Promoting Industrial Growth and Encouraging Foreign Direct Investment in Egypt
Ministry of Petroleum and Mineral Resources
Industry-Specific Reforms > Utilities and Public Services
- The procedures for extending utilities to industrial establishments are cumbersome, lengthy, and costly.
- Industrial areas lack in services such as transport, health facilities, shops, and restaurants.
- Pricing of different energy products for industrial establishments does not follow any uniform standard; pricing schemes vary according to the nature of the industrial sector.
- The high price of natural gas has a negative impact on industrial competitiveness (particularly for steel factories); the domestic gas price reached $7/million British thermal unit compared to $3/million British thermal unit in the global market.
Responsible Entities
Date 2/2/2020
Industry-Specific Reforms > Utilities and Public Services
- Consider offering payment plans, including an installment scheme, to allow industrial enterprises to pay for utilities over time; the payment plan should be commensurate with the size of the enterprise.
- Provide reliable and economical transportation to serve workers in industrial zones.
- Make available commercial properties in industrial zones that can be used by food and beverage providers, as well as rest and recreation areas.
- Provide emergency medical facilities in industrial areas.
- Adopt a standardized mechanism for pricing energy products used in factories in order to achieve greater transparency and fairness. Similar to the situation in most industrial nations, the mechanism should be based on a well-defined formula that takes into consideration global prices, including their upward and downward fluctuations.
- Exercise flexibility when pricing natural gas, especially for factories with high natural gas consumption. Domestic prices should correspond to global prices, and at the same time safeguard the competitiveness of the local product.
Responsible Entities
Date 2/2/2020
Industry-Specific Reforms > Utilities and Public Services
- On March 17, 2020, the Prime Minister issued a number of decrees that support the industrial sector. The decrees entailed reducing the price of natural gas for industries to $4.5 /million British thermal unit, as well as lowering electricity prices for ultra-high, high-and medium-voltage industrial activities by LE 0.10, and placing a freeze on electricity prices for the next 3-5 years for other industrial uses.
Responsible Entities
Date 2/2/2020
Responsible Entities
Date 9/26/2022
Responsible Entities
Date 9/26/2022
Responsible Entities
Date 9/26/2022
Responsible Entities
Date 9/26/2022
Responsible Entities
Date 9/26/2022
Responsible Entities
Date 9/26/2022
Industry-Specific Reforms > Ceramics Industry
- Factories suffer from high utility debt (electricity and natural gas) because they are erroneously classified as energy-intensive industries.
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Ceramics Industry
- Since IDA concluded that the ceramics industry is a labor-intensive, rather than and energy-intensive industry, all utility debt, including interest, should be canceled; the utility debt represents 30% of the industry’s total debt.
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Ceramics Industry
- The price of natural gas in Egypt is much higher than global prices; while the global price is $2.5 per million British thermal unit, it reaches $4.5 per million British thermal unit in Egypt.
- This has diminished the productive capacity of Egyptian industries, and resulted in a loss in the country’s foreign exchange revenues due to lower exports.
- Increase in ceramics imports.
Industry-Specific Reforms > Ceramics Industry
- Adjust the price of natural gas for labor-intensive, mass-production factories, such that it matches the global price; this should increase the competitiveness of the Egyptian product.
Industry-Specific Reforms > Textile Industries
- The high production costs; the natural gas prices are particularly high despite the fact that textile industries are labor-intensive industries; the gas producing companies deal with this issue in a high-handed manner.
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Textile Industries
- Review natural gas prices; charge the textile industries the same natural gas price charged to brick factories.
- Reduce the price of water supplied to the textile industries; water is an essential component in all the different manufacturing processes—spinning, weaving, dyeing, printing, and finishing
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Petroleum and Mining Industry
- Expedite the formation of the advisory committee referenced in the Law on Mineral Wealth No. 198 of 2014 and its Executive Regulations, and their relevant amendments. The committee should be granted greater authority, such that implementing bodies abide by its resolutions regarding the setting of rental payments and royalty rates, according to the circumstances of each case, in other words, the opinions of the committee should be binding and not only of an advisory character. The Prime Minister should issue a decree requiring the committee to include individuals with professional knowledge and expertise and to meet at least four times a year, as mandated by the law, to carry out its responsibility of refining and further developing procedures, in light of what transpires from implementing the law and its regulations (Ministry of Petroleum and Mining). For example, some issues that need addressing include: Setting the royalty for copper at 8% (compared to a 4% globally) is considered high, and works against attracting any investor; the unclear and confused treatment of white sand—whether it falls under the purview of mines or quarries; and the shale oil royalty rate.
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Petroleum and Mining Industry
- The committe that is headed by the Minister of Planning and Economic Development and includes the Minister of Local Development should continue operating to develop a clear and well thought out
- strategy that is centered on the national needs and priorities, promotes vertical integration in the mining sector and value-added production of minerals, and takes into account the resource abundance and scarcity. In this regard, it should be recognized that the responsibility for and interest in these resources go beyond the purview of the Ministry of Petroleum or the Mineral Resources Authority), management of mineral resources is a state-wide matter, and all efforts have to be directed towards maximizing the state’s resources
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Petroleum and Mining Industry
- In March 2020, Egypt launched an international gold exploration auction, which is viewed as a serious step towards placing Egypt on the global mining map. However, after the launch of the auction, the Egyptian Mineral Resources Authority issued instructions, banning operations in 7 locations on account that they are of importance for military operations; these restricted areas are known for being rich in geological formations and have proven gold reserves and gold mines. It was further requested that exploration in these areas be directly awarded to a state-owned mining company, Shalateen, which is in the process of selling 51% of its share to a large investor. No doubt, such an action harms the reputation and credibility of Egypt and undermines trust in its ability to uphold commitments.
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Petroleum and Mining Industry
- Governorates, local units and the General Authority for Roads & Bridges and Land Transport should not request donations or impose any additional fees on the production and transportation of minerals extracted from mines, quarries, and salterns, beyond what is mandated in the Mines and Quarries Law No. 198 of 2014 and Law 145 of 2019 and their executive regulations.
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Petroleum and Mining Industry
- Exempt buildings belonging to mines, quarries, and salterns from the real estate tax, in accordance with Article 18 bis of Law No. 23 of 2020.
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Petroleum and Mining Industry
- Simplify the procedures for mines, quarries, and salterns mineral to export their products; ensure that timeliness of shipping so that exporters do not have to pay delay penalties, which undermines their productive capacity and competitiveness; set a time limit for issuing export approvals, provided that all documents are complete, and in general, review all the conditions and requirements for obtaining export approvals in light of the obstacles faced by exporters.
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Petroleum and Mining Industry
- Ensure that the Egyptian Environmental Affairs Agency provides adequate information (maps) on the areas where mining is prohibited; additionally, it should expedite the issuance of environmental approvals for licensed companies and oblige operating companies to adhere to all the controls and procedures, as gold ores are subject to theft by random explorers of gold “Dahaba”.
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Industry-Specific Reforms > Petroleum and Mining Industry
- Facilitate the issuance of the security approvals that are required for obtaining exploration and extraction licenses; specify the required documents in advance, and set a time limit for when the entity must notify the applicant of its decision after all required documents have been submitted. The life of the approval/license should be extended to three years (it is currently one year), as long as the licensee did not commit any technical or security violation that would require otherwise. Delays in providing security clearances, even for state-owned enterprises, discourage foreign investment, which is critical for exploration activities that are high-risk investments, and thus, result in losing investment opportunities.
- The participation of military-owned companies and other state institutions in the competition for research and exploitation licenses (despite being of high risk and long term investments), without having adequate technical knowledge and expertise, creates a conflict of interest and even competition among them (e.g., Shalateen and IMEX). This practice raises the concerns of local investors, and by turn, international investors, which are mostly public companies.
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 6/30/2020
Responsible Entities
Date 9/26/2022
Responsible Entities
Date 9/26/2022
Responsible Entities
Date 9/26/2022