One of the many issues facing Egypt is that of securing the right funds to press ahead with vital infrastructure and utility schemes.

Many of the country’s government bodies, such as the housing ministry, have struggled to attract private sector participation, due to concerns around investment risk. However, the finance ministry’s PPP (public-private partnership) Central Unit has been able to create an effective, favourable investment environment for the private sector.

Atter Hanoura, head of the PPP Central Unit, says the agency has been able to offer a comprehensive model for both local and international private sector investors.

“The PPP law was issued in 2010 and we received international awards from the [Washington-based] World Bank – most of the countries around us are using the PPP law, extracting some of the articles and using it in their laws that they are building up – some countries are even taking the law cut and paste,” he says.

Four successes

To date the unit has moved ahead with four projects, including the Abu Rawash wastewater treatment plant and the New Cairo water plant.

The list also includes the Cairo Contact Centres Park in Al-Maadi. “[That] project involves the financing, designing, construction, furnishing, operation and maintenance of administration buildings for usage or renting to companies working in the field of information and communication technology,” says Hanoura.

Proposals were submitted in early September for the development of phases two and three of the $150m Contact Centres Park Project PPP in the Al-Maadi area. “All six companies could be involved as there are 12 plots of land to develop,” says Hanoura.

A final award is expected by the end of the year, Hanoura adds, not October as was previously expected. The list of prequalified firms includes the UK’s Carillion, and the local Namaa Real Estate and Orascom Construction.

River bus

The fourth PPP scheme is the Nile River Bus development in Cairo. Work includes the rehabilitation of 16 existing berths and the construction of 12 new ones.

“A consortium has been assigned as the transaction adviser for the project, comprising [the UK’s] EY as lead and financial adviser, in association with [Canada’s] WSP/PB and Dorsch Consult Egypt as technical adviser, and [the UK’s] Eversheds and [the local] Arab Legal Consultants as legal adviser,” says Hanoura.

The PPP unit has pushed through comprehensive investment laws that have encouraged private sector participation, with investors telling MEED the unit has so far been successful in providing the transparency and ease required to do business in Egypt. Nonetheless, as with many other schemes across the country, foreign exchange policies have been central to the reluctance of some investors.

Hanoura tells MEED the PPP unit has been proactive in including a detailed risk matrix surrounding the foreign currency risk, and cites the Abu Rawash project as an example of the support the unit can offer against those risks

Bridge loan

“The structure of this project is slightly different because we have something called a bridge loan, which is accompanied by the interim private agreement – the government’s sovereign guarantee for this project,” says Hanoura. “We just gave some kind of foreign exchange risk protection until the project’s financial close.

“The private sector factors in currency risks – as a government when we are studying a project and doing the financial model to check the viability, we put ourselves in the private sector’s shoes and calculate these kind of risks – so when we get these bids we know they are very close to our estimations that have deemed the project viable.”

With Egypt’s PPP model proving successful, analysts have suggested the unit takes on other work, particularly low-end housing programmes that the country desperately needs. “The ministries of housing and transport should in any country occupy 75 per cent of infrastructure projects, so naturally the communication between these two ministries are very high,” says Hanoura.

He recognises the unit’s ability to help other ministries implement projects under the same structure.

“Housing units that the ministry of housing is undertaking is under the structure of the PPP law, but they do not lie under the PPP unit – we are providing support and knowledge for contract terms,” says Hanoura. Regulations surrounding land allocations means they can only offer this advisory role, he adds.

As bureaucracy continues to cloud Egypt’s investment opportunities, the investment ministry may find itself looking towards the PPP Central Unit for guidance to develop new investment laws to reduce red tape and eliminate corruption.

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