Egypt placed a national fuel company at the top of the list of government offerings that it recently revealed, but financial disputes with major investors delayed the settlement of the deal.
Last February, Egypt announced a list of 32 companies that it intends to offer on the stock exchange, in a plan aimed at raising billions of dollars to finance the country’s general budget deficit.
The offering operations were scheduled to start, according to the government’s plan, at the end of the first quarter of this year, with a number of ready-made companies, led by a national fuel company affiliated with the Civil Service of the Ministry of Defense. However, despite the start of the second quarter of 2023, no deals have been settled yet. .
Deal differences national stations
Informed sources revealed, in statements to the specialized energy platform, that several financial disputes are taking place with the UAE company, ADNOC Distribution, which is still the closest to resolving the deal so far.
The sources said that the deal was supposed to be announced – after negotiations that lasted for several months – in the first week of April, but it was decided to postpone it due to a dispute over the evaluation of the share price of a national company.
The sources added that Egypt is open to selling the majority of the shares of a national fuel company or less than 50%. In return, the UAE side is willing to pay between $180 and $220 million only in the deal.
The sources indicated that Egypt is negotiating $350 million, and after ADNOC Distribution rejected the value and offered a lower value, Egypt offered the deal to Qatar Energy to enter into the deal through a fuel company, but it “did not show much desire” compared to ADNOC Distribution.
Offering through a lead investor
Egypt aims to offer a national fuel company on the stock exchange through a strategic investor, within the framework of the Sovereign Fund of Egypt’s plan to exit a number of national companies, retain a minority stake in them, and enhance the participation of the private sector.
The government offering program announced by Egypt includes the first appearance of energy and oil companies on the stock exchange in order to secure sources of income for the country’s general budget, and to fulfill financial obligations and pledges with international institutions, led by the International Monetary Fund.
The Egyptian Prime Minister, Mostafa Madbouly, had indicated that there are a number of axes to deal with the companies that will be offered for the first time, including a national fuel company, some of which are through public offering through the Egyptian Stock Exchange, or offering it to a strategic investor, or by offering part of the company in The stock exchange, and the other part through a strategic investor.
ADNOC Distribution, the commercial and marketing arm of the Abu Dhabi National Oil Company, topped the stock exchange of candidates to acquire a national fuel company affiliated with the Egyptian army.
For more than two years, there has been talk about issuing shares in a national fuel company affiliated with the National Service Agency (owned by the Egyptian army), among several companies on the stock exchange, which was recently revealed by publishing the list of companies included in the government offering program, which amounted to 32 companies, which are planned to be offered by the end of the year. The first quarter of 2024.
And the Executive Director of the Sovereign Fund of Egypt, Ayman Suleiman, had confirmed in previous statements that the fund aims to sell between 80 and 90% of a national fuel company, provided that it keeps for itself a share ranging between 10 and 20%.
fuel market in Egypt
The fuel market in Egypt is one of the most attractive markets in the region, and many companies, including ADNOC Distribution, view it as a promising market for growth and profitability.
In February, ADNOC obtained official approvals to enter the Egyptian market, following the acquisition of half of the gas stations belonging to the French company Total Energy.
Through its desire to acquire a national fuel company, ADNOC is seeking to strengthen its presence in Egypt after the completion of the Total Energy deal, which represented the first official presence of the largest Emirati company in the fuel distribution and retail sector in the Egyptian market, according to data seen by the specialized energy platform.
And if ADNOC succeeds in winning the deal, its portfolio in the Egyptian market may exceed 300 fuel stations, including about 200 Wataniya stations, and more than 100 Total stations.
Under the Total deal, the Emirati company will receive half of the French company’s business portfolio in the field of refining and petrochemicals in Egypt, which includes 240 retail fuel stations, more than 100 retail stores, more than 250 oil change stations, car wash centers, wholesale fuel, jet fuel and operations. Lubricant.
The portfolio of a national fuel company – established in 1993 – currently includes about 255 operating stations, 20 stations under construction, and 25 planned stations, which raises the number of its stations to 300 stations.
The company started its activity in partnership with Shell and Mobil companies to gain and transfer experience, and since 2002 it started establishing its own stations, which bear the name “Wataniya”.
It is noteworthy that Egypt aims to raise $2.5 billion from selling shares in companies listed on the stock exchange, within the framework of the Egyptian government’s commitment to strengthening the participation of the private sector, within the terms of the International Monetary Fund.
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