CORRECTED – (OFFICIAL)-UPDATE 2-Egypt to reissue cement licences

(Corrects after Industrial Development Authority says licences
to be reissued but not necessarily to original firms)

* Move could help meet booming cement demand

* Licences to be reissued in May

* Gvt might not cover energy needs, proposes imports

By Dina Zayed

CAIRO, April 14 (BestGrowthStock) – Egypt is set to reissue two
cement production licences after two firms had their permits
scrapped, in a move that could help meet demand in a buoyant
construction sector which has defied a regional downturn.

The country is also planning to separately issue eight new
cement licences this year, as it aims to boost production
capacity to 80 million tonnes a year by 2015 from 50 million.
[ID:nN08202448]

But Egypt might not supply firms granted the new licences
with their energy needs, the trade and industry minister said on
Wednesday, potentially raising the cost of investment in the new
licences higher than had been expected.

El Wadi Cement and North Sinai Cement had their licences
cancelled late last year over start-up delays and financing
shortfalls, but were granted 60 days to challenge the decision.
[ID:nLDE5BE1DN]

“The licences will be reissued in the same areas to ensure
sustained development and the flow of investment to those two
areas,” Amr Assal, head of the Industrial Development Authority,
told Reuters.

The new licences will be issued in May, he added. Assal said
the permits would go to a bidding process and the two former
holders could be allowed to bid again to win their permits back
but said that would require a legal assessment.

While El Wadi and North Sinai firms did not meet the
conditions during the appeal period, they have since made
efforts to secure financing to help get their projects off the
ground.

In February, El Wadi said it had secured a $328 million loan
from Liechtenstein bank LLB (LLB.S: ) to build a 1.5 million tonne
per year cement factory. [ID:nLDE6180WG]

Assal said North Sinai Cement, to build its plant in central
Sinai with investments worth 1.7 billion pounds, had also
secured financing. He did not give details.

ENERGY COSTS

Egypt’s construction industry has grown despite the global
economic downturn, even as it stalled elsewhere in the region.
Cement demand rose 25 percent last year, driven largely by a
growing population and cash-fuelled economy. [ID:nLDE61F1HT]

Bidding for the eight new licences, aimed at helping satisfy
the demand, is due to start by the middle of the year.

While conditions for the new licences are not set, the
cement firms that receive them may need to secure energy for
themselves if the Petroleum Ministry decides not to supply them,
Trade and Industry Minister Rachid Mohamed Rachid said.

“We made it very clear if there is no energy available with
the quantities that we need … They can import, they can buy it
at world prices,” he told Reuters on the sidelines of a press
conference.

The government also plans to resume its programme of
gradually phasing out energy subsidies to industry in July,
after suspending the plan following the onset of the global
economic downturn. [ID:nLDE63B22A]

Energy subsidies cost the government 60 billion Egyptian
pounds in fiscal year 2007/08, up from 57 billion pounds in
2006/07. Of this, 20 billion pounds went to energy-intensive
companies, including cement.

Investment Basics

(Editing by Louise Heavens)

CORRECTED – (OFFICIAL)-UPDATE 2-Egypt to reissue cement licences