At the outset, and before talking about listing energy companies on the Egyptian Stock Exchange, I would like to point out the extreme importance of the stock exchange, as it is a major indicator of the state of the economy, and the greater the supply thereof, the greater the volume of trading and the growth rate of economic activity in general.
The stock exchange is characterized by its positive effects in diversifying investment opportunities in Egypt, in addition to being ready and qualified at the legislative level, as well as financial instruments, to receive more capital, both local and foreign.
The public offering of shares on the Egyptian Stock Exchange, whether for energy companies or companies in other fields, represents the expansion of citizens’ participation to invest their money in state-owned projects, which contributes to building people’s confidence in its institutions with citizens’ participation in financing its national projects, within the framework of the state ownership document.
Also, for more importance, the Egyptian Stock Exchange – like the stock exchanges of the world – is subject to international institutions to monitor its activity for the purpose of evaluation, and here it can be said specifically that one of the repercussions of the current global crises and challenges is the decline in transaction values within the money market, and its vital role in providing financing.
The solution during the coming period lies in developing a plan to include huge offerings in the Egyptian market, but despite the vital role of the stock exchange in attracting investment, it cannot lead the growth process on its own, which should be paid attention to in parallel, through the availability of other factors.
Among these factors is the presence of an appropriate climate for investment in the country at the level of legislation regulating investment, the ease of project implementation procedures, and the existence of a market capable of absorbing investment activity, which is widely available in the Egyptian market.
Energy companies and economic reform
The offerings on the Egyptian Stock Exchange represent one of the most important steps of economic reform, as this step was implemented after adjusting the monetary policy tools, which made the investment climate in Egypt more clear, and these important steps in Egypt’s modern history are reinforced by the fact that Egypt is a large market that enjoys high demand in all fields. This makes investing in Egypt highly attractive.
Hence, there is a need to implement the strategy of partnership with the private sector, to raise its contribution to economic growth, and to maximize the return on state-owned assets, in addition to refinancing state investments to reduce the burden on the public budget.
These proposals include gains, whether for the state’s general budget, by providing financing that covers the costs of establishing the stations, or at the level of the Egyptian Stock Exchange, by attracting foreign capital, and enhancing foreign investors’ confidence in the Egyptian investment climate, as well as providing investment opportunities in the field of infrastructure and power generation. Especially since combating climate change is reshaping the investment market and the labor market.
And with reference to the statements of Egyptian Prime Minister Mostafa Madbouly that offering energy companies for the first time on the Egyptian Stock Exchange will be through offering part of them, and the other part through a strategic investor, but this comes according to studies carried out by a number of specialized investment banks, and ended with determining the method of offering .
The importance of these studies, which are prepared by specialized and experienced agencies, which lead to obtaining appropriate and realistic prices (the fair price) according to the real market value of the institutions to be listed on the Egyptian Stock Exchange.
Its main objective includes increasing capital, developing performance, and maximizing the utilization of the state’s assets, as well as clarifying the targeted plan for expansion and development, and developing revenues and profits for the institution subject to acquisition, and how to secure the necessary financing for expansions and performance development, taking into account disclosure and governance standards.
And equally important, clarifying how to preserve the rights of workers, and in general clarifying all the conditions that make the state and the investor beneficiaries of this investment.
Offering energy companies in the Egyptian Stock Exchange
In the same context, offering energy companies (electricity, oil and mining) represents the addition of a new sector for the first time to the Egyptian Stock Exchange, which is the infrastructure sector, and has positive effects on the foundations of the economy in general, and this comes within the framework of Egypt’s endeavor to achieve sustainable development in accordance with the 2030 strategy.
Here, the problem of financing and the lack of expertise, technical competencies, and research and development in the field of renewable energy are among the most important challenges facing the renewable energy sector in Egypt. Bringing in modern technologies and expertise necessary for the production of renewable energy.
This is positively affected by supporting the high cost of production and access to economies of scale, which in the future will contribute to the establishment of wind and solar energy projects at a lower cost (the localization of the industry), thus maximizing the competitive advantage of Egyptian products and increasing Egyptian exports.
Here, we touch on another aspect of the effects of these proposals on the Egyptian Stock Exchange, which is one of the steps of economic reform, as this step was implemented after adjusting the monetary policy tools, which made the investment climate in Egypt more clear, and reinforces those important steps in the modern history of Egypt that Egypt is a market It is large and has a high demand in all fields, which makes investment in Egypt highly attractive.
The maximization of investment opportunities in the field of energy is based on the fact that Egypt ranks as the fourth largest energy consumer in the Middle East and North Africa region, and hence the strong growth in demand for gas and electricity, including electricity generated from renewable sources, driven by the improvement of the economy thanks to structural reforms.
In addition to Egypt’s strategic and geographical location, as it is a link between Europe and the Arab world, which makes it an important source for the production of clean energy, such as green hydrogen, and a promising investment market in the field of renewable energy.
Investment potential in startups
Confirming the aforementioned foundations, the CEO of Forbes International Tower Company stated that “the company seeks to harness the potential of investing in startups and entrepreneurs, leading to the construction of a modern and environmentally responsible tower that enables companies operating in it to achieve progress and prosperity in the heart of one of the most famous capitals of the world, which is The administrative capital.
It was agreed to establish an innovative, environmentally friendly tower, in line with the environmentally friendly sustainable development goals, as the new commercial tower will be carbon-neutral, using renewable energy.
In a related context, clean energy represents a challenge led by countries in the path of protecting the environment and the future of the planet, and the race in clean energy has become intensified, driven by two main goals, the first of which is achieving the goal of carbon neutrality by 2050, and the second is ensuring sustainable sources of energy, which is no less than Significance, especially after the crisis in global markets, given the repercussions of the Corona crisis and the war in Ukraine.
The following infographic, prepared by the specialized energy platform, shows the potential of clean and renewable energy in Egypt until the end of 2022:
Statistics indicate an increase in global investments in the field of clean energy for the year 2022, by $ 1.1 trillion, by 31% compared to 2021, which is approximately equivalent to the annual cost of the world’s consumption of fossil fuels.
This matter draws attention to the world’s increasing interest in the concept of energy security, especially after the unprecedented increases in conventional energy prices.
Statistics also indicate that the most prominent energy sectors that top the spending list are the production of renewable energies and nuclear energy, with a value of about $495 billion, followed by investments directed to environmentally friendly transportation industries and electric vehicles.
* Dr. Hani Hafez – an Egyptian banking expert
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