P rivatization in Egypt - Quarterly R eview April—June 2002

United States, or the Government of Egypt.

PRIVATIZATION C OORDINATION SUPPORT UNIT

Privatization in Egypt
Quarterly Review
April - June 2002

Provided to the
United States Agency for International Development

by

CARANA Corporation
under the
USAID Monitoring Services Project
Contract # PCE-1-800-97-00014-00, Task Order 800

Unless otherwise stated, opinions expressed in this document are those of the
PCSU. They do not necessarily reflect those of USAID, the Government of the

CARANA Corporation
20 Aisha El Taymouriya Street, 1st Floor, Suite 2, Garden City, Cairo
Tel: (202) 792-5466/5477 Fax: (202) 792-5488
PCSU—Privatization Coordination Support Unit
CARANA Corporation WWW.CARANA.COM/PCSU 1
P rivatization in Egypt - Quarterly R eview April—June 2002

Table of Contents

Managing Director’s Note..........................................................................4

The Privatization and Coordination Support Unit ....................................5
Acknowledgments .....................................................................................6
Special Study:
The Result and Impact of Egypt’s Privatization Program .................7
Current Status of Bot and Boot Projects in Egypt .................................14
Ministerial Privatization Activities (Statistical Update )
Ministry of Public Enterprise................................................................15
Ministry of Foreign Trade ....................................................................28
Financial Institution Privatization .........................................................30
Ministry of Electricity and Energy ........................................................31
Ministry of Transportation....................................................................32
Ministry of Civil Aviation ......................................................................34

Financial Markets and Privatization........................................................35

Reports and Studies Delivered to USAID by CARANA PCSU................39
Reports and Studies Delivered to USAID BY IBTCI ...............................43
Law 203 Portfolio .....................................................................................45

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P rivatization in Egypt - Quarterly R eview April—June 2002

Table of Figures

Figure 1: Current Status of BOT and BOOT Projects in Egypt.................................................. 14

Figure 2: Privatization Achievements: Transactions Summary to 30 June 2002...................... 15
Figure 3: Law 203 Privatization Announcements, Tender Dates, and Results ......................... 16
Figure 4: Privatization Achievements: Sales to Anchor Investors ............................................. 18
Figure 5: Privatization Achievements: Majority Public Offering ................................................. 19
Figure 6: Privatization Achievements: Majority Sales to ESAs .................................................. 20
Figure 7: Privatization Achievements: Liquidations .................................................................... 21
Figure 8: Privatization Achievements: Multiyear Leases ............................................................ 22
Figure 9: Privatization Achievements: Minority Public Offerings ............................................... 23
Figure 10: Privatization Achievements: Production Assets Sold ................................................ 24
Figure 11: Privatization Achievements: Sales Proceeds and Uses by March 31, 2002............. 25
Figure 12: Breakdown of Sales Proceeds Values ........................................................................ 27
Figure 13: Total Sales Values by Privatization Method ................................................................ 27
Figure 14: Majority Privatization - Anchor Investor....................................................................... 27
Figure 15: Majority Privatization - ESA .......................................................................................... 27
Figure 16: Majority Privatization - Majority IPO............................................................................. 27
Figure 17: Minority Privatization - Minority IPO............................................................................ 27
Figure 18: Minority Privatization - Production Assets ................................................................... 27
Figure 19: Joint Venture Portfolio Status 1997 to Present ........................................................... 28
Figure 20: Breakdown of Joint Venture Companies by Sector .................................................... 29
Figure 21: Recent Joint Venture Privatization Transactions ........................................................ 29
Figure 22: Joint Venture Portfolio by Public Stake ....................................................................... 29
Figure 23: Ownership of Joint Venture Banks ............................................................................... 30
Figure 24: Private and State-Owned Insurance Companies ....................................................... 30
Figure 25: EEC Generation Expansion Plan ................................................................................. 31
Figure 26: Status of Road BOOT Projects ................................................................................... 32
Figure 27: Status of Maritime BOT Projects................................................................................. 32
Figure 28: Status of Railway BOOT Projects ................................................................................ 33
Figure 29: Status of Airport BOT Projects ..................................................................................... 34
Figure 30: Top 10 Privatized Company Dividend Yields During 2nd Quarter 2001.................... 35
Figure 31: Top 10 Performers Since Privatization (Annual Average Growth) ............................. 36
Figure 32: Top 10 Performers During the 2nd Quarter 2002 ....................................................... 36
Figure 33: Stock Market Performance for Privatized Companies............................................... 37

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P rivatization in Egypt - Quarterly R eview April—June 2002

Managing Director’s Note

This abbreviated edition of the Privatization in Egypt, Quarterly Review

concludes the PCSU’s contribution to the USAID monitoring program. This
edition is dedicated to my colleagues and associates whose tireless efforts
and constantly high quality output made this publication a valued and
highly regarded source of information in both public and private institu-
tions.

In addition to an update of the statistical information, this addition also in-

cludes the Executive Summary of a PCSU special study entitled The Results
and Impacts of Egypt’s Privatization Program. We are happy to share the
findings of this study with our readers at large. I would like to record also
that, on balance, the program met most of its substantive goals. We can fur-
ther conclude therefore, without hesitation, that the government’s privatiza-
tion program has made a significant positive contribution to the economy of
the country. However, I must add that now the future remaining privatiza-
tion task introduces a new phase. This phase must begin with a different set
of objectives, a new perspective, and a new and different approach in order
to optimize and expedite the process. We have made a number of recommen-
dations on the issues and options the government may wish to consider
while implementing the next phase.

In closing, I would like to express my sincerest appreciation to all colleagues

in the various government agencies whose generous cooperation and sup-
port enabled us to gather, analyze and report on this information.

Tejinder S. Minhas
Managing Director
CARANA – PCSU

PCSU—Privatization Coordination Support Unit

CARANA Corporation 4
P rivatization in Egypt - Quarterly R eview April—June 2002

Privatization and Coordination Support Unit

Project Description

C ARANA Corporation is implementing USAID’s three-year (1999 – 2002) Monitoring and

Coordination Services Project under the “Partnership for Competitiveness” agreement
between the GOE and the United States. CARANA formed a Privatization Coordination
Support Unit (PCSU) that is providing privatization coordination support and monitoring
services to nine key government ministries. PCSU also is mandated to monitor the
Development Support Program I (DSP-I) and track privatization progress against DSP-I
benchmarks, gather privatization benchmark-related information, and analyze shortfalls
and successes.

Project Purpose
The PCSU’s goal is to provide transparency and clarity to the privatization process in Egypt
in order to assist the GOE, corporations with total or partial state ownership, and investors
in evaluating and implementing the privatization of the public sector in Egypt.

PCSU Core Functions

Support Overall Privatization Process Management & Coordination

• Introduce additional privatization methods
• Support changes to privatization policy and procedures/regulations
• Facilitate coordination of activities among donors, within USAID, & among
contractors, particularly the Privatization Implementation Project (PIP)
• Facilitate sharing of privatization information and experiences among
ministries

Coordinate and Provide Privatization Support to Individual Ministries

• Complete development and analysis of MPE and MOEFT database for
privatization management
• Complete installation, testing, and website management training for PEO
• Provide ad-hoc capacity building for use of alternate privatization methods
• Help define and obtain training and other capacity building support

Improve Understanding of Privatization & Economic Reform

• Develop special studies/initiatives
• Prepare the Privatization in Egypt Quarterly Review
• Prepare translations of privatization-related articles from the Egyptian press
• Develop & maintain a website about Egyptian privatization
• Track privatization progress against USAID/GOE cash transfer benchmarks

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P rivatization in Egypt - Quarterly R eview April—June 2002

Acknowledgements

T he PCSU wishes to thank the Ministers and many staff members of the following
ministries for providing important information upon which this report is partially
based.

Ministry of Public Enterprise

Ministry of Foreign Trade
Ministry of Electricity & Energy
Ministry of Telecommunications & Information Technology
Ministry of Transportation
Ministry of Civil Aviation
Ministry of Housing, Utilities and Urban Communities
Ministry of Industry & Technology Development
Ministry of Supply and Internal Trade
Ministry of Petroleum
Ministry of International Cooperation

The following PCSU staff members are directly responsible for the design, writing, and
production of this edition of Privatization in Egypt Quarterly Review:

Mr. Tejinder Minhas, Managing Director & Chief of Party

Mr. Tom L. Thompson, Deputy Chief of Party

Ms. Ola Attia, Director & Monitoring Specialist

Mr. Paul Smith, Director & Privatization Specialist

Mr. Jim Sorenson, Quarterly Review Editor and Webmaster

Ms. Shahira Hamza, Senior Privatization Analyst

Ms. Amal Nawar, Special Studies Manager

Ms. Maie El Tabbakh, Privatization Analyst

Ms. Ola Abdel Wahab, Privatization Analyst

Ms. Noha Medhat, Research Analyst

Ms. Nancy Farouk Zaki, Office and Administrative Manager

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P rivatization in Egypt - Quarterly R eview April—June 2002

SPECIAL STUDY:
T HE RESULTS AND IMPACTS OF EGYPT ’S PRIVATIZATION PROGRAM

Executive Summary was introduced through Law 20 of 1957

establishing institution, subsequently
INTRODUCTION changed to organization. One of the institu-
tion’s missions was to monopolize the es-
This Special Study investigates the impact tablishment public economic projects and
of a decade of Privatization Program in to prepare plans for using the state’s funds
Egypt. Given the new and limited activities for economic activities.
in the privatization of the financial sector,
JV companies and private participation in In 1952, the private sector made about
the infrastructure and energy sectors, the 76% of the total investment in the econ-
study focuses on Law 203 public enter- omy. The public sector very quickly estab-
prises (PEs). The study’s main focus is to lished its dominance in the economy and
evaluate the impact of a decade of privati- for the next three decades was making be-
zation activity in Egypt across several ma- tween 80-90% of the investment in econ-
jor indicators. omy and constituted around 37% of GDP
annually.
1. Government fiscal balance and the
Fiscal and Economic
economy
2. Firm performance Before the implementation of the privatiza-
3. Labor issues tion program the performance of the PEs
were poor. By1990 the PE portfolio con-
4. Consumers and end users; producers sisted of a mix of so called profit making
and suppliers entities (260) and loss making enterprises
5. Capital markets and investors (56). The PE’s were operating with soft
budget and their deficits were financed by
6. Governance and institutional devel-
the Governments budget. Although this
opment portfolio was showing a profit of LE1.2 bil-
lion in profits, the accumulated losses were
The study also seeks to synthesize some of LE2.37 billion. In addition, PE’s indebted-
the main conclusions reached about the ness was about LE47 billion, a huge bur-
results of privatization found in the volumi- den on Governments finances and the state
nous existing literature about Egypt’s pri- commercial banks, main financiers of the
vatization program, and finally highlights PEs.
some of the major lessons learned from the
Egyptian experience and the road ahead. In economic terms, Egypt’s public sector
enterprises if anything were less efficient
PUBLIC SECTOR BACKGROUND than those of the other state run and domi-
nated economies. The abundant data about
Historical the highly overstaffed and low labor pro-
ductivity in Egypt’s public enterprises re-
After the revolution of 1952, the Egyptian flected only part of the problem. While the
Government began to play more active role PE’s were receiving the lion’s share of the
in the economy through the projects di- investment in the productive sectors of the
rectly affecting the development of the na- economy, the return on the capitol was
tional economy. The Government’s involve- gradually decreasing and by 1989 reached
ment in business began with establishment a low of 5.9%, while the average interest
of iron and steel, construction and cement rate was 14%. At the same time, the Gov-
companies. In 1956, the Government ernment’s continued policy and regulations
through application of Law 258 began na- aimed at protecting the public sector re-
tionalization of the private companies and sulted in country’s low economic growth by
the Suez Canal. The idea of public projects

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P rivatization in Egypt - Quarterly R eview April—June 2002

mid-1980s. Thus bringing about the vi- “organizations” of the public sector. The
cious cycle of low growth in employment numbers of public sector companies to be
opportunities and no other choice but the privatized were determined as 314 affiliated
Government further overstaffing the PE’s. with 27 holding companies (AC), allocated
on the basis of specialization or industry
THE PRIVATIZATION PROGRAM sector. A total of 85 public companies were
excluded from privatization in the first
The Setting stage of the program. The 314 companies
to be privatized had approximate assets of
After a decade of healthy growth of the LE104 billion and 1.08 million employees.
economy attributed to the Infetah, or “open
door” policies, which began in 1974, 1986 Pace of Privatization
brought with it a downturn in the Egypt’s
economy. The country began to experience The pace of privatization up to 1993 was
a dramatic fall in growth and macroeco- slow because time was needed to introduce
nomic imbalances. By the end 1980s Egypt the necessary legislative and regulatory ar-
had a budget deficit of 17% of GDP, an in- rangement. Also, the socio-economic cul-
flation rate of about 15% and a balance of ture of the country had not been yet ready
payment deficit running at a rate of LE11.4 to accept the concept of privatization. Once
billion. In 1991 the Government began re- the enabling mechanisms were in place,
sponding with a number of initiatives and the Program gained momentum in the sec-
policies to stabilize the economy. The Gov- ond half of 1990s, after a favorable ruling
ernment embarked on an Economic Reform by the constitutional court upholding the
and Structural Adjustment Program de- government’s right to privatize the public
signed with assistance of IMF and the sector. Since the 1999, the Program has
World Bank. The main direction of the re- made slow progress for a number of rea-
forms was the economic strategy which sons among them: down turn in the econ-
was market-oriented and in which the pri- omy and the Egyptian stock and capitol
vate sector takes the lead. The centerpiece markets, and to some degree, the less at-
and the most challenging component for tractive investment opportunities in the re-
achieving the objectives of this strategy was maining companies in the Law 203 portfo-
privatization of the public sector enter- lio.
prises.
Achievements
Law 203, and The Privatization Program As of June 30, 2002, through various
Since early 1980s there were a number of methods, 190 public enterprises of the 314
privatization initiatives. But the public sec- Law 203 portfolio of companies have been
tor remained a dominant force in the econ- privatized. Below is the transaction sum-
omy constituting around 37% of GDP, was mary:
responsible for about 55% of the industrial
production, controlled over 80% of import/
export and about 90% of the banking and 1. Majority Privatization (>51% sold)
insurance sectors. Once the macroeco-
Anchor Investor 28
nomic stability was achieved, the Govern-
ment needed to strengthen signals to the Majority IPOs 38
private sector along with deregulation that
ESA 34
would attract new and higher level of in-
vestment that would promote growth. Liquidation 32
Egypt’s Privatization Program (the Program) Total 132
started in earnest with the passage of Law
203, in June 1991 (a number of subse-
2. Partial Privatization/Leases
quent laws, amendments and decrees di-
rectly and indirectly facilitated implementa- Minority IPOs 16
tion of the Program). The law, among oth- Asset Sales 21
ers, stipulated that “holding compa-
nies” (HC) would replace the Leases 20
Total 57

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P rivatization in Egypt - Quarterly R eview April—June 2002

Impacts Positive Impact on GOE Finances: Before

Law 203, operating loses of PEs were fi-
The impact of privatization program on the nanced through the Government budget
economy cannot be quantified. Neverthe- and they would borrow from public banks
less, there are certain positive factors and for their investments without any checks
tangible results that can be closely linked on the economic or financial viability of
to privatization. their project. In FY 96, all indicators of the
PEs’ performance showed a net operating
Fiscal loss of LE 1.6 billion, carried loss balances
Privatization Proceeds and Uses: As of end of LE 3.91 billion and a total debt of LE
September 2001, the total collected pro- 53.5 billion. Analysis shows that the PEs
ceeds from the Program amounted to LE performance was on a rapid decline and
14.6 billion. These figure doses not include the direct burden on the Government’s fis-
sales to Employee Share Associations cal resources were mounting. It is esti-
(ESA), which have not made payments or mated that by the end of 1990s the finan-
receipts from the liquidations. For a stated cial burden would have reached, in order of
number of reasons, there the Government magnitude, net operating losses of LE 4.0
has not been able to obtain and consolidate billion annually, an accumulated loss of LE
accurate data from HCs. 13.0 billion, and the total debts of LE 74.8
billion.
The allocation and uses of the proceeds
have gone through a number of iterations Improved PE Performance: After the decline
during the Program period. As of end of in performance of the PEs in the early
September 2001, the proceeds of the Pro- stages of the Program, and the sale profit-
gram have been utilized as follows (LE bil- able companies, the operating performance
lions): of the PEs remaining in the portfolio began
to improve in the second half of the 1990s.
The indicators show that between 1995-
Transfer to Ministry of Finance 6.628 45.0%
1999 the number of loss making compa-
Banks Debt Settlements 4.488 31.0% nies decreased from 82 to 41, and the re-
turn on investment rose from 0.72% to
Early Retirement, Pensions and
Salaries
2.683 18.0% 3.54%.
Advances to HCs for future restruc-
turing
0.554 3.0% Increase in Tax Payments: There is evidence
that the Program has had a positive impact
Balance of Restructuring Fund 0.307 2.0% on the Government’s revenues. However,
Total 14.660 100%
the evidence also points out that positive
impact is mainly due to sector liberaliza-
tion (also see section on consumers below).
USAID: In addition to the above proceeds, Therefore, it is difficult to quantify the
under assistance its programs (SPR, DSP magnitude of the increased contribution to
and APRP), USAID made direct disburse- the Government revenues directly from the
ments of US$ 321 million to the govern- privatized companies.
ment between 1995-2002 in support of the
privatization program. Summary: On the fiscal side, the program
has had major impact on reducing the bur-
Liquidation: Attempts were made to deter- den on Government’s fiscal resources, by
mine the magnitude of proceeds from liqui- not only cutting future losses of the PEs,
dations and their utilization. But we could but also bringing in revenues from the
not obtain reliable information. However, sales.
analysis of a sample of four liquidated com-
panies shows that the accumulated debts
of the companies in every case were about
equal or less than the assets listed. There-
fore, it can be assumed that there was not
much potential for a positive net transfer
from liquidations to the Government.

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P rivatization in Egypt - Quarterly R eview April—June 2002

Economic change, or sold to their employee stock as-

sociation, have tended to be mixed per-
At Macro Level: The Program was one of the formers, with some faring better than oth-
key components of the Government’s 1991 ers – a trend quite often associated with re-
economic stabilization program. To achieve sidual government equity retained by the
this aim, the Program fulfilled many of its state in these firms despite privatization.
objectives outright and indicators for the However, a number of privatized companies
others are positive. Implementation of the have performed poorly after their privatiza-
Program conveyed an effective signal of tion, which has resulted in government in-
change towards a market- oriented, private tervention and indefinite suspension of the
sector- lead economy and reducing the firms’ boards of directors.
weight of the public sector in the economy.
Among others, the share of the private sec- Labor
tor investment in the economy continued to
increase, a trend that started in mid- The public sector continues to be the chief
1980s. The Program opened the door for source of employment for the bulk of the
increasing the domestic savings rate and Egyptian labor force, despite over a decade
local and foreign investment in the econ- of reform and the government no longer
omy. This link between privatization and pursuing a policy of guaranteed jobs in the
increased savings is very important. Priva- bureaucracy and public institutions. At the
tization, can positively impact the economic start of economic reform, a little over one
growth processes and thereby creating a million workers were employed in the 314
circle of saving, investment and growth. A Law 203 companies, constituting some 6%
1997 analysis of the Law 203 portfolio, us- of Egypt’s total labor force of 15,500,000.
ing 1995 GDP data, showed that a if 50% This figure has since fallen to just under
of the companies were privatized and 50% half a million at the start of 2001, due to
were just commercialized, the benefits ac- labor restructuring policies implemented
crued to the Egypt’s economy would be an by the government (167,000 workers),
additional annual savings of about 2.4 per- natural retirement (148,000 workers) and
cent of the GDP. state enterprises leaving the public sector
due to their privatization (22,000 workers).
At the Sector Level: The implementation of It is therefore possible to deduce that priva-
the Program has brought about potential tization in Egypt has impacted some 2-3%
for transfer of ownership from public to pri- of Egypt’s total labor force through either
vate sector associated with higher produc- policies of labor restructuring or divestiture
tivity and efficiency. Sector liberalization and any direct impact that privatization
and new entries and enhanced competition has on the labor force has to be treated
been observed as a consequence of the pro- within the context of this relatively small
gram. The PEs yet to be privatized have volume.
been commercialized and provided with a
framework in which legal distinction has The experience of the Program generally
been made between ownership and man- shows that the overall impact of privatiza-
agement responsibilities. In this context, tion on the composition of the Egyptian la-
budget transfer to PEs has been reduced bor force has not been negative, and may
and the banking sector is to lend to the even be positive. Pre-privatization employ-
PEs on commercial grounds. ment levels have been maintained at many
privatized firms, and in a number of cases
Company Performance significant new job opportunities have been
created. The government has pursued an
Most of the companies privatized to strate- early retirement program as part of labor
gic investors have performed relatively well restructuring strategies in advance of pri-
since the privatization, and have tended to vatization, reducing the size of the Law 203
be profitable, competitive in their respective workforce in many companies that are yet
markets, and have attracted investment, to be privatized. The future of workers in
new management techniques and improved public enterprises slated for privatization is
technology. Others, privatized through a highly sensitive issue for the government
public offerings on the Cairo stock ex- and perceived reduction levels in Law 203

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P rivatization in Egypt - Quarterly R eview April—June 2002

companies has raised objections from op- record with nationalization, high level of
ponents of the Program. However, evidence state involvement in the economy, and ex-
presented here suggests that many of these cess application of bureaucracy to busi-
concerns are in reality premature. Despite ness, had eroded investor confidence. De-
the fact that doing away with excess labor velopment of the privatization program was
is a necessity in order to improve the effi- in effect a mechanism to build new bridges
ciency of operations according to market of confidence between the state and the
principles, privatization is not necessarily private sector and stimulating the capital
tied to a reduction in workforce levels. To markets.
the contrary, examples of some Law 203
companies privatized to anchor investors Stock Market: During 1993-1995, the gov-
suggest that employment has increased ernment privatized minority stakes in a
since privatization, while in the case of number of significant Law 203 companies.
many IPOs and ESAs it has largely re- The Government was successful in its pol-
mained constant. Early retirement program icy, a total of 38 Law 203 companies have
has proved to be a relative success. How- been majority privatized through offerings
ever, Some improvements and adjustments on the stock market for a total of LE 6.3
in the program would render it more effec- billion. The sale of Law 203 shares via local
tive and more palliative. stock market represents about 45% of total
privatization proceeds.
Consumers and End Users: Producers and
Suppliers Anchor/Strategic Investors: A total of 29
Law 203 companies were sold to anchor/
The sector liberalization, which accompa- strategic investors for a total LE 6.9 bil-
nied the Program and break up of the pub- lion or 49% of the total proceeds of the
lic sector monopolies have contributed con- privatization. Companies sold to anchor/
siderably to making the Egyptian markets strategic investors have generally pros-
more dynamic and competitive. Sectoral pered more than the other sales methods.
liberalization have resulted in new entrants
in every market, increase in investments, Sale to ESA: Sale to ESAs/ESOP has
expansion of the product range, improved been a prominent feature of the Program.
technologies, better quality, and services, 34 companies were sold to ESAs for a to-
and reduced unmet demand. The private tal of LE950 million on installment. The
sector has also invested in improving dis- installments were to be funded out of
tribution channels, expanding accessibility dividends. Many of these companies have
of products to more consumers. We found not done well financially and have not
that the producers and suppliers in most been able to make installment payments.
instances are freer in sourcing their inputs Two companies have returned their share
in both the privatized and new entrant to the Government.
companies. Given major changes in prod-
uct design, new and expanded product Other Methods: The Government has used
range, functions, quality and service, it was sale of company assets and leases, some
difficult to quantify the impact of the Pro- with option to buy as a means of divesti-
gram on producer and consumer prices. ture. By the end 2001, productive assets
totaling LE862 were sold and 19 lease
Capital Markets and Investors transactions were concluded.

During the initial years of the privatization Foreign Investment: Although there are evi-
program, the institutional environment was dence that foreign investors participated in
still underdeveloped and investors showed IPOs, the known foreign investments have
little interest towards investment opportu- been in anchor/strategic transactions. Out
nities in the prevailing economic climate. of the 29 sales to anchor/strategic inves-
The Government’s policy focus was to sta- tors, 11 involved foreign investors. The for-
bilize the macro economy, stimulate the eign investments in these transactions to-
capital markets, and generally create an tal LE4.0 billion or about 27% of the total
attractive business environment for inves- proceeds from the program to date.
tors. The Egyptian government’s previous

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P rivatization in Egypt - Quarterly R eview April—June 2002

Ownership Base: Broadening the ownership various segments of the economy, were
base has been one of the state objectives of mostly unique to a specific case or transac-
the Program. This objective has been to tion. Discussed below are some of the ge-
some degree achieved. The program has re- neric factors that we feel need to be ad-
sulted in a broadened ownership base in dressed to correct the course of future pri-
101 majority privatizes Law 203 companies vatization.
as well as in 16 minority IPOs. Consider-
able share holding by the HCs and other Global experiences have consistently
government enterprises still exist and some proven that the most critical factor for a
share concentration in traditional financial successful privatization is establishment of
houses has taken place in latter stages of creditability by the government for its pro-
the Program. gram. In turn, establishment of credibility
requires consensus and consistent support
Governance and Institution Development amongst the policy makers and the legisla-
ture at the highest levels. The experience in
The concept of corporate governance stan- Egypt is that the support for the program
dards is slowly evolving in Egypt, as was at the highest levels was at best wavering
the case with khaskhasa a decade earlier. and at times inconsistent. Consequently,
It should also be kept in mind that almost there were many incidents, which eroded
all of the management and employees of the creditability of the program and nega-
the public sector companies have no expo- tively impacted its outcome. The much-
sure or experience with market-economy publicized case of Misr Free Shop is one of
and the state still holds considerable stake the examples that support this.
in the national economy. There is very little
data available on the entire population of Much has been said about the virtues and
the joint stock companies so that would al- need for transparency in a privatization
low a good picture from a governance per- program. Unfortunately, the global experi-
spective. The governance issues in Egypt ences show that in most cases cumber-
relate tax policy and administration: civil some procedures and layered decision-
service reform, legal and judicial reform; making processes are put in place to en-
greater participation of the civil society in sure transparency, Egypt is no exception.
delivery and decision-making. However, as The outcome in every case has been em-
in other areas, there is considerable need powerment of the bureaucrats to increase
for corporate governance reform in Egypt, the transaction time and costs to such an
and much is being done to jump-start the extent that it jeopardizes viability and
reform process. turns domestic and foreign entrepreneurs
and investors away from the program. The
Primarily as a result of the Program a num- experience also shows that only stream-
ber of institutions have emerged and devel- lined, simple and clear process, with ap-
oped. These institutions have and continue propriate accountability built in, will en-
to implement or facilitate the government’s sure transparency, efficiency and best out-
policy shift to privatization and develop- come.
ment of the private sector. However, there
has been very little effort made in separat- Conclusions and Recommendations: Priva-
ing the ownership and the regulatory func- tization is a process that does not end with
tions, and developing the required capacity the transfer of ownership from public to
and capability of the regulators. private sector. In support of the privatiza-
tion program Carana Corporation, on be-
Lessons Learned, Conclusions and Rec- half of USAID, have carried exhaustive re-
search and studies on specific aspects of
ommendations
the Program to assist and facilitate the
Lessons Learned: In more than a decade of process. This study has benefited greatly
existence, the Program has spun an ample from this work the report includes a se-
number of lessons and experiences. Unlike lected summary of the findings and recom-
the infrastructure and financial sectors, mendation, most of which are yet to be im-
the lessons and experiences in privatization plemented.
of a highly diversified portfolio involved in

PCSU—Privatization Coordination Support Unit

CARANA Corporation 12
P rivatization in Egypt - Quarterly R eview April—June 2002

The Privatization Program began as one of bersome and unnecessarily lengthy and
the corner stones of a much broader mac- costly for the government and the inves-
roeconomic reform and structural adjust- tors. In short, the system is in need of a
ment program (ERSAP). As the indicators major overhaul.
attest to, the Program made considerable
positive contribution to the government’s • As the privatization progressed, the HCs
adjustment and restructuring. The same were set up as temporary organizations
indicators also point out that without the and have tended to maintain their
Program the scenario shows that the gov- status quo. As further privatization di-
ernment’s ERSAP task would have been minishes their power and make the bu-
more difficult and its economic and fiscal reaucrats redundant. Also, many of the
achievements made more uncertain. privatized companies linger under the
direct control of the HCs and state
It is evident that the economic gains from banks. The continued existence of the
the Program were substantial and the fi- HCs needs to be examined. If the need
nancial burden on the government was re- for continuation of HCs is proven, these
duced in short and long terms. The find- ties need to be eliminated and the re-
ings of this study show that the longer last- maining government stakes in these
ing achievements of the Program were the companies need to be divested.
accompanied sector liberalization and sig-
naling the government’s intention to move • HCs have been used as “catch all” insti-
towards a private sector oriented market tutions for separating several economic
economy. However, there is an urgent and entities from the government’s direct
serious need for the government to follow economic control. HCs have been estab-
up on the achievements and deepen the lished in some areas that the govern-
benefits. ment has no intention of privatizing (e.g.
air navigation and Egypt air). This
• Not withstanding the progress of privati- makes the overall objectives of estab-
zation, further reducing the size of the lishing HCs confusing and sends mixed
public enterprises to restore a healthy signals to the market. GOE needs to set
balance between public and private sec- up clear guidelines and objectives and
tors should be pursued. To this end, set a time limit for the life of HCs.
GOE and the donor community should
develop strategies to deal with problem-
atic sectors, i.e. pharmaceutical and tex -
tile where sector liberalization and di-
vestiture are needed.

• The remaining Law 203 portfolio, with

exception of Pharmaceutical, Housing,
Cinema and Tourism, largely consists of
companies with declining revenues, high
debts and bank over drafts, excess labor
and highly questionable future. Their
assets are obsolete and have or reached
the end of their economic life. The mas-
sive resource required to keep these
companies in operation could easily
erase the gains of the past and put the
burden on government finances at un-
sustainable level. Therefore, the divesti-
ture of the remaining companies in the
portfolio is urgent.

• As stated before, Egypt’s processes, pro-

cedures and structure for carrying out
privatization very lack clarity, are cum-

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CARANA Corporation 13
P rivatization in Egypt - Quarterly R eview April—June 2002

Awarded - Under
Announced

Period/Yrs
Construction

Operating
Figure 1:

Investment
Cost (US$)
Estimated
Underway
Bidding
Planned
Current Status of BOT and BOOT

Type
Projects in Egypt
MINISTRY OF ELECTRICITY AND ENERGY
Sidi Krir 3&4 BOOT 1998 2002 20 480
Suez Gulf BOOT 1999 2003 20 340
Port Said East BOOT 1999 2003 20 340
El Kureimat BOOT 2002
Nubaria (1) BOOT 2002
Nubaria (2) BOOT 2002
Zafarana (6) BOOT 2002
Zafarana (7) BOOT 2003
Borg El Arab (1) BOOT 2003
El Kureimat (3) BOOT 2004
MINISTRY OF TRANSPORTATION
Airport Sector
Sharm El Sheikh (expansion) BOT 2001 25 170
Hurghada Terminal BOT 1998 1999 10 15
Marsa Allam BOT 1998 2001 40 40
Borg El Arab BOT Stage of assessment of offers
Luxor Airport BOT x 25 70
Assuit Airport BOT x
El Alamein Airport BOT 1998 2002 50 LE200M
Bahariya and Farafra BOT x 50 DM200M x 2
East Oweinat Airport BOT x
Sohag Airport BOT x
Maritime Sector
Petroleum Quay (Alexandria/Dakahlia) BOT 1998 2001 30 45
East Port Said Port BOT 1999 2004 30 481
North Sukhna Port BOT 1999 2002 25 176
Damietta for Liquid Gas Export BOT 2001 2003 25 1,600
Road Sector
Alexandria – Fayoum + Exits BOT x
Development of Cairo – Alex—Matrouh BOT x 152
Development of Cairo – Ismailia – Port Said BOT x 196
Sohag – Hurghada BOT x 109
Luxor – Hurghada Desert Road BOT x 109
Fayoum – Assiut BOT x 98
Dayrout – Farafra BOT x 109
Cairo – Center of Alexandria BOT x 109
Ein Sukhna – Marsa Allam BOT x 269
Cairo-Aswan (west of Nile) BOT x 326
Railway Sector
Boulaq El Dakrour – Alexandria BOT x
Ismailia – Rafah BOT x 268
Giza – Sidi Gaber BOT x
Marsa Matrouh – El Saloum BOT x 11
Alexandria – Marsa Matrouh BOT x
Sidi Gaber/Borg Al Arab BOT x 174
Alexandria/Aswan (Supertrain) BOT x
Cairo – Tebbeen BOT x 75
Sinai – Saloum BOT x 230
Dayrout – Rafah BOT x 400
Saloum – Natrun BOT x 520
Saloum – Morocco BOT x 170
Borg El Arab – Alexandria BOT x 185
MINISTRY OF HOUSING—Water and Wastewater Sector
North West Gulf of Suez BOT x 30
Beheira Water Company BOT x
6th of October City BOT X
Source: Ministry and PCSU Data Note: Italicized years represent planned award dates

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CARANA Corporation 14
P rivatization in Egypt - Quarterly R eview April—June 2002

MINISTRY OF PUBLIC ENTERPRISE

In the 2nd quarter of 2002 the Ministry of Public Enterprise completed two asset sales for
a total value of LE49 million. The sale of Alexandria Cooling was judged to be incomplete
and has been removed from the privatization totals. The tables below reflect these changes.

Figure 2:

Privatization Achievements: Transactions Summary to 30 June 2002

Partial Privatization/
Majority Privatization(>51% sold)
Leases
Anchor Majority Majority Minority Asset Yearly
Year ESA Liquidation Leases
Investor IPO Total IPO Sales Total
1990 1 1 1
1991 3 3 3
1992 1 1 1
1993 1 1 1
1994 3 7 2 12 1 13
1995 1 3 2 6 6 12
1996 3 14 1 18 6 1 25
1997 3 14 3 3 23 2 1 2 28
1998 2 8 12 6 28 1 3 32
1999 9 5 7 21 4 8 33
2000 5 1 3 9 6 8 23
2001 3 2 2 8 3 2 12
2002 2 2 3 5
Total 28 38 34 32 133 16 21 20 189
Partial Privatization/
Source: PEO Majority Privatization Total 132
Leases total 57

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CARANA Corporation 15
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 3:

Law 203 Privatization Announcements, Tender Dates, and Results

Tender Tender Transaction

Company Name For Sale Bidding Results
Opened Closes Status

70.54% (Nile Hilton Open Resolving tax

Misr Hotels 29-03-01 dispute
and Dahab Hilton) Tender*

Negotiations con-
Awaiting MPC
Alexandria Cooling 90% of shares 03-02-01 29-03-01 cluded. Sale value
Approval
LE 33 million

Delta Fertilizer 90% of shares N/A N/A Received two bids In negotiations

Source: PEO

* Since the previous quarter the status has changed of those marked as cancelled and sold. They will not be included in the
next tracking chart.

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P rivatization in Egypt - Quarterly R eview April—June 2002

T he following tables and charts provide details on the achievements of the Egyptian privati-
zation program to date. The information is based on the most recent data available from
the PEO. The tables are preceded by notes 1 through 11 below which explain counting meth-
odologies for companies sold in groups and/or using multiple sales mechanisms, or sold to
non-MPE government entities. Other sources may interpret this data differently, leading to
slightly different total counts by year and privatization method.

Results of Law 203 Privatization Since the Beginning of the Program

132 M AJORITY PRIVATIZATIONS AND 57 P ARTIAL PRIVATIZATIONS

38 COMPANIES SOLD THROUGH MAJORITY OFFERINGS ON THE STOCK MARKET FOR LE 6.3 B ILLION

28 COMPANIES SOLD TO ANCHOR INVESTORS LE 7 B ILLION

34 COMPANIES PRIVATIZED THROUGH SALES TO ESAS FOR A TOTAL OF LE 950 M ILLION

32 UNVIABLE ENTERPRISES LIQUIDATED AND THEIR ASSETS RELEASED TO THE PRIVATE SECTOR

16 COMPANIES PARTIALLY PRIVATIZED VIA MINORITY PUBLIC OFFERINGS FOR A TOTAL OF LE 1.75 B ILLION

20 L EASES IMPLEMENTED

21 ASSETS HAVE BEEN SOLD FOR A VALUE OF LE 908 M ILLION

LE 14.4 B ILLION COLLECTED AS OF SEPTEMBER 30, 2001

185 L AW 203 COMPANIES REMAINING IN PORTFOLIO—SEE APPENDIX II.

Notes to Privatization Activity Tables

1. During the fourth quarter 2001, the PEO updated their review of transactions through December 31. These tables are
constructed from this PEO data. Companies whose shares were sold in tranches are reported in the year of the largest
or most significant sale. The year in which the sale is recorded is given and tranche sales are shown with parentheses.
2. A company whose initial sale was for minority interest is reported as a minority IPO and is then moved to Majority IPO
for subsequent sales over 50% in the year of initial sale. Ameriya Cement is an example of this reporting method and
is why it is not counted as an anchor transaction as reported by PEO in March 2000.
3. United for Housing and Construction, Abou Kir Fertilizers, and El Nasr Casting are reported as majority IPOs,
however less than 51% is in private sector hands. 51% or more of the company is held by non-MPE government enti-
ties. Essentially these companies were ‘sold’ to other government entities by their holding companies.
4. Arabia United Stevedoring, and Bisco Misr are also reported as Majority IPOs however less than 51% of the com-
pany is in private sector hands. The ownership of the ESA and the private sector total to more than 51%.
5. Amoun Shipping Agencies, Abou Simbel Shipping Agencies, Memphis Shipping Agencies and Egyptian Irriga-
tion are reported as privatized through ESAs, while less than 50% is held by the ESA yet over 51% is held by both the
ESA and the private sector.
6. Ramsis Agriculture was sold to a religious fund and liquidated. The PEO records this as an anchor sale.
7. Likewise, a production line of Arab Carpets was sold to a religious fund after the general assembly had elected to liq-
uidate the company. The PEO records this as an anchor sale.
8. Values are rounded to the nearest million.
9. The date given in the approval column identifies when a company’s general assembly approved the change to Law 159.
10. When percentages do not add to 100%, the information has not been provided.
11. The buyer of Abu Zaabal for Fertilizers will lease the company for a period of three years before buying. The PEO re-
cords this transaction as an anchor sale with a value of LE182.8 million.

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CARANA Corporation 17
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 4:
Privatization Achievements: Sales to Anchor Investors

Total Sale
Date of Private Remaining Approval to
Name of Company ESA Value
Contract Sector HC Share Law 159
(LE millions)
1 Pepsi Cola 11-04-94 90.00% 10.00% 0.00% 131 16-12-94
2 CocaCola 20-04-94 90.00% 10.00% 0.00% 286 16-12-94
3 El Nasr Boilers 27-09-94 100.00% 0.00% 0.00% 16 6-12-94
4 El Nasr Transformers (Elmaco) 25-02-96 90.00% 0.00% 10.00% 115 13-07-96
5 Al Nasr Utilities 10-11-96 90.00% 0.00% 0.00% 40 30-06-97
(4-08-99) 10.00%
6 Al Ahram Beverages 13-11-96 90.00% 10.00% 0.00% 298 18-02-97
Misr Mechanical and Electrical
7 19-06-97 61.00% 10.00% 29.00% 103 18-09-97
Projects (Kahromica)
(26-08-97)
8 Modern Textiles (Bolivara) 30-06-97 N/A N/A N/A 33 N/A
9 Delta Industries (Ideal) Dec-97 90.00% 10.00% 0.00% 311 5-01-98
10 Kaha for Preserved foods Aug-98 90.00% 10.00% 0.00% 154 Feb-01
El Wadi for Exporting Agricultural
11 17-11-98 68.00% 27.00% 5.00% 122 18-12-98
Products
Nobarieya for Seeds Produc-
12 24-02-99 100.00% 0.00% 0.00% 103 20-04-99
tion - Nobaseed
13 Gianaclis 4-03-99 N/A N/A 0.00% 32 Underway
14 Beni Suef Cement 5-07-99 76.00% 5.00% 19.00% 527 29-08-99
(2-02-00) 19.00%
15 Delta Sand Bricks 5-07-99 90.00% 10.00% 0.00% 62 25-09-99
16 Arabia Foreign Trade Aug-99 90.00% 10.00% - 15 27-04-00
17 Assiut Cement Nov-99 77.00% 10.00% 13.00% 1,197 1-11-99
(Jun-00) 13.00% 183
18 Alexandria Cement 30-11-99 90.00% 10.00% 0.00% 670 1-02-00
19 Industrial Gases 22-12-99 90.00% 10.00% 0.00% 60 Feb-00
20 Telephone Equipment Dec-99 80.00% 10.00% 10.00% 100 12-02-00
14-02-02 10.00% 10.00% 11.4
(9-12-94)
21 Torah Portland Cement 76.40% 5.00% 18.60% 1,226 Mar-00
(5-05-95)
26-01-00
22 Plastic & Electricity Industry 3-02-00 90.00% 0.00% 10.00% 94 Feb-00
* Ameriyah Cement Mar-00 29.00% 0.00% 0.00% 527 1-10-98
23 Ramsis Agriculture 30-01-00 100% - - 161 Underway
Egyptian Engineering
24 Jun-00 90.00% 10.00% 0.00% 25 15-07-00
& Equipment (MICAR)
25 Alexandria Confectionary Aug-00 90.00% 0.00% 10.00% 28 Underway
26 Egyptian Gypsum 8-02-01 90.00% 0.00% 10.00% 83 Underway
27 Arab for Carpets 5-07-01 100% - - 50.1 Underway
28 Abou Zaabal Fertilizer 23-11-01 See Notes 182.8 Underway
Total 6,945
Source: Public Enterprise Office

*The 29% sale of Ameriyah Cement is recorded in sale value total for anchor sales, however it is not counted as an anchor
sale. The sale is recorded as a majority IPO.

Sales to Anchor Investors lists the companies sold in which over 51% of shares have been sold to a strategic investor. The
table gives the date(s) of sale, amount held by the private sector, the company’s ESA, the residual stakes still held by the hold-
ing company and the total value of the sale.

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CARANA Corporation 18
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 5:
Privatization Achievements: Majority Public Offering
Total Sale Approval
Private Remaining
Name of Company Date of Sales ESA Value to
Sector HC Share
(LE Millions) Law 159
1 United Arab for Spinning & Weaving (1994) 1998 60.40% 6.9% 32.70% 226 5-05-97
2 Ameriyah Cement (1994) 1998 61.00% 10.00% 0.00% 768 1-10-98
3 Alex. For Spinning & Weaving (1995) 1998 94.60% 5.40% 0.00% 82 5-03-98
4 Egyptian Electrical Cables (1995) 1997 95.00% 5.00% 0.00% 321 8-12-97
5 Extracted Oils 30-03-95 42.53% 8.54% 48.93% 85 26-04-98
6 Paints & Chemicals (Pachin) (1995) 1997 53.75% 8.00% 38.25% 836 3-10-97
(6-09-01)
7 Helwan Portland Cement (9-11-95) 95.00% 5.00% 0.00% 1202 4-01-97
3-12-96
8 United Housing (& Construction) 12-02-96 3.11% 7.00% 0.00% 5 21-05-96
9 Abou Kir Fertilizers May-96 2.80% 0.00% 0.00% 20 Completed
10 Medinet Nasr Housing / Construction 13-05-96 64.94% 10.00% 25.06% 190 30-06-96
11 Egyptian Financial & Industrial Co 26-05-96 64.70% 10.00% 25.30% 70 30-06-96
12 Egyptian Starch & Glucose 18-06-96 51.03% 10.00% 38.97% 68 10-09-96
13 Middle & West Delta Mills 30-06-96 51.00% 10.00% 39.00% 177 30-10-96
Nile Matches (and Prefabricated
14 Sep-96 55.67% 8.90% 35.43% 34 28-09-96
Houses)
(Feb-01)
15 Kafr El Zayat for Insecticides 85.00% 5.00% 10.00% 60 28-09-96
(Sep-96)
16 Misr Oil & Soap 7-08-96 50.92% 10.00% 39.08% 73 17-09-96
17 Arabia Cotton Ginning Sep-96 90.00% 10.00% 87 21-12-96
09-1996
18 Telemisr 90.00% 10.00% 0.00% 59 25-11-96
(03-1999)
19 Upper Egypt Flour Mills 4-11-96 51.00% 10.00% 39.00% 165 04-11-96
20 East Delta Mills 18-11-96 51.00% 10.00% 39.00% 110 18-11-96
21 Nile Cotton Ginning Jan-97 90.00% 10.00% 295 27-07-97
22 Misr for Free Shops 2-02-97 87.40% 10.00% 2.60% 133 21-05-97
23 Cairo Housing (& Construction) 24-03-97 69.38% 10.00% 0.00% 118 29-04-97
Development & Engineering
24 30-04-97 88.00% 10.00% 0.00% 104 21-05-97
Consulting
25 Nobareya Agricultural Engineering 14-05-97 79.38% 20.00% 0.62% 27 21-06-97
26 KABO 11-06-97 63.00% 0.00% 7.00% 197 18-05-96
27 Middle East Co. for Paper SIMO 22-06-97 75.00% 0.00% 25.00% 55 19-08-97
5-06-97
28 Upper Egypt Contracting 75.00% 10.00% 0.00% 15 29-06-97
(4-07-98)
Nasr Dehydrated
29 11-08-97 90.00% 10.00% 0.00% 24 14-12-96
Agricultural Products
30 El Giza Contracting 15-09-97 70.00% 10.00% 20.00% 33 16-11-97
31 Industrial & Engineering Projects 29-10-97 80.00% 10.00% 10.00% 299 30-12-97
32 El Nasr Casting Dec-97 0.00% 32.50% 0.00% 48 24-11-97
33 Mahmoudia Contracting 17-01-98 69.75% 10.00% 20.25% 54 15-02-98
34 El Shams Housing Oct-98 50.46% 5.00% 44.54% 31 13-10-98
35 El Nasr Civil Works 24-05-98 70.67% 10.00% 19.33% 105 30-06-98
16-05-98
36 Arabia & United Stevedoring 29.50% 21.95% 49.00% 17 11-01-99
08-11-98
Bisco Misr (Jun-00) 9.3% 45.01%
37 45.69% 89 Oct-98
(Second Tranch for ESA ) 26-05-98 8% 37.01%
38 Cairo Co. for Oil & Soap Jul-00 61% 0.00% 39.00% 33 Underway
Total 6,315
Source: Public Enterprise Office
Majority Public Offerings provides details on the sale of companies through the stock market. The table gives the name of the
company, date(s) of sale, the amounts sold to the private sector, the company’s ESA and the remaining HC share.

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CARANA Corporation 19
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 6:

Privatization Achievements: Majority Sales to ESAs

Total Sale
Approval
Date of Private Remaining Value
Name of Company ESA to
Contract Sector HC Share (LE Mil-
Law 159
lions)
1 Consulting Office for Irrigation 25-06-94 4.00% 95% 1.00% 1 27-04-94
2 Kom Ombo Valley 15-09-94 4.73% 95% 0.27% 70 27-04-94
3 General for Land Reclamation 10-11-94 4.86% 95% 0.14% 60 27-04-94
4 Egyptian Real Estate 16-11-94 4.70% 95% 0.30% 46 27-04-94
5 General Mechanical Excavation 16-11-94 4.76% 95% 0.24% 23 27-04-94
6 Egyptian Dredging 6-12-94 4.17% 95% 0.83% 19 27-04-94
7 Upper Egypt Dredging 7-12-94 4.80% 95% 0.20% 8 27-04-94
8 Regwa 3-01-95 4.77% 95% 0.23% 28 27-04-94
9 Arabia for Land Reclamation 7-01-95 4.77% 95% 0.23% 61 27-04-94
10 El Beheira Company 16-02-95 3.20% 95% 1.80% 49 27-04-94
11 El Nile for Heavy Transport 15-11-97 - 95% 5.00% 27 18-10-98
12 El Nile for Goods Transport 15-11-97 - 95% 5.00% 24 24-10-98
13 El Nile for Inland Transport 15-11-97 - 95% 5.00% 27 18-10-98
14 Damietta & Bilkas Mills 1-01-98 0.10% 90% 9.90% 49 27-06-99
15 Sharkeya Mills 1-07-98 0.10% 90% 9.90% 39 4-03-99
16 Kafr El Sheikh Mills 27-07-98 0.10% 90% 9.90% 13 19-09-99
17 Rasheed Mills 26-09-98 0.10% 90% 9.90% 12 30-10-99
18 El Beheira Mills 26-09-98 0.10% 90% 9.90% 22 8-08-99
19 Dakahleya Mills 3-10-98 0.10% 90% 9.90% 37 27-06-99
20 Alexandria Mills 10-10-98 0.10% 90% 9.90% 27 10-07-99
21 Marine Supplies & Contracting 19-10-98 - 51% 49.00% 16 5-11-98
22 Amoun Shipping Agencies 4-11-98 44.00% 44% 5.00% 26 11-03-99
30-01-99
23 Abu Simbel Shipping Agencies 4-11-98 44.00% 44% 5.00% 26 11-03-99
(30-01-99)
24 Memphis Shipping Agencies 4-11-98 44.00% 44% 5.00% 43 11-03-99
30-01-99
25 Martrans 10-11-98 44.00% 51% 5.00% 43 11-03-99
26 San El Hagar Agricultural 1-03-99 0.00% 95% 5.00% 18 14-03-99
27 Egyptian for Irrigation Jan-99 60.00% 30% 10.00% 5 14-03-99
28 Transport Works 1-07-99 0.13% 95.00% 4.87% 12 25-12-99
29 Direct Transport 1-07-99 0.08% 95.00% 4.92% 18 25-12-99
30 Suez Shipment & Auto. Stevedoring 24-10-99 0.1875% 61.88% 6.69% 22 1-02-00
31 Gharbeya Mills Jul-01 00.0% 90% 10% 51 Underway
32 Misr for Import Export 30-07-01 00.0% 100% 00.0% 17 Underway
33 United for Trade 19-02-02 00.0% 98% 2% 4.9 Underway
34 Arab Textiles 19-02-02 00.0% 98% 2% 5.8 Underway
Total 950
Source: Public Enterprise Office

Majority sales to Employee Shareholding Associations lists the companies in which over 51% of the shares were sold to the
company’s ESA. (See note 6 on page 18) The table gives the date, value and percentage of sale. The ESA usually has be-
tween 5 and 10 years to pay the HC for the company and accumulate board directorships as they pay.

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CARANA Corporation 20
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 7:
Privatization Achievements: Liquidations

Name of Company Date Liquidator

1 Upper Egypt Agricultural* 17-04-90 Ahmed Serrafy

2 West Nobareya Agricultural* 10-11-91 Ahmed Abu Hadab

3 Middle Delta Agricultural* 10-11-91 Farouk Omar

4 Al Nahda Agricultural* 26-11-91 Mahfouz Boutros
5 El Nile for Corps Import* 7-01-92 Youssef Al Hayatmi
6 Cairo for Building & Prefab Houses 15-06-93 Mohamed Shoukri
7 South Tahrir Agricultural* 28-02-94 Mahfouz Boutros
Mohamed Mounir - Abdel Aziz
8 Faraskor for Wood 7-05-94
Hareedi
9 General for Foundations 23-02-95 Abdel Halim Abdel Fattah

10 General for Contracting & Sanitary Works 23-02-95 Abdel Moneim Akl
11 High Dam for Civil Works* 18-03-96 Moustafa Nour

12 Canaltex 26-08-97 Badr El Dakar

13 Pre-Fabricated Houses 5-11-97 Saad Salem

14 General for Batteries 1997 Mohamed Rashid

15 Cairo for Silk Textiles 1-07-98 Wageeh Rady

16 Industrial Fittings & Services 13-07-98 Yousry Yousry

17 Graphite & Stationary Co. 15-09-98 Ali Waly

18 General for Metallurgical Wealth 28-09-98 Mohamed Shalakany

19 Maryout Agriculture 17-10-98 Abdel Bary Abdel Bary

20 Egyptian for Leather Tanning 25-11-98 Hosny Mowafy

21 Sand Bricks 6-02-99 Fekry Fashara

22 Egyptian General Agriculture Co. 11-09-99 Hamed Abu Ghaleb

23 General Co. for Production & Agricultural Services 11-09-99 Essam Zerd

24 Egyptian Co. for Meat Production and Dairy 23-09-99 Fardous Badran

25 North Tahrir Agricultural Co. 25-09-99 Mohamed Borhan

26 Egyptian Gypsum Quarry & Marble - Gemco 14-10-99 Sarwat Abdullah

27 Sornaga Rerfractories 29-12-99 Mr. Ali El Din Mohamed Badra
28 General Co. for Engineering Works 8-05-00 Samir Kenaway
29 Egyptian Refractories 13-02-00 Osama Mahmoud
30 United Poultry Production 24-06-00 Hamed Abu Ghaleb
31 Egyptian Electrical Equipment (Shaher) Jan-01 Eng. Nagwa Fakher
32 Egyptian Company for Metal Trade (Segal) Jan-01 Mr. Maher Abdullah

Source: Public Enterprise Office

* Liquidation complete

Company Liquidations lists the name and date for companies liquidated. Values are not available.

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CARANA Corporation 21
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 8:
Privatization Achievements: Multiyear Leases
Total
Date of Annual Lease Management
Name of Leased Assets Company Name Duration LE/$
Contract LE/$ Company
Million
El-Dakahlia for
1 Aga Factory Spinning & 08-05-97 1, 560,000 5 7.8 N/A
Weaving
Industrial
New Weaving Factory $750,000 +3% net
2 Shops for Silk 15-10-97 10 N/A
Mostorod-Kaluobia FOB for raw material
& Cotton (Esco)
First Group: Miami(Cairo)-Al Misr Company
3 Chark (Cairo)-Radio(Alex)-El for Dist. & 20-03-99 2,200,000 20 44 N/A
Horeya(Alex)-Misr(Port-Said) Show Rooms
Second Group: Segal (Cairo)-
Roxy (Cairo)-Winter Rio (Alex)-
4 20-03-99 2,600,000 20 52 N/A
Summer Rio (Alex)-Opera
(Sohag)

Third Group: Diana (Cairo)-

5 Winter Normandy (Cairo)-Ferial 20-03-99 2,500,000 20 50 N/A
(Alex)- Rashid (Rashid)

El Sharkeya for Islamic Company

6 Menia El Kamh Factory Spinning & 01-07-99 9,000,000 5 45 for Plastic &
Weaving Weaving**

Cairo Dying & Mr. Said Ramzy

7 String Dye Factory Sep-99 336,000 5 1.68
Preparation Hanna**
Mr. Sabry Ishak
Missiha and Mr.
8 Fibers Factory Oct-99 1,600,000 5 8 Emad Sabry
Ishak**

Misr Studios Studio 13 Com-

pany for Artistic
9 Galal Studios and Cinema 02-01-00 379,000 20 7.58 Production &
production Distribution**

Egyptian Com-
10 El Ahram Studios Feb-00 2,100,000 20 42 pany for Media
Production City**
El-Exeer for
11 Misr Studios Feb-00 2,250,000 20 45 Technical Ser-
vices**
Egyptian Com-
12 Cinema City Studios Feb-00 5,400,000 20 108 pany for Media
Production City**
13 Egyptian For
to 2 Floating Hotels Anni & Hotob Tourism 9-03-00 $1.200.000 5 $6M N/A
14 & Hotels
15
to 2 Floating Hotels Isis & Osiris 19-04-00 $672.000 5 $3.3M N/A
16
17
to 2 Floating Hotels Tut & Aton* 3-05-99 $1,000,000 5 $5M N/A
18
19 Darphala Factory Misr Aluminum 19-02-01 $14,400,000 25 $360M N/A
20 Gypsum Factory—Sadat GYMCO 19-02-01 2,000,000 4 $8M N/A

Source: PEO
* Reported in 2000
** HC reported data

Note: This is an increasingly popular mechanism used by the GOE to transfer management of difficult/troubled companies or
assets to the private sector. The table provides the duration, annual amount, total value (when given) and the management
company (when available).

PCSU—Privatization Coordination Support Unit

CARANA Corporation 22
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 9:

Privatization Achievements: Minority Public Offerings

Total Sale
Date of Private Remaining HC
Name of Company ESA Value
Contract Sector Share
(LE Millions)
1 Arab Bureau for Design 24-07-94 5.00% 40.00% 55.00% 4
2 Misr for Chemicals Jan-95 51.10% 0.00% 48.90% 65
3 North Egypt Mills 29-05-95 33.42% 8.25% 58.32% 136
22-06-95
4 Eastern Tobacco 28.70% 5.00% 66.30% 549
(6-03-97)
5 Heliopolis Housing 15-08-95 10.47% 9.53% 72.86% 135
14-12-96 7.14%
Alexandria Pharmaceuticals 1995
6 30.00% 10.00% 60.00% 52
& Chemicals (1996)
1995
7 Nile Pharmaceuticals 23.30% 10.00% 66.70% 55
(1998)
8 Middle Egypt Mills 10-04-96 30.07% 10.00% 59.93% 32
9 South Egypt Mills 26-05-96 30.00% 10.00% 60.00% 30
10 Memphis Pharmaceuticals Sep-96 30.00% 10.00% 60.00% 48
11 Arab Pharmaceuticals Sep-96 30.00% 10.00% 60.00% 18
12 General for Silos 28-10-96 30.00% 10.00% 60.00% 148
13 Cairo Pharmaceuticals Nov-96 30.00% 10.00% 60.00% 62
14 Alexandria Mills 29-06-97 30.00% 10.00% 60.00% 125
15 Misr Aluminum 1997 8.00% 0.0% 92.00% 221
16 Mokhtar Ibrahim 24-06-98 3.45% 10.00% 86.55% 76
Total 1,755
Source: Public Enterprise Office

Minority Public Offerings provides the list of companies in which less than 51% has been sold on the stock market. Compa-
nies which were initially minority public offerings but then sold sufficient subsequent tranches to raise the private sector owner-
ship above 51% have been moved to the Majority Public Offering table.

PCSU—Privatization Coordination Support Unit

CARANA Corporation 23
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 10:
Privatization Achievements: Production Assets Sold
Date of Value/LE
Sold Assets Statement Owner
Selling/ Contracting millions

1 Cairo Sheraton N/A 14-11-96 350

2 Al Borg Hotel Egyptian Hotels 6-11-97 6
3 San Stepheno Hotel: Lands and Premises Egyptian Hotels Aug-98 271
4 Siklam Factory N/A 27-08-98 20
5 Distillation Factory Egyptian Koroum 8-10-98 26
6 Plastic Factory in Kabari National Plastics 22-06-99 3
7 Kowar Grinding Balls Factory Delta for Steel Aug-99 28
8 Production Line for Yoghurt & Ice Cream N/A 24-11-99 .6
9 Basatin Factory Sabi Company 30-11-99 14
10 Tinning Factory in Ghamara Cairo Metal Products 22-01-00 .6
11 Nile Hotel N/A Feb-00 49
12 Agriculture Dehydration factory Gianaclis Jun-00 4
13 Oil and Olive Production Gianaclis Jun-00 .5
14 Barrel Factory Alex Metal Products Jul-00 11
15 Apparatus Factory Niaza Company Dec-00 19

16 Nozha Factory Alex Metal Products Jan-01 25

17 Minya Factory for Iron Sheets Alex Metal Products Jan-01 3

18 Nadler Factory Alex Confectionary 30-01-01 11

19 Syringe Factory El Nasr Glass and Crystal 2002 20

20 Yassin Factory El Nasr Glass and Crystal 2002 26

21 Mostrood Saudi 2002 23

Total 908

Source: Public Enterprise Office

PCSU—Privatization Coordination Support Unit

CARANA Corporation 24
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 11:

Sale Proceeds and Uses by March 2002

Proceed Collection Totals

Cash inflow from privatization proceeds 14,293
Dividends paid from holding companies 396
Total 14,689
Proceeds Uses
Settling banks' debts -4,513
Early Retirement, compensations, & wages of losing companies -2,705
Privatization proceeds transferred to the Ministry of Finance -6,628
Technical & administrative reform -570
Various uses -8
Total Proceeds Uses -14,424
Balance of the restructuring fund by March 2002 265

Transfers to the Ministry of Finance

The Ministry of Finance tranche of the privatization proceeds 6,628
Transferred to the Nile Hilton account 115
Transferred to Customs - Alexandria Cement 8
Excess Profit Transferred to Ministry of Finance
Maritime Agencies Companies 448
Electricity Companies 350
Total Transfers to the Ministry of Finance 7,549

PCSU—Privatization Coordination Support Unit

CARANA Corporation 25
 P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 12:

Breakdown of Sales Proceeds Values

Sales Values by Year

4000
3396
3000
2791 2784
2361 2566
LE Millions

2000
1215 1088
664 926
1000 688
352 392
69 45 84 39 23 69
0
1994 1995 1996 1997 1998 1999 2000 2001 2002-Q2
Year
Source: PEO
Privatizations above 50% Partial Privatizations

Figure 13:

Total Sales Values by Privatization Method

Anchor Investor
(LE Millions)

Production Assets 6978

7000 6315

6000

5000
LE Millions

4000

1755
3000
950 862
2000

1000

0
Anchor Investor ESA Minority IPO Production Assets Majority IPO

Privatization Method

Source: Public Enterprise Office

PCSU—Privatization Coordination Support Unit

CARANA Corporation 26
P rivatization in Egypt - Quarterly R eview April—June 2002

Majority Privatization Minority Privatization

Directly Below Directly Below

Figure 14: Anchor Investor Figure 17: Minority IPO

2002Q1 11 2001

2001 316 2000

2000 2435 1999
1999 2665 1998 76

Yaer
Year

1998 276
1997 346
1997 447
1996 338
1996 453
1995
1995 926
1994 64
1994 443
0 200 400 600 800 1000
0 1000 2000 3000
LE Millions
LE Millions

Figure 15: ESA Figure 18 Production Assets

2002Q1 69
2002Q1 11
2001 69 2001 39
2000 75
2000 84
1999
Year
Year

1998 351 1999 45

1997 79 1998 316
1996
1997 6
1995 139
1994 433 1996 350

0 100 200 300 400 0 100 200 300 400

LE Millions LE Millions

Figure 16: Majority IPO

2001 670 Notes:

Sales Values refers to the reported value of transac-

2000 47
tions method and year.
1999
Years with not data are zero values.
Year

1998 1342 Based on Figure 29 totals by year for Majority IPOs

would be 2,503 million LE for 1997, 1,372 million LE
1997 2519 for 1998 and 33 million LE for 2000. The different
year totals above provided by the PEO are a result of
1996 1650 the allocations of tranche sales. The total value for
Majority IPOs remain the same.
1995 85
Source: Public Enterprise Office
0 1000 2000 3000
LE Millions

PCSU—Privatization Coordination Support Unit

CARANA Corporation 27
P rivatization in Egypt - Quarterly R eview April—June 2002

MINISTRY OF FOREIGN TRADE

Figure 19:

Joint Venture Portfolio Status 1997 to Present

Presidential Decree #341 of 1996 mandates the reform and restructuring of joint venture
1996 companies through privatization, and states the government's intention to sell its out-
standing stakes in joint venture enterprises.

IBTCI reports that 134 joint venture companies were transferred from the Ministry of Pub-
lic Enterprise to the Ministry of Trade and Supply (MOTS) in 1997. The control of these
1997 companies is combined with an existing 142, with equity already under the control of the
Ministry of Trade and Supply, resulting in the first joint venture portfolio of 276 compa-
nies.

In early 1998, the MOTS established a unit under the direction of Ayman Abd El Ghaffer
to value and privatize these companies. By the summer the Ministry announces the sale
of 22 of these companies (later clarified to be 20 companies).
1998 In the 3rd quarter, the Ministry of Trade and Supply identifies a further 87 companies,
creating a portfolio of 363. Data was provided to IBTCI breaking the portfolio down into
13 sectors.
Newspaper reports in October quote HE Minister Gowaily as saying that the JV portfolio
consists of 403 companies.

In October, with the change in the cabinet, the MOTS became the Ministry of Supply and
1999 Internal Trade and the Ministry of Economy became the Ministry of Economy and Foreign
Trade, with responsibility for the privatization of the joint venture portfolio. Mr. Abd El
Ghaffer was transferred to Japan as a trade representative. Considerable confusion sur-
rounded the joint-venture privatization process.

In the 1st quarter, the MOEFT sets up a Joint Venture Privatization Unit with responsibil-
ity for creating and managing the database of companies, preparing appropriate docu-
mentation and tracking sales. This unit requested data from all government institutions
(banks, governorates etc.) to list their joint ventures. Three companies were reported by
the unit to be in the process of being sold.

By August 2000, 474 companies (now inclusive of the JV banks and insurance compa-
2000 nies) had been identified as part of the MOEFT portfolio. The public sector held 51% or
more in 149 companies. The information collected by the MOEFT privatization unit
showed that most of the companies were profitable. One company was sold in the 3rd
quarter.

In the 4th quarter, the MOEFT received approval to begin the privatization process for 30
companies and banks having a public stake equal to or exceeding 50%. In December the
Privatization Implementation Project (PIP) was assigned the advisory role for these compa-
nies.

By March 2001, 511 companies had been identified within the JV portfolio with a total
paid in capital of LE50 Billion. The MOEFT reported that the government stake in 6 of
2001 these companies had been sold since September of 2000.
By the end of the 3rd quarter, PIP had worked on the promotion and valuation of 13 com-
panies in the portfolio.

2002 JV privatization activity continues

Source: Previous PCSU Quarterly Reviews

PCSU—Privatization Coordination Support Unit

CARANA Corporation 28
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 20:
Breakdown of Joint Venture Companies by Sector

Number of Total Paid Capital

Sector
Joint Ventures (LE Million)
Construction 62 3,450
Agriculture 44 3,543
Services 115 14,628
Industrial 153 15,564
Power 9 830
Tourism 62 4,349
Trade & Commerce 10 215
Transportation 12 1,529
Insurance 7 1,906
Banking 44 21,582
Total 518 67,596
Source: Ministry of Foreign Trade

Figure 21:
Recent Joint Venture Privatization Transactions

Shares Remaining
Date
Company Sold Buyer State Share
of Sale
% %
SONAT Q1-2001 10.00 SONID 0.00
Arabeyya for
Q1-2001 25.00 Individual 0.00
Exchange
Fast Flying
Feb. 2001 10.00 Global F Hospitality 10.00
Ambulances
Industrial Company for
Oct. 2000 14.15 PICO for Investment 9.42
Developing Upper Egypt
Egyptian American
Aug. 2000 98.00 ACE 0.00
Insurance Company
Egyptian British Bank Sep. 2000 6.23 HSBC 5.08
Ameriyah Spinning & Weaving Apr. 2002 - Novastis-Schorr N/A
Egyptian Glass Company Jun. 2002 80% Kuwati Holding Co. N/A

Figure 22: Joint Venture Portfolio by Public Stake

Number
Public Stake
of Companies
Percentage Unknown 4
Sold 7
0% - 10% 84
10% - 20% 85
20% - 50% 166
50% - 75% 79
75% - 100% 93
Total 518
Source: Ministry of Foreign Trade

PCSU—Privatization Coordination Support Unit

CARANA Corporation 29
P rivatization in Egypt - Quarterly R eview April—June 2002

1
Figure 23:—Ownership of
Figure 47:—Ownership of Joint
Joint Venture
Venture Banks
Banks1

Total
Other Total
JV Banks Banque Banque Bank of State Others
NBE State State
Misr du Caire Alex. Bank Interests
Interests Interest
Interests
Alexandria Commercial & Maritime Bank * - 5.0 – 5.0 52.1 57.1 43.0
El Togarioun Bank 17.0 16.0 16.5 9.7 59.2 27.2 86.5 13.5
Export Development Bank 11.5 11.5 11.5 10.1 44.5 40.0 84.5 15.5
Housing & Development Bank * – – * * 62.5 62.5 37.5
Islamic Bank for Investment & Develop-
20.0 20.0 20.0 20.0 80.0 – 80.0 20.0
ment
Misr America International Bank – – 32.8 – 32.8 67.2 99.9 0.1
Misr Iran Development Bank – – – 39.7 39.7 37.5 77.2 22.8
Banque du Caire et de Paris – – 22.0 – 22.0 – 22.0 78.0
Cairo Barclays International Bank – – 40.0 – 40.0 – 40.0 60.0
Cairo Far East Bank – – 19.2 – 19.2 20.0 39.2 60.8
Egyptian American Bank (EAB) – – – 35.3 35.3 – 35.3 64.7
Egyptian Gulf Bank – – – – – 24.4 24.4 75.6
Egyptian Saudi Finance Bank 7.7 – 8.5 7.4 23.6 12.7 36.3 62.7
MIBank – 20.0 – – 20.0 4.0 24.0 76.0
Misr Romanian Bank ** – 33.0 – – 33.0 – 33.0 67.0
Egyptian Commercial Bank (Alex Kuwait
– – – 9.8 9.8 0.1 9.8 90.2
Int. Bk)
Commercial International Bank (CIB) 19.6 – – – 19.6 – 19.6 80.4
Credit Internationale d’Egypte 0 – – – 0 – 0 100.0
Egypt Arab African Bank – – – – – 0.7 0.7 99.3
Misr Exterior Bank – 20.0 – – 20.0 – 20.0 80.0
National Bank for Development – – – * – 11.9 11.9 88.1
National Societe Generale Bank 19.3 – – – 19.3 – 19.3 80.7
Suez Canal Bank 4.3 * 0 * 4.3 11.8 16.1 83.9

Figure 24: Private and State-Owned Insurance Companies 1

Egyptian Insurance Authority

State Companies Private and JV Companies (8) Free Zone

Companies (2)

Misr Egypt JVCs (3) Private (5)

Al Chark Reinsurance Arab International
Al Ahlia Suez Canal General Special-
(2) ized (3) Insurance
El Mohandes
El Delta Egyptian
Allied Alico
Investors (life) American
Pharonia EMIC Insurance*
(med)
CILIC (life)

1
No info has been recorded since 30 September 2001.
* Company sold to ACE and Commercial International Investment Company. Status as a Free Zone company may be updated.

PCSU—Privatization Coordination Support Unit

CARANA Corporation 30
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 25:

ECC Generation Expansion Plan

Estimated Award (x)
and Operation Dates with Plant Size, MW
Awarded
Financing Tariff
Location Type 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Concept Cent/
kwh
Steam
2.54 In-
SidiKrir 3&4 Tur- BOOT X 2x325
terGen
bines
Steam
Suez Gulf Tur- BOOT X 2x325 2.37 EDF
bines
Steam
Port Said East Tur- BOOT X 2x325 2.37 EDF
bines
Wind EEHC
Zafarana (5) X 30
Farm Financed
Solar/ BOOT w/
El Kureimat X 150
Gas Grant
Com-
Nubaria (1) bined BOOT X 700
Cycle
Com-
Nubaria (2) bined BOOT X 700
Cycle
Com-
EEHC
Cairo North (1) bined X 700
Financed
Cycle
Wind BOOT w/
Zafarana (6) X 200
Farm Grant
EEHC
Nagaa Hamady Hydro X 64
Financed
Steam
EEHC
Cairo West 7&8 Tur- X 2x325
Financed
bines
Wind BOOT w/
Zafarana (7) X 100
Farm Grant
Solar/ BOOT w/
Borg El Arab (1) X 300
Gas Grant
Steam
El Kureimat (3) Tur- BOOT X 650
bines

Source: Ministry of Electricity and Energy

PCSU—Privatization Coordination Support Unit

CARANA Corporation 31
 P rivatization in Egypt - Quarterly R eview April—June 2002

MINISTRY OF TRANSPORTATION

Figure 26:

Status of Road BOOT Projects

Length Investment Cost

Road Project Name Project Stage Contractors
(km) (LE million)
Cairo – Ein Sokhna + Exits 175
600-800 Just started Ministry of Defense
Cairo – Kurimat + Exits 125

Alexandria – Fayoum + Exits

Under negotiations with
199 700 -
Council of Ministers
Development of Cairo – Alexan-
dria - Matrouh 520 900 Under study for offer -
Development of Cairo – Ismailia –
Port Said 180 500 " -

Sohag – Hurghada
Studies are being
250 500 " prepared by GARBLT
Luxor – Hurghada Desert Road 220 450 " "

Fayoum – Assiut 260 500 " "

Dayrout – Farafrah 263 500 " "

Cairo – Center of Alexandria 180 400 " "

Ein Sukhna – Marsa Allam 630 1200 " "

Cairo – Aswan (West of Nile) 800 1500 " "

Source: GARBLT

Figure 27:

Status of Maritime BOT Projects

Investment Project Completion Name of

Authority Project Name Period
Cost Status Date Contractor

Petroleum Quay
Old Alexandria Signed end Inaugurated MEDTAB (to build quay pipes)
in Alexandria 30 years $45m MIDOR refines raw petroleum
Port/ (Dekheila) of 1998 July 2001
(Dekheila)
JV-European Container Termi-
East Port Said East Port Signed
30 years $480.8m Early 2004 nal, Maersk (Danish), Ibrahim
Port Authority Said Port August 99 Kamel, National Bank of Egypt

JV – ABL (American), Sawiris,

Red Sea Port North Sokhna Signed
25 years $176m Early 2002 SSA (American) Tantawy
Authority Port May 99 (Egyptian)

Damietta for Liq-

Damietta Port February Sea Gas – JV Spanish Venus &
uid Gas 25 years $1.6 billion 2003 Egyptian Company
Authority 2001
Export

Source: Maritime Transportation Sector

PCSU—Privatization Coordination Support Unit

CARANA Corporation 32
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 28:
Status of Railway BOOT Projects

Investment
Railway Project Name Length Project Stage Name of Contractor
Cost
Ein Shams—Tenth of Ramadan 40km LE1.7billion Study Underway -

225 km $268m Offered -

Ismailia – Rafah
Giza – Sidi Gaber - - Announced -

Marsa Matrouh – El Saloum 260 km LE50m Bidding underway -

Alexandria – Marsa Matrouh 300 km N/A Bidding underway -

Sidi Gaber/Borg Al Arab 60 km $150m Study Underway -

LE10 billion Feasibility study to Spanish Railway

Alexandria/Aswan (Supertrain) - Authority
(estimate) be conducted
Cairo – Tebbeen 225 km $75 m Offered -

Sinai – Salloum - $230m Offered -

Dayrout – Rafah 165 miles $400m Offered -

Salloum – Natrun 315 miles $520m Offered -

Salloum – Morocco - LE780m Under study -

Supervised by Interna-
Borg El Arab – Alexandria - LE850m - tional British Company

Source: PCSU compilation

PCSU—Privatization Coordination Support Unit

CARANA Corporation 33
P rivatization in Egypt - Quarterly R eview April—June 2002

MINISTRY OF CIVIL AVIATION

Figure 29: Status of Airport BOT Projects

Concession Investment
Airport Project Name Project Stage Name of Contractor
Period Cost

Inaugurated
40 $40m November 2001
EMAC (El Khorafi Group)
Marsa Allam

Completed JV Artoc Suisse for Airport Services

Hurghada Terminal 10 $15m 1999 Investment & GOE

ABB Equity Swiss–SESAM

Sharm El Sheikh Under Negotiation (Swedish.Scansca-Vancouver/
25 $170m
(expansion) Canadian-Samcrete/Sami Saad)

Under
25 Approx. $70m Negotiation
JV Aeroport de Paris/Vinci
Luxor Airport
Under*
LE200m International Company for Airports
50 Construction—expected
Al Alamein (Each Airport) opening Q4, 2002 (Ibrahim Kamel)
DM200m
Bahareya & Farafra Cancelled ABB – Manheim Germany
50 (for each air-
Oasis Airport (2 Airports)
port)

Assiut Airports Bidding underway

To be announced
East Oweinat

Sohag To be announced

Stage of assessment of offers

Borg El Arab

Source: Civil Aviation HC

PCSU—Privatization Coordination Support Unit

CARANA Corporation 34
P rivatization in Egypt - Quarterly R eview April—June 2002

FINANCIAL MARKETS AND PRIVATIZATION

Figure 30:

Top 10 Privatized Company

Dividend Yields During the 2nd Quarter 2002

1 El Nasr Civil Works 22.70%

2 Nile Matches 22.60%

3 El Shams Housing 22.60%

4 Middle & West Delta Flour Mills 22.20%

5 East Delta Flour Mills 22.10%

6 South Cairo & Giza Flour Mills 22.10%

7 Ameriyah Cement 21.90%

8 Upper Egypt Flour Mills 21.50%

9 Egyptian Contracting (Mokhtar Ibrahim) 20.70%

10 Middle Egypt Flour Mills 19.50%

Source: PCSU analysis of CASE data

PCSU—Privatization Coordination Support Unit

CARANA Corporation 35
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 31:

Top 10 Performers Since Privatization

(Annual Average Growth)

1 Arab Pharmaceuticals 6.01%

2 Alexandria Pharmaceuticals 5.24%

3 Kafr El Ziat Insecticides 4.37%

4 Egyptian Financial & Industrial Company 2.52%

5 Memphis Pharmaceuticals 0.67%

6 Abu Kir Fertilizers 0.14%

7 Cairo Pharmaceuticals 0.02%

8 Bisco Misr 0.00%

9 Nile Pharmaceuticals -0.56%

10 Misr Aluminum -2.05%

Source: PCSU analysis of CASE data

Figure 32:

Top 10 Performers

During the 2nd Quarter 2002

1 General Silos and Storage 65.2%

2 Kafr El Ziat Insecticides 53.5%

3 Egyptian Financial and Industrial Company 33.9%

4 El Wadi for Exporting Agricultural Products 30.6%

5 Paints and Chemical Industries—Pachin 27.0%

6 El Nasr Civil Works 26.2%

7 Extracted Oils 23.3%

8 El Giza Contracting 22.6%

9 Cairo Pharmaceuticals 21.2%

10 Misr Free Shops 21.1%

Source: CASE

PCSU—Privatization Coordination Support Unit

CARANA Corporation 36
P rivatization in Egypt - Quarterly R eview April—June 2002

Figure 33:

Stock Market Performance of Privatized Companies

Performance Indicators Market Data for Q2 2002 Initial Offering
Since
Over Qtr Yield Closing P/E Ratio Last Div. Price Date
offer
# Company Name Code 1 2 3 4 5 6 7 8
1 Abu Kir Fertilizers ABUK.CA 6.8% 0.1% 9.7% 34.91 inactive 3.40 34.60 1-May-96

2 Al Ahram Beverages PYBR.CA 8.0% -7.6% 14.0% 42.98 9.55 6.00 67.00 13-Nov-96

3 Alexandria Cement ALEX.CA -9.8% -6.6% 0.0% 26.83 2.84 4.90 32.00 30-Nov-99

4 Alexandria Flour Mills AFMC.CA 0.3% -39.9% 15.4% 6.48 3.29 1.00 82.50 29-Jun-97

5 Alexandria Pharmaceuticals AXPH.CA 16.6% 5.2% 0.0% 94.99 inactive 10.81 66.15 1-Jun-95

6 Alexandria Spinning & Weaving SPIN.CA -4.0% -23.5% 0.0% 5.53 inactive 1.33 37.00 1-Jun-95

7 Ameriyah Cement AMRI.CA -7.4% -12.5% 21.9% 29.64 inactive 6.50 86.97 1-Jun-94

8 Arab Cotton Ginning ACGC.CA 5.9% -8.4% 0.0% 36.00 inactive 4.00 60.00 1-Sep-96

9 Arab Pharmaceuticals ADCI.CA 10.2% 6.0% 0.0% 56.20 4.28 8.50 40.00 1-Sep-96

10 Bisco Misr BISM.CA 0.0% 0.0% 12.1% 14.00 inactive 1.70 14.00 26-May-96

11 Cairo Oil & Soap COSG.CA 0.0% -32.9% 12.9% 14.00 inactive 1.80 31.00 01-Jul-00

12 Cairo Pharmaceuticals CPCI.CA 21.2% 0.0% 0.0% 46.04 4.86 7.17 46.00 01-Nov-96

13 Delta Industries IDEAL IDEA.CA -22.5% -17.9% 11.2% 13.39 inactive 1.50 33.08 01-Dec-97
Development & Engineering
14 DAPH.CA -7.7% -19.4% 0.0% 8.50 19.27 1.00 26.36 01-Apr-97
Consultants
15 East Delta Flour Mills EDFM.CA 9.8% -9.2% 22.1% 18.06 3.98 4.00 31.00 18-Nov-96

16 Eastern Tobacco EAST.CA 8.5% -11.3% 14.5% 41.41 3.73 6.00 96.00 22-Jun-95
Egyptian Contracting (Mokhtar
17 ECMI.CA 9.2% -35.1% 20.7% 9.66 inactive 2.00 55.00 24-Jun-98
Ibrahim)
18 Egyptian Electrical Cables ELEC.CA -5.3% -30.7% 0.0% 1.77 n/a 4.80 23.33 17-Jun-95
Egyptian Financial & Industrial
19 EFIC.CA 33.9% 2.5% 8.6% 34.91 5.40 3.00 30.00 26-May-96
Company
20 Egyptian Starch & Glucose ESGI.CA 19.3% -15.1% 0.0% 13.00 inactive 2.30 35.00 18-Jun-96

21 El Giza Contracting GGCC.CA 22.6% -26.0% 17.9% 11.17 inactive 2.00 47.25 15-Sep-97

22 El Kahera Housing ELKA.CA -25.3% -31.7% 2.3% 2.21 10.24 0.05 16.48 24-Mar-97

23 El Nasr Civil Works NCCW.CA 26.2% -18.6% 22.7% 14.32 inactive 3.25 33.25 24-May-98

24 El Nasr Clothes & Textiles KABO KABO.CA 0.0% -31.2% 0.0% 15.44 inactive 2.00 102.00 11-Jun-97
El Nasr for Dehydrating Agricul-
25 NDAP.CA -4.9% -23.3% 0.0% 10.42 inactive 0.86 38.00 11-Aug-97
tural Products
26 El Shams Housing ELSH.CA -4.3% -37.0% 22.6% 2.66 inactive 0.60 15.00 01-Oct-98
El Wadi for Exporting Agricultural WACE.CA
27 30.6% -20.3% 17.2% 13.65 inactive 2.35 31.00 17-Nov-98
Products
28 Extracted Oils ZEOT.CA 23.3% -22.3% 0.0% 7.20 inactive 1.60 45.00 30-Mar-95

29 General Silos & Storage GSSC.CA 65.2% -20.5% 18.9% 10.59 4.33 2.00 39.00 28-Oct-96

30 Heliopolis Housing HELI.CA 13.5% -14.6% 11.5% 52.23 5.01 6.00 155.00 15-Aug-95

31 Helwan Portland Cement HELW.CA -7.3% -8.7% 0.0% 31.63 inactive 5.00 58.00 09-Nov-95

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P rivatization in Egypt - Quarterly R eview April—June 2002

Stock Market Performance of Privatized Companies—Page 2

Initial Initial
Performance Indicators Market Data for Q2 2002
Offering Offering
Since
Over Qtr Yield Closing P/E Ratio Last Div. Price Date
offer
# Company Name Code 1 2 3 4 5 6 7 8
32 Industrial & Engineering Projects IEEC.CA 14.0% -29.9% 13.9% 10.80 4.92 1.50 56.70 29-Oct-97

33 Kafr El Ziat Insecticides KZPC.CA 53.5% 4.4% 10.1% 29.77 inactive 3.00 23.20 01-Sep-96

34 Mahmoudia Contracting MGCC.CA 0.0% -45.6% 0.0% 2.33 n/a 3.25 35.00 17-Jan-98

35 Medinet Nasr Housing MNHD.CA -6.9% -7.9% 10.2% 19.57 5.94 2.00 32.50 13-May-96

36 Memphis Pharmaceuticals MPCI.CA 7.2% 0.7% 0.0% 51.98 inactive 8.76 50.00 1-Sep-96
37 Middle & West Delta Flour Mills WCDF.CA 15.5% -9.1% 22.2% 22.52 3.89 5.00 40.00 30-Jun-96
38 Middle East Paper Simo SIMO.CA 10.8% -25.7% 0.0% 4.94 inactive 1.00 22.00 22-Jun-97

39 Middle Egypt Flour Mills CEFM.CA 17.2% -11.9% 19.5% 8.73 3.04 1.70 24.81 10-Apr-94
40 Misr Aluminum EGAL.CA -10.2% -2.0% 10.4% 9.57 inactive 1.00 71.25 1997

41 Misr Chemicals MICH.CA 12.5% -4.3% 0.0% 3.61 10.72 0.18 5.00 1-Jan-95
42 Misr Free Shops MFSC.CA 21.1% -11.1% 0.0% 16.95 inactive 3.80 32.00 02-Feb-97
43 Misr Oil & Soap MOSC.CA -1.7% -8.3% 11.9% 18.56 inactive 2.20 31.00 07-Aug-96
44 Nile Cotton Ginning NCGC.CA 0.0% -3.2% 0.0% 35.97 inactive 1.97 43.00 1-Jan-97

45 Nile Matches NMPH.CA 1.8% -23.9% 22.6% 5.52 inactive 1.25 27.00 1-Sep-96
46 Nile Pharmaceuticals NIPH.CA 10.7% -0.6% 0.0% 54.49 inactive 8.55 56.70 1-Jun-95
Nobareya Agricultural Engineer-
47 NAEM.CA 8.3% -20.0% 0.0% 8.59 inactive 2.00 27.00 14-May-97
ing
48 North Cairo Flour Mills MILS.CA 0.9% -19.6% 0.0% 18.47 2.81 4.00 87.00 29-May-95
Paints & Chemical Industries
49 PACH.CA 27.0% -18.7% 17.3% 13.86 4.80 2.40 60.16 1-Jun-95
Pachin
50 South Cairo & Giza Flour Mills SCFM.CA 15.9% -12.2% 22.1% 11.75 2.81 2.60 26.00 26-May-96

51 Telemisr AEEL.CA -8.2% -26.0% 0.0% 3.45 inactive 1.00 20.00 1-Sep-96
52 Torah Cement TORA.CA -0.1% -3.6% 18.7% 32.03 7.59 6.00 42.25 9-Dec-94

53 Unirab Spinning & Weaving UNAR.CA 0.0% -26.8% 0.0% 1.50 8.56 3.30 18.75 1-Jun-94
United Arab Shipping & Steve-
54 UASG.CA 15.4% -47.5% 0.0% 2.17 inactive 2.80 31.00 16-May-98
doring
55 United Housing UNIT.CA -7.8% -6.4% 12.8% 2.85 6.12 0.36 4.34 12-Feb-96
56 Upper Egypt Contracting UEGC.CA 5.1% -21.9% 0.0% 11.01 inactive 2.00 38.50 05-Jun-97

57 Upper Egypt Flour Mills UEFM.CA 15.4% -10.5% 21.5% 21.40 3.62 4.60 40.00 04-Nov-96
Notes:
Companies in Italics are included in PIPO index

Companies in Bold are listed among the 10 Most Active Companies in Terms of Volume Traded for September 2001
Column 1: Change in share price over quarter (percent)

Column 2: Annual average growth in share price, from first offering date to end of quarter (percent)
Column 3: Dividend yield (column 5/column 3). If no dividend is reported by CASE in the last 12 months, then the dividend
yield is set to 0 (Percent).
Column 4: Closing CASE price at end of quarter. Source: CASE

Column 5: P/E Ratio at end of quarter. Source: CASE. "n/a" stands for negative earnings
Column 6: Stated dividend payout (LE per share). Source: CASE
Column 7: Initial offering price per share. Price has been adjusted for corporate actions. Source: CASE, Prime Securities.
Column 8: Initial Offering sale date. Source: PEO

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P rivatization in Egypt - Quarterly R eview April—June 2002

Reports and Studies Delivered to USAID by the CARANA PSCU

Diagnostic Review of the Egyptian Civil Aviation Holding Company—(ECAHC)

August 2002

Given the government’s desire to corporatize ECAHC, this study undertakes a diagnostic re-
view of the Civil Aviation Holding Company’s legal, administrative and financial structure with
a view to identify opportunities for improvement. The study provides a brief roadmap for im-
plementing major reforms in the sub-sector.

New Company Creation & Research—Identifying, Documenting and Tracking New En-
terprises Formed by the GOE

August 2002
Over the past decade, the GOE and its various economic entities have created partial or
complete new ownerships in several productive enterprises. This report attempts to list these
entities and provides a brief look into their objectives and ownership structure.

Labor Restructuring & Privatization—A Study of the Early Retirement Program

August 2002
This report provides a comprehensive assessment of the government's Early Retirement
Program as it relates to Egypt’s Privatization Program. The report’s conclusions and recom-
mendations are based upon an exclusive scientific survey of the 1300 early retirees. The re-
tirees’ sampling was based on a selective random sampling technique involving geographic,
educational, sectoral and gender stratification.

The Results and Impacts of Egypt’s Privatization Program

July 2002

This Special Study investigates the impact of a decade of Privatization Program in Egypt.
Given the new and limited activities in the privatization of the financial sector, JV companies
and private participation in the infrastructure and energy sectors, the study focuses on Law
203 public enterprises (PEs). The study’s main focus is to evaluate the impact of a decade of
privatization activity in Egypt across several major indicators.

Case Study Anthology

July 2002
Over the course of the Egyptian Privatization Program donor projects and investment firms
have made periodic efforts to document the performance of privatized enterprises. These
“case studies” when presented together, form a comprehensive compendium of post privati-
zation experiences. The 58 studies presented in this anthology were conducted by many au-
thors and written in different formats, with varying levels of detail, over the course of six
years. The purpose of this ‘anthology’ is to provide academics, donor agencies, and the in-
vestment community with a single reference for future research.

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P rivatization in Egypt - Quarterly R eview April—June 2002

Technical Consultancy to the Public Enterprise Office’s Records Management and Re-
trieval System for Privatization Transactions.

June 2002

At the request of the Public Enterprise Office, PCSU provided technical assistance to review
the existing records management and filing and to propose an improved filing and retrieval
system. Relevant staff of the PEO was also trained to complete the records filing and to main-
tain the system for easy reference and retrieval.

Strategies in Privatizing Distressed Companies

June 2002

This study reviews the suitability of the government’s current privatization methodology and
policy framework for privatizing the remainder of the Law 203 companies that are also classi-
fied as ‘distressed’. The report also discusses the applicability of debt swap techniques in re-
solving the excessive debt burden of these companies. A presentation based on the recom-
mendations and findings of this report was made to the chair persons of all holding companies.

Airport Infrastructure: Public-Private Partnership

March 2002
Airport Infrastructure Public-Private Partnership Workshop was held during March 6-7, 2002.
A total of 6 international experts in various fields related to aviation sector made presentations.
Approximately 150 participants from the public and private sectors attended the sessions. The
workshop concluded with a comprehensive discussion on the issues and future strategies for
the aviation sector in Egypt. All material on the workshop was sent to USAID including
presentations in hard and soft copy and a list of attendees in addition to a summary report on
the workshop.

Post Privatization of ESA Companies

March 2002

At the request of the Public Enterprise Office, the PCSU conducted an exhaustive study on the
performance of companies sold to their Employee Share Association. It makes several impor-
tant findings concerning the appropriateness and effectiveness of the ESA sale program.

Alternative Methods II “Privatization of Distressed Companies”

May 2002

Important study discussing the appropriateness of the existing law 203 structure and how that
structure needs to be changed to allow for the privatization of 49 distressed companies. The
study makes a number of recommendations and comments on the governments existing plans
and offers solutions.

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P rivatization in Egypt - Quarterly R eview April—June 2002

BOOTs and BOTs as Shortcuts for Privatizing Egypt’s Infrastructure

September 2001

This report summarizes on-going efforts to reform and privatize Egypt’s infrastructure enter-
prises and sectors to date, and identified the problems that the government is already facing
or likely to face in the future. Specific suggestions are proposed to develop a comprehensive
privatization infrastructure development policy. The ultimate goal is to ensure that all Egyp-
tian stakeholders – consumers, taxpayers, workers, the government, and the private sector –
benefit from overall infrastructure sector and infrastructure enterprise reforms.

Debt Restructuring: Strategic Options

June 2001

This paper addresses a fundamental issue in Egyptian privatization strategy: how to restruc-
ture the debt of Law 203 companies to make them viable candidates for privatization. The
approach suggested by this Special Study is to first define the debt that is a “problem”, and
second to recommend restructuring methods that combine “internal restructuring” and the
use of resources from the Privatization Restructuring Fund (Restructuring Fund). The study
recommends focusing all debt restructuring resources on so-called “Group 2” companies,
those for which a reduction in debt should make a difference in how easily they could be sold
for more attractive prices. The study presents and analyzes data on the current Law 203
portfolio, and presents an action plan for next steps. This study is considered confidential,
and is available only with the permission of the Public Enterprise Office.

Law 203 Portfolio – Financial Data

June 2001

This paper presents 3 volumes of data from the PEO’s Law 203 company database, and
analyzes patterns among holding companies and affiliate companies.

Alternative Privatization Methods

May 2001

This special study reviewed some of the obstacles impeding Law 203 privatization, and iden-
tified several potential approaches to privatization that could serve to invigorate the current
program and push it forward. Four specific groups of recommendations were proposed to
accelerate the traditional process of privatization of Law 203 companies in Egypt, including
(1) Accelerating case-by-case privatization, (2) Packaging, (3) Rapid Batch Tendering, and
(4) Auctions. The study also examined strategic issues surrounding the establishment of in-
termediate privatization vehicles.

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P rivatization in Egypt - Quarterly R eview April—June 2002

The Corporate Governance Policy Framework

June 2000

This special study sets out the essential elements of the concept of corporate governance,
and reviews the nature and origin of many corporate governance concerns. The second
section summarizes the main features of the emerging international standards in corporate
behavior and regulation. The third section reviews the corporate governance situation in
Egypt, with emphasis on areas of greatest divergence between the new international stan-
dards and Egyptian law and practice. The fourth and final section proposes an initial strat-
egy for reform.

The Post Privatization Development of Former Law 203 Companies: 15 Case Studies

June 2000

This study examines the post-privatization development of a sample group of 15 privatized

Law 203 companies and seeks to evaluate the degree to which they are becoming inde-
pendent of the State after their privatization. A set of qualitative evaluation criteria was cre-
ated to categorize the degree of post-privatization enterprise independence.

Getting the Deal Done: A Review of Recent Privatization Transactions

April 2000

A review of recent privatization offerings by the Holding Companies of the Ministry of Public
Enterprises, concentrating on unsuccessful transactions and difficult negotiations with poten-
tial anchor investors. The purpose of the study was to isolate common sources off difficulty
to determine “lessons learned” and to recommend corrective action while deploying best in-
ternational practice.

Valuing Insurance Companies: Workshop Materials

April 2000

The PCSU sponsored “Valuing Insurance Companies”, a 5-day workshop for the Ministry of
Economy and Foreign Trade and the insurance industry, to assist in the understanding of
critical issues and procedures.

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P rivatization in Egypt - Quarterly R eview April—June 2002

Reports and Studies Delivered to USAID by IBTCI

Privatization Best Practices (Vol. I and II)

January 1999
The study was conducted in 2 distinct phases. The 1 st phase consisted of in-depth research
on 22 countries engaged in privatization programs and 6 sectors that had specific relevance
to Egypt. The 2 nd phase was an on-site assessment of the Egyptian Privatization Program
and the identification of opportunities for the adoption of new methodologies of privatization
in Egypt.

Employee Stock Ownership Plans In Egypt “Case Study”

September 1998
This special study was completed to: 1) identify options to solve challenges and issues with
the current Employees Shareholder Associations (ESAs) that would allow them to be more
effective and efficient while also creating options for more effective use of employee owner-
ship in the privatization process; 2) develop a strategic plan for ADALA, an employee owner-
ship association that will allow them to be a self sufficient organization that provides technical
information to employee ownership companies and will represent their interest in the estab-
lishment of laws and regulations; and 3) to educate the public sector on the various em-
ployee ownership options that can be used to meet different business objectives.

Investment Banking Special Study

May 1998
The study's primary objective was to provide USAID, the PEO and the MPE with the status
and understanding of the int'l and domestic investment banks and their capacity to support
the H/Cs and A/Cs in their privatization initiatives.

Privatized Companies Case Study

March 1998
This report summarizes the case studies carried out on 7 newly-privatized Egyptian firms by
IBTCI at USAID/Egypt's request. The principle purpose of this report is to assess the effect of
the differing methods of privatization both on the efficiency and productivity of the firms pri-
vatized and on the economy in order to help determine the nature of and direction for future
approaches.

Valuation Advisory Report Assessment

February 1998
The purpose of this review was to determine whether or not privatization authorities were us-
ing int'l standard methodologies for valuing the companies and assets and to assess their ap-
plication to the process of bringing a company to the point of sale.

Valuation Advisory Report Assessment

February 1998
The purpose of this review was to determine whether or not privatization authorities were us-
ing int'l standard methodologies for valuing the companies and assets and to assess their ap-
plication to the process of bringing a company to the point of sale.

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P rivatization in Egypt - Quarterly R eview April—June 2002

Assessment of Investment Information Memoranda

December 1997
A review and evaluation of information memoranda (IM) prepared for the government of
Egypt (GOE) as a part of the U.S. Agency for Int'l Development (USAID) privatization pro-
ject..

Banking and Capital Markets in Emerging Market Economies

September 1997

In emerging market economies, the initial development of capital markets is usually domi-
nated by the banking sector and a small but growing brokerage industry. In developed mar-
ket economies, the commercial banks' share of the financial service industry activities is
much smaller due the growth of diversified financing options. Egypt is currently in the transi-
tion phase from the 1 st stage to the 2 nd with the commercial banks dominating the financing
sector.

Capital Markets: Growth and Development

August 1997

This report is a follow-on to a legal and regulatory analysis which analyzed law 95, 195, 203,
230, the commercial code, the unified tax law, and other applicable regulations.

Privatization In Egypt: A Review of Program Development and Current Status

June 1995

The purpose of this study was to show how Egyptian reform leadership was able to change
popular attitudes and implement economic change. In addition, the paper provides a descrip-
tion of the privatization of industrial companies as it now stands. Finally, the factors influenc-
ing the current program are discussed in an effort to illuminate the complex environment fac-
ing program managers.

Privatization Organizational Structure

May 1995
The purpose of this study is to assess the effectiveness of the organizational framework in
support of the privatization assistance services to the Government of Egypt.

Organizing for Privatization

January 1995
An assessment of organizational effectiveness of the Egyptian Privatization Program and the
associated impact on the USAID Privatization Support Program.

Capital Markets: Operations and Procedures

January 1995
This special study released at the time of the sale of shares in Egypt reviews the current op-
erations of the Cairo Stock Exchange and related financial intermediaries. An Analysis of the
2 partial flotations in 1994 El Amereya Cement and Paint and Chemicals highlight the
strengths and weaknesses of the financial markets from a variety of relevant viewpoints.

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P rivatization in Egypt - Quarterly R eview April—June 2002

Law 203 Portfolio

Number
Total Net
of
Revenue Income
Workers
2000 1999 2000 1999 2000 1999
Chemical
Eastern Tobacco 2290.2 2196.6 268.5 243.2 13,152 13,612
National Cement - Kawmia 589.0 638.2 (150.6) 45.2 3,837 3,934
Delta Fertilizer 279.5 264.8 22.5 12.5 5,098 5,244
Al Nasr Salines 122.0 NA 10.4 NA 1,802 NA
Chemical Industries - Kima 117.7 144.3 16.3 10.1 2,268 2,289
Al Nasr Fertilizers 116.0 66.1 4.5 (302.5) 1,991 2,052
Paper Manufacturing - RAKTA 115.7 100.7 8.8 3.6 2,039 2,131
General Trade & Chemicals 102.7 151.2 2.7 5.9 421 449
Tanta Flax 65.1 31.3 6.7 (28.7) 1,164 1,053
National Paper Company 62.8 57.4 0.3 1.4 1,564 1,647
Paper Manufacturing - VERTA 59.6 73.8 (10.6) 0.1 1,148 1,444
Moharam Press 48.4 34.8 1.1 (5.1) 993 1,045
National Plastic Company 35.1 44.0 (5.4) 3.5 1,217 1,260
Sinai Manganese 30.2 96.4 (73.3) (8.5) 641 834
Dyestuffs & Chemicals 29.5 42.0 (6.9) 6.3 943 971
Egyptian Shoes - Bata 28.6 40.4 (8.7) 0.8 2,109 3,225
Al Nasr Leather Tanning 19.9 25.6 (8.8) (13.7) 719 882
Al Nasr Particle Board & Resins 16.4 15.0 0.9 NA 286 380

Construction
Hassan Allam Contracting 999.3 1530.2 95.8 512.7 NA 9,323
Mokhtar Ibrahim Contracting 812.1 958.0 56.5 77.7 NA 12,598
Egyco 306.6 349.5 4.5 4.8 NA 3,259
Egyptian Contracting (Al Abd) 290.5 393.4 10.9 11.5 NA 2,129
Misr for Concrete 243.0 310.1 5.2 1.5 NA 4,885
General Electric Projects - Elegect 199.4 188.7 7.0 7.0 NA 3,152
High Dam Electrical Projects (Highdelico) 193.2 150.7 7.2 7.1 NA NA
Heliopolis (Misr El Gedida) Housing & Dev. 181.7 189.0 50.7 70.2 NA 1,156
Maadi Housing 132.2 157.3 34.4 52.9 NA 631
Nile Concrete Development - SPEECO 93.7 74.8 2.7 (15.5) NA 1,279
Atlas General Contracting 73.0 121.9 2.2 (6.5) NA 1,975
Arab Foundations (Vibro) 66.2 59.5 6.3 2.6 NA 1,517
General Construction Company - Roulan 59.2 68.4 1.4 1.7 NA 597
Egyptian General for Building 55.4 56.3 5.4 4.0 NA 379
Cairo General Contracting 54.4 66.4 2.2 4.0 NA 1,206
Arab General Contracting 51.3 34.2 4.3 2.1 NA 573
El Wady El Gedid Contracting 45.2 41.1 2.2 0.2 NA 788
Alexandria Contracting 38.9 47.0 1.8 0.8 NA 443
Nile General Contracting 38.0 43.2 3.7 1.6 NA 486
Red Sea Contracting 23.3 44.2 0.3 2.1 NA 348

Source: PEO

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P rivatization in Egypt - Quarterly R eview April—June 2002

Law 203 Portfolio Continued

Total Number of
Net Income
Revenue Workers
2000 1999 2000 1999 2000 1999
Food Industries
Sugar & Integrated Industries 2500.0 2484.3 106.0 86.3 20,677 21,613
North Cairo Flour Mills 581.4 647.9 47.9 50.9 4,990 5,044
Middle Egypt Flour Mills 539.0 543.5 26.9 24.5 4,908 5,220
General for Wholesale Trade 508.3 NA (18.6) NA NA NA
Egyptian Wholesale trade 471.4 NA (3.5) NA NA NA
Alexandria Flour Mills 399.2 397.3 7.2 10.9 3,951 4,300
Alexandria Oil & Soap 376.9 393.6 9.3 11.1 3,697 3,882
Nile Oil & Detergents 356.6 369.9 19.6 14.9 3,013 3,090
South Cairo Flour Mills 310.2 337.7 13.8 12.8 3,767 4,106
Tanta Oil & Soap 292.8 307.1 10.0 8.0 4,000 4,345
Salt & Soda Co. 279.8 336.7 17.0 16.2 3,021 3,281
General Silos & Storage 175.2 NA 24.8 0.0 3,941 NA
General Greater Cairo Bakeries 126.7 137.1 (2.2) 0.3 4,548 6,115
Nile Consumption Outlets 87.8 NA (12.7) NA NA NA
Alex Consumption Outlets 83.9 NA (6.4) NA NA NA
Egyptian Starch, Yeast & Deter- 81.0 84.1 12.5 11.6 1,530 1,601
gents
Edfina for Preserved Food 80.6 86.6 3.0 1.5 962 995
Misr Dairy Products 73.8 104.6 0.4 7.4 1,375 2,117
Rice Marketing Co. 56.0 NA 5.0 NA 627 NA
Al Ahram Consumption Outlets 49.5 NA (3.6) NA NA NA
Egyptian for Fish Marketing 43.7 NA (13.4) NA NA NA
Packing & Distribution Co - SHIMTO 26.9 15.5 4.3 1.8 119 114
Egypt Meat, Poultry & Supplies NA NA NA NA NA NA

Housing, Tourism and

Cinema
Misr Travel 289.0 234.7 16.4 15.9 2,346 2,311
Al Maamoura Housing & Urbaniza- 118.4 117.0 31.0 40.1 1,123 546
tion
Delta General Contracting 95.5 68.2 11.1 9.8 390 254
Al Nasr Housing 83.1 88.4 26.9 23.2 611 620
Gomhureya Contracting 73.4 72.1 16.2 8.6 350 200
Misr Hotels 54.6 53.2 35.4 33.2 92 111
Misr Distribution & Theatres 32.6 23.0 6.4 3.8 1,135 437
Misr for Sound & Light 31.6 21.7 12.9 7.5 374 362
EGOTH NA 211.1 NA 129.6 NA 1,498

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P rivatization in Egypt - Quarterly R eview April—June 2002

Law 203 Portfolio Continued

Total Net In- Number of

Revenue come Workers
2000 1999 2000 1999 2000 1999
Maritime and Inland Transport
Alexandria Containers Handling 246.0 249.7 102.2 91.0 2,078 2,004
Egyptian Navigation 165.5 192.1 (17.0) 2.0 1,500 1,557
East Delta Bus 156.5 136.9 17.8 14.8 NA NA
Canal Shipping Agencies 151.9 201.6 44.9 74.9 NA NA
Port Said Containers Handling 140.5 135.4 24.5 34.1 NA NA
Upper Egypt Bus 135.8 122.0 5.8 11.7 NA NA
Egyptian General Warehouses 103.4 106.7 21.2 22.8 1,644 1,740
Damietta Containers Handling 103.2 79.4 32.3 29.1 NA NA
Middle Egypt Bus 71.9 61.0 3.4 3.0 NA NA
West Delta Bus 64.7 60.3 1.1 575.0 NA NA
Nile Car Repair 58.9 52.7 1.2 1.1 NA NA
Alexandria Shipyards 48.7 63.7 (25.7) (22.9) 657 2,863
Egyptian Shipbuilding & Repairs 22.7 22.3 (1.0) 2.0 657 1,149

Metallurgical
Misr Aluminum 1648.0 1571.1 76.4 37.2 10,573 10,761
Egyptian Iron & Steel 1519.0 1649.1 0.1 0.1 19,886 20,665
Al Nasr for Coke 633.7 703.7 28.3 32.6 4,821 5,019
Al Nasr Steel Pipes 174.8 173.9 0.6 (4.8) 2,601 2,682
Railway Wagons Co. - SEMAF 166.4 71.8 10.2 7.5 1,866 2,354
General Metals Company 158.6 141.8 0.6 0.6 1,337 1,378
Delta Steel 147.1 204.7 0.9 0.8 2,416 2,490
Egyptian Metal Construction - Metalco 137.7 200.6 0.1 0.1 4,463 3,091
Egyptian Ferroalloys 124.6 125.5 1.8 2.0 1,588 1,769
Al Nasr Glass & Crystal 103.6 108.9 0.0 0.0 2,292 2,770
Al Nasr Phosphate 86.1 94.8 3.1 8.9 1,063 1,275
Porcelaine & Dinnerware-SHINI 48.2 40.3 4.1 (5.9) 1,130 1,194
River Transport Co. 29.9 33.0 0.1 0.1 1,654 1,752
Red Sea Phosphate 28.3 60.7 (20.1) 0.1 800 1,308
Water Transport Co. (Gen. Nile for Water Trans.) 22.4 21.9 0.1 0.1 1,291 1,361
Sornaga Ceramics (New) 3.1 NA 0.4 NA 110 NA
Alexandria Refractories NA NA NA NA NA NA
Egyptian Irrigation workshops NA NA NA NA NA NA
National Metallurgical Industries NA NA NA NA NA NA

Pharmaceuticals
Egyptian Pharmaceutical Trading 1509.2 1470.3 73.0 55.4 3,655 3,920
El Gomhureya Pharmaceuticals 454.6 464.5 49.9 40.9 1,592 1,988
Nile Pharmaceuticals 222.9 217.0 35.3 27.9 2,533 2,734
Chemical Industries Development (CID) 199.2 200.0 33.6 28.8 2,377 3,229
Cairo Pharmaceuticals & Chemicals 184.1 186.1 31.0 30.8 2,488 2,766
Source:
Alexandria Pharmaceuticals & Chemicals 170.2 158.5 34.4 32.3 1,405 1,469
Al Nasr Chemical 136.9 135.4 10.5 6.0 2,961 3,049
Memphis Pharmaceuticals & Chemicals 134.8 131.8 27.4 26.8 1,505 1,656
Arab Pharmaceuticals & Chemicals (ADCO) 120.8 120.4 13.8 11.0 1,287 1,496
Misr Pharmaceutical Industries 83.9 108.0 7.6 11.2 1,718 1,915
Pharmaceutical Packaging Co. 31.6 33.1 2.1 0.7 626 689

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P rivatization in Egypt - Quarterly R eview April—June 2002

Law 203 Portfolio Continued

Total Number of
Net Income
Revenue Workers
2000 1999 2000 1999 2000 1999
Spinning & Weaving (Textiles)
Misr Spinning & Weaving - Mehala 700.2 866.9 (87.8) 12.5 28,400 28,568
Alexandria Commercial (Trading) Co. 366.2 413.1 20.0 17.8 586 601
Misr for Cotton Export 290.7 311.3 16.7 16.1 536 576
Port Said for Cotton export 284.2 223.7 14.8 14.1 873 NA
Sharkeya Cotton 274.4 363.0 17.0 16.4 592 699
Cotton Trade & Export Co. 251.2 320.5 12.8 12.6 573 635
Cairo Cotton 228.7 344.1 12.1 15.4 613 650
Shebin ElKom Spinning & Weaving 216.0 214.0 12.1 15.8 6,605 NA
Delta Spinning & Weaving 112.2 176.9 (16.9) 16.1 5,257 5,430
Al Nasr Spinning, Weaving & Dyeing 86.5 123.9 (58.7) (22.4) 6,517 NA
Dakahleya Spinning & Weaving 81.1 137.4 (38.8) 10.0 3,508 3,556
Delta Cotton Ginning 71.7 78.3 6.2 6.0 784 897
Misr Helwan Spinning & Weaving 61.0 80.4 (93.1) (78.8) 6,256 6,838
El Seyouf Spinning & Weaving 55.3 108.4 (67.9) (29.7) 4,986 NA
Orient Linen & Cotton 54.3 82.6 (20.4) (13.1) 2,462 2,573
El Wady Cotton Ginning 50.6 76.2 4.2 4.1 1,081 NA
Mit Ghamr Spinning (newly split) 47.7 53.3 (9.2) (20.4) NA 2,430
Misr Beida Dyers 43.0 88.9 18.5 (21.1) NA NA
Misr Cotton Ginning 40.5 76.1 3.1 7.1 1,064 1,333
Egyptian Cotton Pressing 39.4 NA 19.5 NA 805 NA
Sharkeya Spinning & Weaving 39.3 55.9 (19.9) (7.7) 2,816 2,917
General for Jute Products 39.0 40.0 (11.4) (18.6) 2,205 3,013
National Spinning & Weaving 36.6 70.0 (109.0) (73.0) 3,417 NA
Arab Carpet & Upholstery 29.2 23.1 7.4 0.7 1,354 1,005
Middle Egypt Spinning & Weaving 24.4 30.5 (71.7) (69.8) 2,735 4,744
Industrial Stores - ESCO 24.3 7.3 (89.8) (134.9) 4,086 5,750
Port Said Spinning & Weaving 23.5 48.6 6.9 8.6 1,192 NA
Misr for Textile Equipment 17.2 22.5 (4.3) (2.6) 578 830
Al Nasr Wool-Wooltex 15.5 32.6 (77.9) (52.8) 4,262 NA
Shourbagy & Tricona 15.3 16.1 (65.2) (61.0) 2,113 3,527
Kom Hamada Spinning & Weaving 15.1 NA (10.5) NA 2,134 NA
Cairo Dyeing & Finishing 10.0 4.7 3.2 (6.8) 622 736
El Mahmudeya Spinning & Weaving 7.2 NA (7.7) NA 1,354 NA
Menya El Kamh Spinning & Weaving 4.4 72.9 (7.6) (0.4) 1,546 1,552
Misr Fine Spinning - Kafr El Dawar NA 285.9 0.0 (106.1) NA NA
Misr Services (newly split) NA 28.6 0.0 (11.9) NA 2,104
Misr Polyester (newly split) NA 58.2 0.0 (14.5) NA 1,534
Misr for Rayon NA 112.7 0.0 (23.9) NA 4,106
Damietta Spinning & Weaving NA 123.9 NA (19.7) 4,105 4,290
Alexandria Blankets (newly split) NA 1.4 0.0 (1.5) NA 300
Alexandria Dyeing (newly split) NA 1.1 NA 0.0 NA 95
Upper Egypt Spinning & Weaving NA 75.1 NA (46.3) NA 5,627
Al Nasr Wool & Selected Textiles - STIA NA 166.9 0.0 6.4 NA NA

PCSU—Privatization Coordination Support Unit

CARANA Corporation 48