Egypt to restore free zone status to refineries
Cairo, June 16, 2010
Egypt's parliament has agreed to restore free zone status to oil refineries, newspapers reported on Wednesday, potentially removing a hurdle that had deterred foreign investment in the country's energy sector.
Egypt's government had cancelled oil refiners' free zone status, which gives them tax breaks and other advantages, as part of broader changes to its free zone laws in May 2008.
The amendments passed on Tuesday will restore refining companies' exemption from some annual duties, but firms will still pay income taxes, state-run daily al-Ahram reported.
'This should have a material impact on investment,' said EFG-Hermes analyst Mohamed Abu Basha. 'The need for refineries is important for Egypt.'
Analysts say the increased costs resulting from the 2008 cancellation had deterred some foreign firms including Kuwait's Al Kharafi Group from building refineries in Egypt.
In May, Egypt said it planned to build its largest ever oil refinery with $2 billion of Chinese investment to supply the domestic market and export to China.-Reuters