Abstract
The Egyptian government has recently announced that it is going to double its
planned EGP15bn
(US$2.65bn) stimulus package, which should lend support to
infrastructure. It is hoped that by boosting
the construction industry,
will in turn provide jobs and increase consumer spending. However, BMI
notes
the time lag between the allocation of money to an infrastructure
project and the commencement of work
on said project, often due to the
number of surveys and studies needed. We predict that after expanding
by
4% in 2009 in real terms the construction sector growth will rise to above 5%
by 2010. By 2013, the
sector should be back on track with growth forecast
to be pushing 10%.
In January 2009, the World Bank announced that it will
lend Egypt US$600mn for the construction of
the Ain Sokhna power plant.
The World Bank loan will be partly financed by the African Development
Bank and the Arab Fund for Economic and Social Development. The loan is to
help the Egyptian
Electricity Holding Company (EEHC) finance the 1,300MW
supercritical steam turbine Ain Sokhna
power plant. The plant will consist
of two 650MW turbines and will be mostly powered by natural gas.
The plant
will be managed by the East Delta Production Company, a subsidiary of EEHC and
is
expected to be completed in 2013.
There has been a clear strategy
of constructing power plants in Egypt recently, and the World Bank notes
that 1,300MW of new capacity is being installed per year. In March 2009, as
reported by Reuters,
Egyptian construction firm Orascom received a
contract to construct a US$258mn 1,300MW thermalfired
power plant in
Alexandria. The client for the project is the state-run West Delta
Electricity
Production Company, which is currently constructing a number
of power plants in Egypt and Algeria.
The projects will have a combined
generating capacity of 4,150 MW.
According to Reuters, Egypt' s economy
registered growth of 4.1% y-o-y in the second quarter of its fiscal
year
(October-December 2008) compared with 7.7% y-o-y for the same period in
2007-2008. The growth
was less than market forecasts and was due to low
revenues from the manufacturing sector and from the
Suez Canal. BMI has
slashed our 2009 and 2010 growth forecasts in the light of the ongoing
global
economic slowdown, as well as a deteriorating security situation in
the Gulf of Aden, which is threatening
Suez Canal traffic. Going forward,
GDP will slow to a full-year rate of 3.7%, and then fall further to 3.0%
in 2010.
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