Citadel Capital Chairman and Founder Ahmed Heikal said investments in Egypt face three major challenges represented in energy, water and indeed in the employment which is necessary for the production process.
Heikal noted during the proceedings of Euromoney conference in Cairo that it is crucial to restructure the subsidy system in Egypt as a part of a big major issue, the budget deficit.
He added that the subsidy in Egypt hit $ 120 billion by the end of last year which has directly contributed to the country’s budget deficit.
For the other challenge – the energy shortage – Heikal said Egypt is producing around 41million tons of only one petroleum product of which Egyptians consume 75%. On the other hand, the country has local commitments of 83 million tons, the energy deficit of up to 43 million tons. To fill such deficit, Heikal said the country resorts to import paying around $60 and $70 million which represents in fact a huge burden on the budget. He referred that when the CBE announced $8 billion deficit, it was due to energy prices.
Accordingly, Heikal noted that it is necessary to work on the files of pricing regarding the wide gap between the local market and the global prices.
On running the transitional period, Heikal asserted that energy re-pricing to fit the international prices shall be gradually not suddenly. He added that such a sudden increase in the energy prices would represent a major threat against the current projects. Heikal further noted that in 2000, he had proposed that the government would increase the prices by 10 piasters monthly. If the government had listened to my proposal since that time, Egypt would have had then ‘a debt of zero by today, Heikal said.
Furthermore, Heikal said the energy subsidies would be for projects not for the projects taking into consideration countries such as Brazil and Iran have managed to have a gradual increase in energy prices for the projects. The energy policy in Egypt has failed, the country now witnesses shortage in electricity, diesel, and fuel oil. Hence, Heikal said Egypt has to reconsider adopting such policy.
On Citadel Capital’s business, Heikal said the firm has already invested $4 billion in Egypt since January 2011, when an uprising erupted that toppled President Hosni Mubarak. Citadel has an eye on infrastructure and energy-related projects, he added.
“I met a number of government officials and we think we are ready to invest a significant amount of money, probably higher than the $4 billion over the next three years,”
“We identified a number of opportunities in the energy efficiency, infrastructure sphere,” he said.
The firm secured $3.7 billion in financing for an Egyptian petroleum refinery project in June and said it is also looking at potential refining deals in sub-Saharan Africa, including investing in a $2.5 billion oil refinery project in Uganda.
