Egypt Builders 2017: Challenges Continue to Rise in Construction Sector

Thursday, 16th March 2017

Egyptian developers, contractors and Ministries of Housing and Transportation expose challenges, updates, and legislations in the construction sector at the third annual conference of Egypt Builders aka Bonat Misr held on March 14 and 15, Invest-Gate reports.

President of the Egyptian Federation of Construction & Building Contractors (EFCBC) Hassan Abdel Aziz announces the bankruptcy of 1,989 contracting companies out of a total 30,000 companies since 2016.

In efforts to avoid further loss, contractors are demanding compensation on the price differences of construction materials that was a result of the pound flotation back in November.

“Egyptian contractors, among the greatest in Africa and MENA region, are currently on the verge of bankruptcy due to recent economic challenges and the government delays tackling problems,” says Abdel Aziz.

The delay in approving the compensation law has caused a lag in projects’ delivery amid the high prices of construction materials such as steel, which increased an additional of EGP 6,000 to reach EGP 10,700 per ton.

The ministry of Housing and Urban Communities Mostafa Madbouly announces that a technical committee has been formed to study the price difference in contracts to avoid any delays. The committee is also expected to set the compensation rate to each contracting company.

The compensation law will be discussed again in parliament this week and to be approved within one month, according to Alaa El Waly, head of the parliamentary housing committee. He adds that the delay in the approval of the legislation is due continuous amendments and lack of required resources.

Abdel Aziz notes that the extension period, the Ministry of Housing & Urban Communities previously allowed, has also not been implemented despite its approval.

In an interview with Invest-Gate, Abdel Aziz displays the recent achievements of the federation in the construction sector, namely the drafting of a unified construction law to prosper investments. Other laws include the Contractor’s Union Law and the Balanced Contract Law, to name a few.

The balanced contract law certifies that a contractor should be compensated immediately in case of any unexpected price hikes that are different from the price agreed upon in the contract between investor and contractor. The Unified Construction Law 119 prohibits building unlicenced developments and organizes the procedures of constructing buildings to prevent any potential building violations.

“Egyptian contractors have managed to encourage the construction sector to reach highest growth rates within the past two years,” says Abbas.

Abbas highlights plans that the ministry will carry out in the upcoming period, including developments in West Qena, Assiut Hill, Al Alamein City, and the new Administrative Capital.

The New Urban Communities Authority (NUCA) is currently working on EGP 37 bn- projects across many cities. “Other construction updates include the completion of 17,000 units at the new Administrative Capital with 11 Egyptian contractors currently implementing the project, including Arab Contractors, Orascom Construction, and Hassan Allam Holding,” Abbas adds; in addition to “other major projects- worth of over EGP 1 trn- in the pipeline will be completed within five years,” Madbouly states.                                 

Minister of Transportation Hesham Arafat says,“Contractors have been providing sustainability and mobility in the transportation sector since 2010. We seek to develop at least 180 kilometers of metro lines to accommodate 7 mn passengers,” says Arafat.

Construction is to commence on the third phase of the third metro line in July in efforts to accommodate 2 mn passengers. The fourth metro line will extend from Wahat to Nasr City, according to Arafat. He adds that a parking lot will be specifically designed, allowing citizens to park their cars and use the metro through their daily transportation.

Arafat announces further updates on roads and infrastructure development as the ministry and the National Authority for Roads have developed the new Suez Road axis to include three more lanes, an attempt to reduce car accidents and organize trucks’ mobility.

Egypt has finalized developments to Shubra Road -from Shubra to Banha – within 1.5 years and plans to enhance the 360- kilometers- long Regional Ring Road to be completed by the end of 2017. “The country is on track in regards to implementation; however, obstacles that delay national roads projects include the time consumed by state in providing landowners ownership rights before they give up their agriculture lands to the state for road development,” says Arafat.

Other updates include the participation of 16 companies, including the Chinese company, in developing the -170,000- acres- New Administrative Capital. “The project, which aims to be a smart city, will be an extension to Cairo not a replacement to accommodate the rising population of Cairo, which increases by 500,000 citizens annually,” says Ayman Ismail head of the Administrative Capital Authority.

Ahmed Afifi, board member of Talaat Mostafa Group, suggest smart solution in developing the Administrative City such as using Fiber Optics to support internet in the area. He also adds that metro lines should be the first thing constructed at the new capital to cover transportation means for residents.

Furthermore, Yehia Abo El Fetouh, deputy of the National Bank of Egypt (NBE), announces NBE’s contractors’ credit increase of EGP 30 bn from EGP 20 bn in 2016, providing  EGP 5 bn for insurance policies to small and medium enterprises. “NBE has provided facilitations for several contractors to commence their projects,” he says.

The third conference for ‘Egypt Builders’ is a two-day exhibition event hosting ministries, contractors, and banks all on one platform to discuss construction sector challenges. Attendees included Redcon, NBE, Banque Caire, the Ministry of Housing, Ministry of Transport, Petroget, Arab Contractors, the Talaat Mostafa Group, the National Authority for Transportation, the General Authority for Financial Supervisory, and Beltone Financial Holding, among others.

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