Economic relations between Egypt and the GCC were affected after the 25 January Revolution in 2011 due to investment disputes over projects ownership. But ties rebounded after President Abdel Fattah Al-Sisi’s entry onto the political scene and the overthrow of the Muslim Brotherhood in 2013, with Gulf countries shortly after pledging a total of $12bn in aid to Cairo.
After becoming president, Al-Sisi has made numerous efforts to bring investments back to the country, with the Kuwait visit as his latest move.
(DNE Photo)
Financial assistance from Kuwait
Following the ouster of former president Mohamed Morsi in July 2013, Kuwait pledged Egypt a non-refundable grant of $1bn. It also pledged a five-year $2bn deposit to the Central Bank of Egypt (CBE) and $1bn worth of petroleum products.
In September 2013, the CBE announced that it had received the $2bn Kuwaiti deposit.
The most recent aid was in December when the Kuwait Fund for Arab Economic Development (KFAED) agreed to loan Egypt approximately $102m for a power plant project located west of Cairo. The fund has also participated in financing the upgrade of the Assiut power plant.
Egypt has had very strong cooperation ties with the KFEAD since 1964, with the fund providing Egypt with 38 loans totaling approximately $2.4bn.
In November, Kuwait was said to have granted Egypt $1bn, however, this was met with contradicting responses from government officials. During a press conference, Minister of Finance Hany Kadry Dimian “neither denied nor confirmed” the news.
In April 2014, Kuwait’s national oil group announced that it would provide Egypt with 85,000 barrels of crude oil per day under a new contract boosting supplies from Kuwait by 31%. It added that the Kuwait Petroleum Corporation (KPC) will also increase its supply of diesel and jet fuel to 1.5m tonnes per year, up from 860,000 tonnes previously.
In March 2014, Egypt’s interim government signed two agreements with the Kuwaiti-based Arab Fund for Economic and Social Development (AFESD) to finance projects in the electricity sector. AFESD also signed a $50m loan agreement with the state-owned Social Development Fund (SFD) to finance small and micro enterprises.
(DNE Photo)
Investment disputes with Kuwaitis
In last November, Kuwaiti investors who own 26,000 acres of land in Ayat, Giza, intend to prosecute Egypt in international courts.
The Egyptian government requested nearly EGP 47bn from the Egyptian-Kuwaiti Company for Development and Investment for converting the purpose of the Ayat plot from agricultural to residential. As part of the deal, there would be a 25% down-payment due and the remainder to be paid over five years. This was rejected by the company, and no new settlement has been reached.
Tarek Eissa Al-Sultan, Vice-President of the International Holding Projects Group, which represents with its subsidiaries companies Kuwait’s main contributor to the project, said in press statements in November that prosecuting Egypt internationally came after the investors found an “unjustified disruption…and lack of seriousness” on the part of successive governments to resolve the fate of the Ayat area.
The dispute dates back to 2002 when the then Egyptian government agreed through a decision issued by former president Hosni Mubarak, to transfer ownership of the land to the company.
The land was to be used for agricultural purposes at a price of EGP 200 per acre, but the company describes the price as higher than that of similar contracts.
The company, which is 90%-owned by Kuwaiti investors, stated: “We cannot cultivate the land because the Egyptian government has not provided us with water as agreed upon.”
It requested to be supplied with water to cultivate the land, or that an agreement be made to convert the land to serve urban purposes with the company paying a fair value for conversion fees.
There were a total of seven cases brought against Egypt after the 25 January Revolution involving demands totalling more than $20bn in compensation.
According to Minister of Investment Ashraf Salman, the government is working to end 80% of investment disputes before the economic summit, which will be held in March 2015.
Similarly, a ministerial committee approved in November the final settlement for UAE-based company, Al-Futtaim, worth EGP 214m, which will be paid by the New Urban Communities Authority (NUCA).
