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6 JUNE 1987 MEED

CONSTRUCTION

Much of the public sector investment is (Ambric) in managing the scheme. aimed at completion of existing projects The US-financed west bank portion ofthe 's debt 42 percent in 1987/88 and 30 percent over project has been spared problems over pay C/J the plan asa whole. For contractors onsite, ments, though notlegal ortechnical hitches, brings focus this emphasis will bewelcome. UK and local because it is funded entirely by grants from constructioncompaniesworkingon the east the US Agency for International Develop on project bank section of the Greater Waste ment (USAID). Majorcontracts for construc s water Project have found the task ofsecuring tion ofwastewater treatmentplants on both timely payments fully as taxing as that of east and west banks are expected to be let in tunnelling beneath the teeming city. the next 18 months (MEED 23:5 87- THE day of reckoning has come for Egypt's On the main tunnelling contracts —num 8:11:86). bers 3, 4 and 12 — technical interest has The wastewater projects in Cairo and external financial obligations, whose size focused ontherelative performance ofdiffe owesmuch to the boom inconstruction over other cities are only the largest of the the past 10 years. rent types of machinery. Lilley International infrastructure schemes under way. The President Mubarak fills his public speeches and local partner Misr Engineering have been French-built Cairo metro is set for comple with detailed lists of construction projects using equipment designed by Japan's Oka- tion in late-1987; port, also built by financed from the $10,000 million borrowed mura on contract 4; a system designed by French companies, started operating at the by the state between 1982-86. Hospitals, West Germany's Bade &Theelen is being endof 1986; and tendering is in progress for used by Cairo Wastewater Consortium on construction oftheEsna dam, in Upper Egypt abandoned in mid-construction in the 1960s contracts3 and 12. Having overcome teeth and 1970s for lack of reinforced steel bars, ing problems, both systems are working well, (MEED 16:5:87). Butthe mamarea for new were completed; power generating capacity and rival claims tothe world tunnelling speed construction projects isthe electricity sector. was trebled; 1,600 schools, nearly 1 million record are being made. The Egyptian Electricity Authority (EEA) homes and three new ports were built, and But the progress of work has been under has introduced a fresh element into its work started on wastewater schemes in threat because of problems faced by the tendering process over the past 12 months Cairo. and the canal cities. bylettingfourcontractsfromone set of bids. While emphasising the necessity of the Cairo Wastewater Organisation (CWO) in The original contract, to build a 300-MW securing Egyptian pound payments to meet plant at Demanhour, in the Delta, was projects undertaken. Mubarak has also in contractors' payments deadlines. sisted that foreign borrowing should be Total payments arrears had crept up to awarded to an Italian-Canadian consortium limited from now on: any agency wishing to about £E 30 million ($14 million) by early led by Italy's Ansaldo. Contracts were then contracta foreign loanwill haveto showitis 1987. And interest payments on the £185 negotiated with the second and third-lowest able to meet the repayments. million sterling ($311 million) line of credit bidders — Mitsubishi Heavy Industries of Foreign debt has reached about $40,000 provided by the UK's Samuel Montagu & Japan and Kraftwerk Union of West Ger million, and the government has been many— to build similar-sized plants in Company tocover thebulk offoreign curren and respectively. obliged to seek IMF help to deal with the cy costs were about £2.5 million sterling ($4 servicing burden. An IMF standby credit million) in arrears in May. The fourth-placed bidder, France's Al- sthom, has started talks about a contractto programme is now in place, and arrange However, as one contractor concedes, in ments are being made for rescheduling the context of the severe drop in state build a 300-MW unit at Abu Qir, inAlexan official debts. The price to be paid for this dria, on the basis of itsDemanhour bid. The revenues in 1986, the payments problems order isexpected to be finalised once France assistance will be restrictions on growth could have been much worse. In the 1987/88-1991/92 five-year plan, resumes export credit cover for Egypt as part foreign borrowing is set to take up only 20 In early 1987, CWO was reorganised in an of a debt rescheduling agreement per cent ofpublic sector investment totalling effort tomake operations smoother: Salama Thecombined value of the four contracts Ahmed Salim —a board memberat Hassan is about $600 million, regarded asa bargain £E 28.500 million ($13,100million). And the Allam, one of Egypt's largest construction government is looking to the private sector price for 1,200 MW ofgenerating capacity. companies — was appointed chairman, and By contrast, the estimated cost ofbuilding a to play a more active role in all investment new local consultants were selected to co areas (MEED 23:5:87, page 8). 1,000-MW nuclear power plant in Egypt is ordinate with American-British Consultants well over $1,200 million.

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CONSTRUCTION

The IMF/rescheduling issue is of signifi increasingly dubious on both cost and safety Much building activity is funded by the < cance for other power projects in the EEA's grounds. private sector, including the Islamic invest ambitious expansion programme. The World In the building materials sector, there has ment companies, which have expanded to K Bank is set to resume lending for power been a marked slowdown in new projects become a major economic force. projects now the IMF economic adjustment after the rash of cement plant contracts in In the public sector, the most ambitious 8 programme has been approved. recent years. Few of the cement plants have schemes involve construction of entire mili The first scheme to benefit is the 600-MW been completed without running into diffi tary cities outside Cairo and Alexandria, for combined-cycle power station project at culties, technical or financial. The emphasis which UK firms — notably Cementation , near Damietta. The African De now is on project completion and making International — have picked up major con 3 velopment Bank is lending $124 million to existing plants more efficient. tracts. Finance has come from a UK line of CO part-finance the simple-cycle section, gener Upgrading existing plants is also a priority credit to the Defence Ministry (MEED ating 400 MW from gas turbines. The World in the iron and steel sector, which is benefit 24:1:87, page 5). Bank board is expected to approve an addi ing from the recent start-up of the first phase tional $ 140 million to finance the combined- of the Dikheila steel complex, outside Alex DAVID BUTTER cycle section, which will generate 200 MW andria. Western companies are bidding for with turbines driven by steam using heat an estimated $75 million contract to install a recovered from the simple cycle. steel slab caster at the Helwan factory in Substantial World Bank financing is being south Cairo. Thiswillcut out one stage in the sought for a massive project to install about steel-making process, considerably impro 5,000 MW of coal-fired generating capacity ving productivity (MEED 9:5:87). in the Gulf of Suez region. The centrepiece However, demand for building materials New awards will be a 2,600-MW replica of an Australian still outstrips supply by a wide margin. power station sited at Zaafarana, where a Cement production, for example, totalled raise hopes major coal-handling port is planned. Coal about 8 million tonnes in 1986, only half of from the port will also be transported to two consumption. of Saudi 1,200-MW plants, to be built at Kurimat, in The demand for cement is a reflection of the Nile valley, and Ayun Musa, across the the scale of the domestic building industry. Gulf of Suez (Power & Water, MEED Business Egyptsuffers a chronic housing shortage — revival Feature, 28:2:87). the most recent census found that, on Commitment to coal by the EEA would not average, there are three Egyptians to every INDICATORS point to an improvement in the necessarily rule out plans to build a nuclear two rooms; 300,000 couples married for Saudi Arabian construaion seaor in 1987. power station at El-Dabaa, west of Alexan more than a year are still seeking their own Already more large-scale contracts have dria. However, the nuclear project is looking accommodation. been awarded this year than in the whole of 1986. However, concern at payments delays Breaking records: tunnelling in progress on contract 4 of the Cairo wastewater scheme and increased competition for jobs has driven many companies out of the market. One problem was highlighted in 1986 with the phase two contraa for the GCC headquarters complex in Riyadh. A letter of intent for the SR 164.3 million($43.8 million) job was originally awarded to Riyadh's Manufaauring & Building Company (Mab- co) early in the year. But delays in the contraa award led to Mabco's bid bond expiring. .The client, Riyadh Development Authority, then invited other companies to submit offers with a much shorter comple tion date. France's Dumez was awarded the 11-month contraa in November. The King Fahd international airport (KFIA) projea in Eastern Province showed another problem facing bidders. Taiwan's Ret-Ser Engineering Agency refused a letter of intent for the SR 140 million ($37.3 million) con traa to build the airport's concourse. The company claimed that exchange rate flue-

Largo Quinto Alpini, 2-20145 Milano duly) Phone: 46.84.83 - 46.94.907 • Telex: 315283 SOCAP I \ * Pneumatic Forms for in-Place Casting of Concrete Pipes. r • Foldable Tanks for Storage and Transport of Liquids. > r • Pneumatic Stoppers to Test all Kind of Pipelines. ^ 3/ M. 6 JUNE 1987 MEED 5 V No. *-? plant Based ontheHidd, off Muharraq On a recentvisit. EEC Commissioner island. The factory, which has about 240 UMlafenWI mfcnm.t», 1985-88 (BD million) ClaudeCheysson described the staff, has not operated since summer agreement as "a unique arrangementfor •i 1986. the EEC and a step short of full The company'sdebt difficulties centreon % 19M 1985 membership for Cyprus." Some EEC a $158 million, 10V£-yearloan provided by politicians disagree: they say itis like "the 11 regional banks in July 1982. A second, Total assets • 75.8 52.7 +43.8 Loans marriage of an elephant to a flea." $11.8 milliondeal was agreed in 1983 with 9.2 3.3 +178.8 Customer deposits 33.8 23.8 +42.0 Thecommunist Akel and socialist Edek The Export-Import Bank of Japan. Agent Net profits 1.2 0.7 +71.4 parties stronglyoppose the union. bank for both deals was NationalBankof S1=BD 0.3769 (May 1987) President Kyprianou agreed inMayto refer Bahrain (MEED16:5:87). the accord to the houseof representatives, Source: The Bahraini Saudi Bank, Manama where he is expected to win approvalwith Al-Ahli bank's profits fall support from the right-wing Democratic Sharply lower net profits were recorded in Rally party. 1986 by Al-Ahli CommercialBank, the rise is attributed to new retail products, Also infavour is George Vassiliou, a including a special savings accountwith Manama-based retail institution. leading local economistwho recently Earnings fellto 80 47,000 ($125,000), life insurance cover and a deposit account declared his candidacy for the 1988 that pays interest monthly. compared with 1985'sBD 2.3 million($6.1 presidential elections. It is not clear million), reflecting a 16 percent fallintotal The bankwants to expand its retail whether his stand will affect Akel's widely income and a 34 per cent rise inoperating services in 1987and develop among local expected support for his candidacy. costs. The large cost increase included a retailers its Mastercard agency, which was Turkish Cypriot leader Rauf Denktash has rise in loan loss provisions of more than 300 acquired on 1 January. strongly attacked the agreement, and per cent, to BD 1.7 million($4.5 million). threatened to close allcrossing points Totalassets, excluding contras, fell by 14 IN BRIEF between the government-controlled south per cent to BD 144.5 million($384 million). • The Bahrain high court has awarded and the Turkish-occupied north. Denktash BD250.000 ($670,000)to formeremployees of argues that the EEC had no right to Loans and advances dropped by almost 6 the local Sue/waryACTfor overdue salaries. In percent to BD 91.2 million($240 million). negotiate the agreementwithout March, about 250 of the company's staff filed a consulting his community. Commission Provisions forloan losses totalling BD3.9 suit with the Labour&Social AffairsMinistry million ($10.3 million) were also deducted claiming they had not been paid since officialssaythat, when the accord is finally from assets in the balance sheet. September 1986 (MEED 9:5:87). signed, the EEC willmake itclearthatthe union applies to the whole of thedivided Adividend of BD 400,000 ($1.0 million)— • Qassim Fakhra says he will not seek re island. half the 1985 level — has been announced. election as presidentof Bahrain Chamberof This is equivalent to 5 per cent of share Commerce &Industrywhen histermexpires on capital. 15 June. Fakhra, who has completed two four- IN BRIEF year stints in the position, has been a memberof • Austria's Waagner-BIro has a AS 300million the chambers board for 18 years. (S24 million) contractto install boilers for the Al-Ahli Commercial Bank:results, 1985-86 expansion of Dhekelia powerstation. Client is the Electricity Authority ofCyprus. (BO 000) ,

1986 1985 CYPRUS Total income 5,082.0 6,070.0 Total operating '.,." 5,035.0 ,3,769.0 EEC customs union initialled EGYPT expenditure Acustoms unionagreement with the EEi Net income 47.0A-rn *! '2,301.0 was initialled on 22 May, afterfive difficult Preliminary budgetfigures Total assets 144,482.0 167,309.0 rounds of negotiation. Itwill besigned released Loansand advances 91,158.0 96,706.0 formally in Septemberand come into force Shareholders'equity Anet deficit of£E 680 million ($312 million) 20,529.0 20,882.0 inJanuary 1988, followingapproval by the Dividend 4O0.0 8O0.0 is projected forfiscal 1987/88—13per European parliament and the house of cent less than envisaged inthe previous Exchangerate:$1 = BD0.3768 (May 1987) representatives. spending programme, according to "; The agreement provides for the Source:Al-Ahli Commercial Bank, Manama preliminary budgetfigures published inthe progressive dismantling of most trade semi-official daily Al-Ahram. barriers overa 10-yearperiod, afterwhich Spending forthe year is budgeted to rise the two sides will move towards full to £E 23,000 million($10,500 million).No Bahraini Saudi Bank customs union inthe next four or five years. income figures haveyet been released. A

boosts profits '<:-.V: v£l I

TheBahrainiSaudi Bank significantly Egypt budgets, 1985/86-87/881 • snote increased profits—to BD 1.2 million ($3.2 -.;-. i-'vlEE million) million)—in 1986, its second full year of -•- . jj«j*aej operation. The Manama-based, locally 1987/88 1986/87 incorporated bank continued todevelop its Totalexpenditure,ofwhich: 23,000.0 20,246.0 19,910.0 loan portfolio, concentrating on the deposit Salaries 4,500.0 3,796.0 na .;•' and retail markets. Othercurrent 9,200.0 na na ;.: Loans more than doubled in 1986, to Totalcurrent 13,700.0 na na Investment spending BD 9.2 million ($24.4 million), but interbank 5.800.0 7,400.0 5,430.0 Capitaltransfers 3,500.0 na- placings remain the bulk of its assets, na - exceeding 60 per cent. Total assets rose Netdefictt s 680.0 780.0 900.0 by 43.8 percent, to BD 75.8million ($201.1 Allfigures are projections million). Exchange rate: $1=CE 2.1777(May 1987) Customerdeposits increased by42 per Source: Al-Ahram, Cairo :rvW)e*5 cent, to BD 33.8 million ($89.7 million). The continuedon page 8 8 MEED 6 JUNE 1987 &&YPTcontinued frompage5

full budget statement was expected to Kuwait RealEstate Bank and First Marketing Corporation, a consortium of meat have been read out to the national ArabianCorporation. producers. Itis for delivery at Eid Bairam, at the assemblyon 6 June, to be followed two Thegovernment has been highly critical end of the Islamic year in August. days laterbydetailsofthe development of Islamic investment companies, which plan for 1987/88-1991/92. have succeeded inattracting depositors • A FF 100million ($17 million) line of credit to finance imports of French equipmentand by giving annual dividends of more than 20 services has been signed with Cairo-based Misr percent. Itis putting pressureon the Germanswin Cairo north Iran DevelopmentBankand Union de companies as part ofthe exchange rate BanquesArabest Francaises (UBAF). The substation contract reforms designed to boostthe role of the credit will provide upto 85 percent of the A contract to rebuild Cairo north substation official banking sector at the expenseof finance for each contract concluded with French has beenawarded to West Germany's non-bankfinancial institutions. suppliers. Brown, Boveri A Compagnie (BBC). •A decision is expected soononan estimated The jobwas won againstcompetition $15 millioncontractfor the supply of 5-MW from fellow West German concernsAEG SuezCanal traffic falls generating units for Mersah Matruh and El- and Siemens. BBCagreed to cut itsinitial Asignificant fallinthe volume oftraffic Dabaa, and a three-by-1.7-MW generatorfor bidofDM 64.4 million ($36 million), plus using the SuezCanal was recorded in El-Ansh (MEED29:11:86). £E4.2 million ($1.9million), and accepta 1986,Suez CanalAuthority figures show. • Aletterofintenthas been awarded to a joint higher local currency component. The final The number oftransit vesselsfell by7 per venture of Korea's DongsanConstruction price ofDM 58.6 million ($33 million) plus cent, to 18,403, compared with1985; Company and the local Petrojet Petroleum £E 5.2million ($2.4million) isbeing grosstonnage passing through the canal Companyforthe construction ofa fluid handling financed by Kreditanstaltfuer was 422,630tons, downbynearly3 per unit at Ras Shukhair, on the Gulf of Suez. The Wiederaufbau (KfW). The contract is to be cent. agreementwith Gupco—a joint venture of the US' Amocoand Egyptian GeneralPetroleum signed on 10 June with the client, the Corporation (EGPC)—is valued at $5.2 million. Egyptian Electricity Authority(EEA). Workwill entail building a new process area, a Workentails building a 220/66/11 -kV Suez Canal: traffic, 1985-86 wastewatertreatment plant and pipeways. substation atthe Cairo north site. The 1986 1985 Dongsan will supply electrical and mechanical optionofrenovatingexistingequipment equipment for the processarea, and Numberoftransits» .->• 18,403 19,791 was abandoned when replacement Grosstormage 422,630 434,185 instrumentationforthe treatment plant. Petrojet proved cheaper. Twelve three-phase 220- is a division of EGPC. kVcircuit-breakers from the old unit are to Source: Suez Canal Authority • The opening ofbids forthe Damietta power beoverhauled and installed atthe Tahrir station project has been postponed until 17 Badrsubstation near Alexandria. June, to give contenders more time to prepare ConsultantisDeutsche Energieconsutt IN BRIEF their offers. Two contractsare affected: for the (Decon). • Belayim Petroleum Company(Petrobel) four 100-MW gas turbine generators and the has madean oil discovery at Ras Garra, off the 220-kVswitchgear (MEED 11:4:87). west coast of the Sinai peninsula. The find has •AEE 60million ($27.5million) contract tolay El-Rayan's bankbidthwarted yielded 10,000barrels a day of 34° APIcrude water pipelines to linkvillages on the The Central Bankof Egypt has refused to from two wells tapping reservesestimated at Mediterranean coast west of Alexandria has authorise a bid by one ofthe largest Islamic 6 million barrelsand 14 million barrels. Three goneto the army's National Service Projects more wells are planned, to determine thefield's Organisation(NSPO). Thelinewill supply investment companiesto buy intoBank of areaand the size of reserves. America's local jointventure. drinking waterto new communities between • The68 per cent fall inthecountry'soilexport Mersah Matruh and El-Alamein, and feed into an Cairo'sEl-RayanInvestment Company existing networkrunningwest to Borgel-Arab. had proposed to help Misr America earnings in1986 was the result ofa "crazy price war," Petroleum &Mineral Wealth Minister • One million doses of foot-and-mouth vaccine International Bank (MAIB), 40 per cent Abdel-Hadi Mohamed Kandil says. "Egypt was are to be provided bythe UN Food &Agriculture owned by the US institution, to increase its oneofthe oil-exporting countries most affected Organisation (FAO). inan effortto combat capital in an effort to deal with doubtful bythe crazypricewarwhich was ignited by outbreaks ofthe disease, the first forfive years. debt problems. The move was originally some members of OPEC last year," he said in a proposed in 1980/81 by the then deputy 30 May statement to the official Middle East • An Agriculture &Land Reclamation Ministry prime minister for the economy, Ali News Agency. This resulted ina fallinthe value team is to visit Hungary inJuly to finalise details Abdel-Razzaq Abdel-Meguid. of total exports to $1,080 million, from 1985s ofa tomato processing factory to be builtin $3,340million. Exportprices formost Egyptian Fayoum. A Hungarian company is in line for a Abdel-Meguid, acting as consultant to contract to supply machinery and equipment. MAIB, encouraged El-Rayan to put money crudesare unchanged for June. Prices of the heavy and medium Ras Badran Theplantwill produce tomatopaste using into the bank. The initialproposal wasto crudes have been increased by $0.15 a barrel surplus local production whichwas previously increase MAIB's paid-up capital to the to$15.55and$16.15. dumped, reducing importsfromItaly. Greece authorised level of £E 20 million($9 and Turkey. Hungary has approved a $4.9 million), from£E 15 million ($7 million). • Thecoastal land protectionauthority isto millionloan for the protect to be drawn from a The next stageofthe plan called for commission the construction of two protective $100 million aid agreement. Supplier credits are dams inland from the present coastline at to beadvanced for a further $5 million. capital to be increased to £E 50 million . Afurther11 protectivedam systems will ($23 million). Because MAIB's present Construction ofthefactory will begin bythe end be built between Alexandria and , in a ofthe year. ImportsfromHungaryfell by3 per condition made it difficult to raise the seven-year programme to slow down the rate at cent, to $80 million, in 1986. Exports rose to $17 additional money through a shareflotation, which the Delta coast is being eroded. The million from1985s$13.3 million. Imports are El-Rayan was to have provided a total of schemes will cost about $100 million, authority projected to reach $85 million and exports $25 about £E 30 million ($14 million), inan chairman Ahmed Ali Masen says inan interview million in1987,the Budapest weekly Figyelo agreed move. withthe Hamburg transport journalDeutsche reports. El-Rayan provided a letter of intent forthis Verkehrs-Zeitung Masen isreported as saying construction of the High Dam has upset • Sugar prices have been raised by8 per cent transaction. However, the central bank the Delta system, allowingdeepersea as part ofan economic reformprogramme issued itsformalrejection ofthe proposal in penetration and erosion The Rosetta coastline ageed withthe IMF (MEED 23:5:87, page 8). The alettertoAbdel-Meguiddated2i May. could retreat bytwokilometres by2020,he price of a one-kilo bag has been increased to Other shareholders in MAIBarethe argues CE0.65 ($0.30) fromEE 0.60 ($0.28). DevelopmentIndustrial Bank and Misr Government-owned stores will continue to sell • Asupply contract tor2,000 tonnes of lamb Insurance Company, both locallybased, subsidised sugar torEE 0.01 (less than $0.01)a has been placed with New Zealand'sMeet bag to people with ration cards