Egypt opened bidding for two cement production licenses on Monday but will not allow existing cement firms in Egypt to bid in an effort to boost competition and bring down prices, the industrial authority said.
Egypt’s construction industry has grown even as it stalled elsewhere in the region due to the global economic downturn. Cement demand rose 25 percent last year, driven largely by housing needs of a growing population and a cash-fuelled economy.
The two licenses will replace ones that had been held by El Wadi Cement and North Sinai Cement but which were cancelled late last year over start-up delays and financing shortfalls. Both firms were granted their licenses in 2007.
"Companies that were given licenses in 2007 or are currently producing cement will not be allowed to enter the game for these two licenses," Amr Assal, head of the Industrial Development Authority, told Reuters. "We want new competitors."
The licenses will be for projects in North Sinai east of Cairo and El Wadi to the southwest. The authority earlier said the two firms which lost licenses might be allowed to submit a new bid, but Assal has since said they would be excluded.
Egypt would welcome participation from industrial firms that might have operations elsewhere or in other building materials, but no existing cement firms in Egypt would be allowed to participate. The bidding will close in early July.
El Wadi Cement and North Sinai Cement were granted two of the six greenfield cement factory licenses offered in late 2007, in a bid to boost production after rising local prices drove the government to impose an export duty in February.
A regulatory committee that cancelled their licenses had previously extended the licenses of three firms, Al-Arabiya Al-Wataniya, indirectly owned by private equity firm Citadel Capital, El-Nahda Industries and Assiut Cement, a local unit of Mexico’s Cemex.
"We want to create and strengthen competition, to move away from five or six firms that control the market, because we want better competition on prices," Assal said.
Separately, Egypt is planning to issue eight additional new cement licenses this year, as it aims to boost production capacity to 80 million tons a year by 2015 from 50 million.
Bidding for the eight new licenses is due to start by the middle of the year.
Those who have expressed an interest in bidding for the eight new licences include the Egyptian unit of Lafarge and Egypt’s largest listed cement firm Suez Cement, which controls Helwan Cement and Torah Cement. Suez is a subsidiary of Italcementi.
