, as confirmed by Egyptian Minister of International Cooperation Sahar Nasr to Ahram Online.

The development of the Sinai Peninsula takes centrestage in the agreements. Ten agreements financing new projects in Sinai have been signed with the Saudi Public Investment Fund and the Saudi Fund for Development (SFD), according to the ministry website.

The projects are part of the Sinai Peninsula Development Project launched during a visit by the minister of international cooperation to Saudi Arabia last month. They include the establishment of King Salman University, housing complexes, a development axis of 90 km to serve new housing units east of Suez and to connect them westwards, and 13 agricultural zones and wastewater treatment plants.

The two parties also agreed to the establishment of a free-trade area in the Sinai Peninsula that is expected to benefit from the building of a bridge to connect the two countries that was also agreed upon during the visit.

“The focus on Sinai emanates from Egypt’s prioritising the development of the area,” Ahmed Darwish, a board member of the Saudi-Egyptian Businessmen’s Association, told Al-Ahram Weekly.

For Darwish, the signed agreements and the visit will have a positive impact on the Egyptian economy, communicating the message that Egypt is an attractive destination for investors and that it is working to improve its investment climate.

An agreement worth 60 billion Saudi riyals (around $16 billion) to set up an Egyptian-Saudi investment fund was signed between the two sides.

“The ball is now in our court. We have the chance to match our opportunities with investment and to show what we have to offer,” Darwish said, adding that even more investment could be attracted from the recently announced $2 trillion Saudi sovereign fund.

Darwish said that investment disputes between Saudi investors and the Egyptian authorities have mostly been resolved. Eighty per cent of the disputes have been resolved, Sheikh Saleh Kamel, a major Saudi investor in Egypt, told the Egyptian-Saudi Business Forum organised during the king’s visit.

Over the past three years, efforts by the Council of Saudi Chambers of Commerce, the Egyptian Dispute Settlement Committee and the Egyptian-Saudi Coordination Council have made a great difference in resolving such disputes, and this has reflected positively on the current interest in investing in Egypt.

The new Suez Canal Special Economic Zone is of particular interest to investors. As Darwish pointed out, the legislation is clear, a company can be established in one day, and setting up in the zone allows investors to enjoy access to multiple markets with which Egypt has agreements, such as the European Union and the Common Market for East and South Africa (COMESA).

Moreover, the zone stands to benefit from infrastructure upgrading, which is included in the projects agreed upon with the Saudis.

During the visit, Josur Al-Mahabba, a company that plans to develop the Suez Canal with funds amounting to LE3 billion, was established. A second company, which will develop a six-square-kilometre area of the industrial zone along the Suez Canal, was also set up, with a total sum of $3.3 billion, the ministry’s website said.

Aside from the deals concluded during the king’s visit, Saudi Arabia is also set to provide Egypt with monthly shipments of 700,000 tons of petroleum products for five years, Reuters reported, quoting an official from the Egyptian General Petroleum Corporation.

“The Saudi Fund for Development (SFD) will pay Aramco [the Saudi petroleum company] for the petroleum products directly, and receive in return the amount from Egypt in installments,” the source told Reuters.

He added that $2 billion in loans provided to Egypt by the SFD would carry an interest rate of two per cent over 20 years with a five-year grace period.

Other agreements signed during the visit include a $120 million agreement for developing the Qasr Al-Aini Hospital in Cairo and an agreement worth $100 million for establishing the West Cairo power plant.

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