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Egypt Water Report Q4 2012
Business Monitor International, October 2012, Pages: 46
The Egypt Water Report provides industry professionals and strategists, corporate analysts, utilities associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Egypt's water industry.
BMI View: There is reason for cautious optimism for Egypt’s water sector as a result of the political changes over the summer months. The formation of a government with a new ministry devoted to ulilities and drinking water, must be a seen as a token of President Mohammed Morsi’s intent to push public service provision. The big caveat is on the investment climate. Recent decisions such as the scrapping of the 6 October City wastewater project do not augur well for private sector investment in the water sector.
It remains to be seen what role will be allotted for the PPP Central Unit, which under the Mubarak regime did much to advance private developer participation.
Key themes to highlight for Egypt’s water sector:
- The Muslim Brotherhood candidate Mohammed Morsi appointed a former Water Resources &
Irrigation Minister, Hesham Qandil as his prime minister. With water shortages biting hard in summer 2012, the government has sent out a clear signal that it intends to prioritise the sector.
With the formation of a new “utilities ministry” – termed the Ministry of Utilities, Drinking Water & Sanitation – to be headed up by the ex-chairman of the Holding Company for Water &
Wastewater, Cairo governor Major General Abdel Qawi Khalifa, sorting out critical public services clearly will be priority number one for Morsi’s administration.
- With much of the impetus for the coutnry’s water projets eroded in the past couple of years of drift and unrest, the creation of the new ministry headed by the respected Khalifa will give institutional focus to moving projects forward – though much too will depend on what role is given to the PPP Central Unit under the new Muslim Brotherhood-dominated government. With separate ministries handling irrigation and utilities, there should be a better chance of Cairo concentrating its efforts on key priorities for consumers, business and agriculture.
- In July, protests at power and water shortages borke out across the country, in fact going far wider than the usual Tahrir Square demonstrations. Water levels in the Nile were some 5 metres below the normal depth this summer, raising the prospect of resticted supply for farms over thesummer months.
- There is little scope for the authorities to boost water production, and the low level of the Nile River this summer is another grim portent about available supply to the agriculture sector. The failure to advance key wastewater projects like 6 October City – with some 150,00 m3/d of supply now mothballed after its scrapping in Q212 – will impinge on the future water production outlook. We have wound back our water production forecast for the next five years in light of the more uncertain investment climate for Egyptian water projects; whereas we previously saw water production hitting 7,966mn m3 in 2016, we have scaled this back to 7,780mn m3. Much of course will depend on Egypt’s economic growth. The last two years have been bad ones for Egypt’s GDP, but with multilaterals like the IMF set to return to provide financial support, there is a prospect of better econmoic growth. Indeed, we see real GDP growth hitting an impressive 6% by 2016.
BMI Industry View 5
SWOT Analysis 7
Egypt Water Industry SWOT 7
Egypt Political SWOT 8
Egypt Economic SWOT 9
Egypt Business Environment SWOT 10
Market Overview 11
Domestic Competitive Landscape 11
Pricing Mechanisms And Regulatory Framework 16
Water Supply 20
Wastewater Treatment 20
Major Projects 22
PPP Wastewater Projects 22
Water Supply 23
Key Projects 25
Table: Egypt – Major Projects 25
Table: Egypt – Key Water Infrastructure Projects 26
Industry Forecast Scenario 27
Table: Egypt Water Production Data, 2008-2016 27
Regional Risk Reward Ratings 28
Table: Regional Infrastructure Risk/Reward Ratings 33
Table: Egypt - Economic Activity 36
Company Profile 37
Holding Company for Water and Wastewater (HCWW) 37
Suez Environnement 39
Veolia Water 41
BMI Water Forecast Modelling 43
How We Generate Our Industry Forecasts 43
Infrastructure Risk/Reward Ratings 44
Table: Infrastructure Business Environment Indicators 45