ERC is a crucial import substitution project that saves Egypt US$ 600 million—US$ 1 billion annually and reduces dependence on import ERC eliminates 186,000 tons of sulfur dioxide from being emitted into Cairo’s air annually and has developed the Mostorod area with community development programs that empower women, youth, and people with special needs
Qalaa Holdings, an African leader in energy and infrastructure, is proud to announce that Egypt’s President H.E Abdel Fattah El Sisi has officially inaugurated the Egyptian Refining Company (ERC), its US$ 4.3 billion PPP greenfield megaproject in partnership with the Egyptian General Petroleum Corporation (EGPC) and a consortium of leading local ,gulf and international investors, in addition to global export credit agencies and development finance institutions
ERC, Egypt’s largest private sector-led infrastructure megaproject, is economically and environmentally transformative for Egypt. The state-of-the art refinery uses the most advanced technology to convert low-value fuel oil into high-value distillates that are meeting domestic consumption needs. As an import substitution project, ERC is enhancing the added value of Egypt's resources and contributing significantly to the reduction Egypt’s import bill for petroleum products and furthering the country’s goal to become self-sufficient in petroleum liquid products
Qalaa takes deep pride in the project as it stands as one of the most successful models for financing large-scale infrastructure development in Africa. ERC underscores the power of successful collaboration between the private and public sectors, proving that these types of partnerships can work efficiently when deals are structured in a manner that can effectively produce a win-win for everyone involved. The project integrates economic, social and environmental returns that are in line with Egypt's Vision 2030 and President El Sisi’s mandate to encourage the private sector to invest in the localization of industries and value-added national projects.
The President was received by Prime Minister H.E Dr. Mostafa Madbouly, H.E Eng. Tarek El Molla, Egypt’s Minister of Petroleum and Mineral Resources, and Dr. Ahmed Heikal, Qalaa Holdings’ Founder and Chairman , along with senior government officials, and a number of senior executives from both Qalaa Holdings and The Egyptian Refining Company.
Heikal expressed the company’s pride in seeing this industrial landmark to a successful conclusion, saying: “ERC will play a pivotal role in developing Egypt’s economy, in addition to attracting billions of foreign direct investments. I would like to take this opportunity to express my deep gratitude to the government and all our partners that have supported us in both the financing and construction phases of the project, particularly the EGPC. “
“I extend my sincere thanks and appreciation to President H.E Abdel Fattah El-Sisi for inaugurating the project, his presence offers moral support and encouragement to the ERC Board of Directors and employees. This project would not have seen the light of day had it not been for the President’s support. The government’s economic reform program helped to gain the confidence of investors and financiers who took part in the project.” Heikal also highlighted President El-Sisi’s tremendous efforts in developing Egypt’s infrastructure to a level comparable to that of developed nations.
Heikal stated that “ERC is the largest partnership in Africa and the largest private sector-led infrastructure megaproject in Egypt carried out in collaboration with the government. Qalaa Holdings developed an attractive plan that won the support of the international investment community and brought in the largest amount of foreign direct investment to Egypt since 2007 and the largest in the Middle East and North Africa in 2012.
Heikal expressed his belief in the strategic dimensions of the project, highlighting that ERC represents a fundamental pillar of Egypt’s energy security. The project addresses one of the country’s major economic challenges by providing a local alternative to imports to meet the increase in consumption in the local market. ERC has the capacity to produce c. 4.7 million tons of refined products and high-quality oil derivatives, delivering high-value products to EGPC including 2.3 million tons of Euro V diesel (the equivalent of 30% to 40% of current diesel imports), and about 600,000 tons of jet fuel, in addition to 860,000 tons of Naphtha and Reformate and 80,000 tons of LPG. The project will save the state approximately US$ 600 million to US$ 1 billion annually, which will in turn support Egypt’s balance of trade, in addition to improving air quality and helping develop Egypt’s economy.
Heikal stressed that ERC stands as a good example that the private sector has a real appetite to contribute to the unprecedented construction process that Egypt is currently undergoing and that it can play a complementary role alongside the government’s achievements.
Heikal also pointed out Qalaa’s long and successful track record in spearheading projects that contribute to Egypt’s economic development— having established 43 companies and acquired and developed 39 others. These projects attracted billions in foreign direct investment including US$ 4.3 bn to fund and build ERC, a testament to the faith that investors have in the Egyptian economy.
Heikal explained that ERC was able to overcome a number of major challenges particularly during the construction phase of the project which witnessed both the global financial crisis and the Arab Spring. Technical hurdles such as managing the transportation of heavy equipment from Korea and Japan to Mostorod were also successfully dealt with. Heikal added that reaching financial close in the midst of a challenging external environment required careful supervision in order to seamlessly secure and execute the equity and debt packages in a manner that did not place extra burden on the government.
From an environmental point of view, ERC rationalizes resource consumption and improves air quality by producing petroleum derivatives that meet the highest international standards for emissions. ERC will prevent an estimated 186,000 tons of sulfur dioxide and 96,000 tons of sulfur from being emitted into the air in Greater Cairo, the equivalent of approximately 29% of Egypt’s present-day total. ERC also uses natural gas as a primary fuel for the company and will work to enable Cairo Oil Refinery Company (CORC) to convert to natural gas instead of fuel oil as well.
The project also includes an important social dimension. The ERC Board made the decision to raise a budget for community development programs that would help empower youth and women as well as raise levels of income in the surrounding community.
Heikal confirmed that Qalaa intends to seek the necessary approvals to expand ERC in cooperation with the government, and that the company will continue to develop additional projects that can positively impact Egypt’s economy.
“The success of ERC, a project that has been 14 years in the making, is due in large part to the depth of the team, government support, and the solid fundamentals of both ERC and Qalaa Holdings as a whole. The fact that we were building something of exceptional economic strength is fundamentally what kept the momentum going,” said Qalaa Holdings Co-Founder and Managing Director Hisham El-Khazindar.
“ERC is an example of Qalaa’s approach to responsible investing which takes into account environmental, economic and social dimensions, and the multiple bottom-line approach, to achieve sustainable development in line with Egypt’s Vision 2030 and the United Nations Sustainable Development Goals (SDGs),” said Qalaa’s Group Chief Sustainability & Marketing Officer Ghada Hammouda.
The project has succeeded in creating more than 18,000 jobs at peak construction and 1,200 permanent jobs, in addition to the transfer of knowledge and development of human capital that occurred when global experts worked alongside local employees to bring this project to life. Approximately 30% of those employed at ERC are from the surrounding community.
To further support the local community, ERC developed economic empowerment programs for youth, women, and people with special needs. The programs focus on 4 main areas: 1) education support through “Mostakbaly” for Students and Teachers ”, 2) Youth and Female Economic empowerment and income raising through “Mashrouy” and “Tamkeen”, 3) capacity building and youth volunteering with “Reyada.” and 4) special needs through “Takaful” Approximately 40% of the beneficiaries of ERC’s programs since inception are women.
“Today is a good day for Qalaa, and I would like to recognize my partners Hisham El-Khazindar and Karim Sadek and the contributions of Tarek Salah, Mostafa Sowelam and the entire team who made the project a success. I would also like to recognize the historical contributions of Marwan ElAraby and Mohamed Shoeib. This day puts serious weight on our shoulders to deliver value for both to our shareholders and to our country in a responsible way,” said Heikal.
—Ends—
The Egyptian Refining Company is building a state-of-the-art US$ c.4.3 billion greenfield oil refinery in the Greater Cairo Area, which will produce over 4.7 million tons of refined products per annum, including jet fuel and EURO V diesel, the cleanest fuel of its type in the world. ERC’s production will be sold to the Egyptian General Petroleum Corporation (EGPC) under a 25-year offtake agreement at international prices.
Qalaa Holdings (CCAP.CA on the Egyptian Stock Exchange) is an African leader in energy and infrastructure. Formerly known as Citadel Capital, Qalaa Holdings controls subsidiaries in core industries including Energy, Cement, Transportation & Logistics, Mining, and Printing & Packaging. To learn more, please visit qalaaholdings.com.
For more information, please contact:
Ms. Ghada Hammouda
Chief Sustainability & Marketing Officer
Qalaa Holdings (S.A.E.)
Tel: +20 2 2791-4439
Fax: +20 22 791-4448
Mobile: +20 106 662-0002
Twitter: @qalaaholdings