Egypt to reinstate refineries free zone perks
London, November 30, 2008
Egypt is planning to reinstate free-zone status for energy refineries after it removed tax and custom perks for these firms earlier this year, Egypt's Investment Minister Mahmoud Mohieldin said on Friday.
The move is part of a series of planned government measures to help the country maintain an average annual investment of $10 billion, he added.
'Now we are drafting amendments...in the coming weeks and these companies will be benefiting...again,' he told Reuters in an interview on the sidelines of an Egypt investment forum.
Mohieldin said parliament would likely review before the end of the year the proposed changes to a bill passed in May that had abolished the privileges of energy-intensive companies in free zones.
Refining firms were among those in the steel, fertiliser, petrochemical, natural gas liquefaction and natural gas transport industries that had their tax and custom privileges revoked in May after the government said they were benefiting from Egypt's subsidised fuel prices.
'Refineries are not heavy users of energy. We are granting refineries the status of free zone if they so wish,' he said.
Mohieldin said the move in May had halted some investment plans by refining companies.
'There was a mistake in classifying them as heavy users of energy. This is a matter of principle rather than attracting investment,' Mohieldin said, adding that he expects the country to attract $3.5 billion in energy-refining investments in the coming two fiscal years.
With total private sector debt amounting to some 49 percent of total bank deposits and inflationary pressures abating, Egypt's banks can heed President Hosni Mubarak's recent call to step up lending and lower the cost of credit to boost economic investment, Mohieldin said.
'We have ample liquidity which is a real blessing today,' he added.
To stimulate the economy of the Arab world's most populous country of 82 million people, Cairo plans to spend an extra 15 billion Egyptian pounds ($2.7 billion) on infrastructure projects including water and sewage this fiscal year.
Egypt's economy is set to expand 5.25 per cent this fiscal year, down from 7.2 per cent a year ago -- its slowest annual growth in half a decade, a Reuters poll showed.-Reuters