Qalaa Holdings, one of Egypt's largest investment companies, said on Friday its investment strategy would focus on opportunities presented by reforms in the energy sector. Speaking at an investment conference in the Red Sea resort of Sharm El-Sheikh, Qalaa chairman Ahmed Heikal said he was highly encouraged by the government's decision last year to cut fuel subsidies that had drained state coffers. "If you remove the source of the original problem, which is subsidies, and provide some stimulus, it can unwind very fast and it can eat at the inefficiencies that exist," he told Reuters in an interview on Friday. "That is the reason why we are investing, because as you remove the source of the original problem, it will unleash investment opportunities that people did not see coming." Heikal said subsidies had for decades inflated energy consumption and generated illiquidity which hit production. Their removal would require new investments in areas such as natural gas distribution, merchant power plants and proper insulation, he said. President Abdel Fattah al-Sisi won praise from foreign investors by reducing fuel subsidies and raising taxes last year. The government expects to sign up to $20 billion in agreements at the investment conference in sectors such as energy, agriculture and real estate. "Fixing traps... will unleash investment opportunities that people didn't see coming," said Heikal, saying his company had forecast opportunities in natural gas, power plants and refineries. He said Qalaa was pouring $130 million into expanding natural gas grids and would spend $400 million on other projects in energy. Heikal said the government needed to take several steps to keep investors happy in the most populous Arab country, where political upheaval triggered by the 2011 popular uprising has battered the economy. The measures include ensuring that investors have access to information and an encouraging regulatory framework. Heikal praised Sisi's recent decision to fire Interior Minister Mohamed Ibrahim, who led the fight against Islamist militants who have killed hundreds of soldiers and police since autocrat Hosni Mubarak was toppled in the 2011 revolt. Human rights groups have accused the police of widespread abuses and returning Egypt to an authoritarian state. "While fighting terrorist actions, we need to be cognizant that we can not infringe on human rights," said Heikal. Qalaa has some $9.5 billion in assets under management, including stakes in dozens of firms mainly in Egypt and Africa.
