Talks between Egypt and Chinese builder China Fortune Land Development Co (CFLD, 華夏幸福) for a US$20 billion development in the new administrative capital have fallen through over disagreements on how to share revenue from the project, Egyptian officials said.
Two years of tough negotiations came to an end after Egyptian authorities sent a response to the final proposal by the Shanghai-listed CFLD on developing 6,070 hectares over 25 years in the new capital east of Cairo.
“We didn’t hear back,” said General Ahmed Zaki Abdeen, head of Administrative Capital for Urban Development, the firm created to oversee the construction of the new capital. “The talks have stopped.”
Failure to reach an agreement will likely raise questions over Egypt’s ability to attract crucial foreign direct investments to propel economic growth, but it might not deter Chinese state-owned companies from pursuing other opportunities in Egypt, thanks to strong ties between the two governments.
CFLD declined to comment.
Authorities could collaborate with CFLD on another development, although not in the new capital, Egyptian Deputy Minister of Housing, Utilities and Urban Communities Khaled Abbas said.
“This could be an alternative to the new capital project,” he said by telephone, without elaborating.
Egypt has struggled to attract major foreign investments outside the oil and gas industry. Foreign direct investment fell US$200 million to US$7.7 billion in the fiscal year that ended in June.
With the exception of the business district, which is being developed by another Chinese company, work on the new capital has so far been undertaken by the housing ministry, the military and Egyptian contractors who have bought smaller parcels of land outright.
Egypt wanted 40 percent of the project revenue, while CFLD offered 33 percent, Administrative Capital for Urban Development spokesman Khaled al-Husseiny said.
“We found that to be unacceptable especially they were going to have a premium plot,” he said.
CFLD began talks with the Egyptian government in June 2016 and signed a memorandum of understanding in October that year agreeing to plan, develop, manage and market a section of the new city.
The new administrative capital is one of several mega-projects launched by Egyptian President Abdel-Fattah al-Sisi since taking office in 2014 in an effort to reboot the economy and leave his mark on the most-populous Arab nation.
The three-phase administrative capital project envisages transforming a 700km2 swath of desert into a hub for government buildings, foreign embassies and major firms.
That project aims to ease pressure on traffic-choked Cairo, the sprawling 1,000-year-old city that is home to 23 million people. The first phase is due to be completed by the middle of next year.
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