Al-Abbar requests reduction in administrative capital project share to 20%

Sources say Housing Ministry may approve request on condition investors commit to project's financing from abroad

Emirati businessman and Eagle Hills chairman Mohamed Al-Abbar requested Egypt to decrease its share in the new administrative capital's project from 24% to only 20%. The request was made during negotiations with the Ministry of Housing pertaining to the implementation of the project, which was announced at the Economic Summit that was held in Sharm El-Sheikh last March.

Since the project's Memorandum of Understanding (MoU) was signed, the Housing Ministry failed to reach an agreement with Al-Abbar, the founder of Capital City Partners' company (CCP) regarding the contract's terms, the start date of construction, and the share of each party. This is despite the fact that the New Urban Communities Authority (NUCA) has allocated EGP 5bn this fiscal year (FY) 2014/2015 to provide the capital with facilities.
Official sources told Daily News Egypt that, during negotiations between the Emirati party and Ministry of Housing representatives, Al-Abbar requested a decrease in the state's in-kind shares in the project. This would see the state's shares reduce from 24% to 20%, in return for the land that it offers for the project's implementation.

Sources added that the advisory committee responsible for the contract drafts asked for a grace period so that it could ask the Housing Ministry to determine its project's revenue. This would allow for the possibility of continuing negotiations in accordance with the new percentages.

Previously, Minster of Housing Mostafa Madbouly said the state's share in the project is more than the maximum limit allowed for any project in which the state participates in with land.

"The shares vary between only 15% and 20%. After negotiations with the Emirati party, Egypt's share reached 24%," Madbouly added.

Sources indicated that negotiations with Al-Abbar included the approval on decreasing the share in-kind. This would be in return for his commitment to arranging to finance the project from abroad, and cancel his request to provide local banks with the finance needed for implementation.

Despite the difficulties that face negotiations between the Egyptian Government and Al-Abbar, Egypt insists on implementing the new capital project. NUCA allocated EGP 5bn out of this year's budget to provide the capital with facilities, and the ministry's official statement talks about the project's unique location. In the latest statement, the ministry announced that the price of one square metre in Badr City was raised to EGP 19,500 for the commercial activities. The ministry justified this increase by saying that the start of implementation of the project's infrastructure is the reason.

The Housing Ministry formed a technical team on 18 March to follow up with the procedures of the project's implementations, until the actual implementations are initiated.

The ministry revealed an agreement with Eagle Hills to establish an Egyptian joint stock company, to implement the first phase of the administrative capital covering 105 sqkm under the name Capital City.

Sources revealed that the administrative capital area is considered to be a new city. Facilities will include main road networks, water lines, and sewage systems, while land spaces would be divided in accordance with the targeted projects.

Madbouly had previously signed a contract with Al-Abbar for implementing the project's first phase, with investments of $45bn. The project's total cost, however, varied between $75bn and $ 80bn, on a land space of 70,000 acres. The Housing Ministry's share is estimated at 24%, which is equivalent to the land's value.