Top Arabtec executives are flying to Egypt today in a last ditch attempt to salvage a US$40 billion deal to build a million low cost homes in Egypt.
Chairman Khadem Al Qubaisi is among those making the 1,500 mile trip to Cairo for a series of last minute negotiations with the Egyptian ministry of Housing surrounding stalled plans to build affordable homes on 13 sites across the country.
Arabtec shares fell 1.36 per cent in early trading on Wednesday morning, a fourth day of declines after Egyptian newspaper Al Masry Al Youm reported that the project had been put on ice after Arabtec failed to meet conditions imposed by the government to start work.
The newspaper cited general Kamel Al Wazir, head of the Egyptian army’s engineering division who said that the project was no longer going ahead.
“The problem is with the financial details,” a source close to Arabtec told The National. “Arabtec officials spent a week in Egypt on February 22 and thought they had reached an agreement. But when the contract arrived it was different from what they had agreed.”
Last November Arabtec reported that it would start construction on a first phase of 120,000 homes in the cities of Obour, Badr and New Minia after it agreed a deal to offer the New Urban Communities Authority completed homes in place of payment for the land.
“The company will not sell vacant land but affordable housing units, then it will deliver public services’ buildings to the Urban Communities Authority, who will in turn transfer their ownership to the concerned authorities,” Khaled Abbas, Egypt’s assistant minister of housing for technical affairs said at the time.
But, UAE-based sources claim that the Egyptian Ministry of Housing is now demanding to be given more housing units than originally agreed.
An ultimate decision for the terms of the highly political project however is likely to rest with the UAE and Egyptian governments rather than company bosses.
The deal, which if it goes ahead is believed to be the largest housing project in the world, was first announced by Egyptian president Abdel Fattah El Sisi in March 2014 before he came to office and has been viewed as part of a package of economic and political aid which the UAE has provided to Egypt after Muslim Brotherhood president Mohammed Morsi was ousted in 2013.
“The problem is not with Arabtec,” the source added. “The problem is with Egyptian politics. People there are afraid to sign a paper and be judged by society for giving the land away too cheaply. But Arabtec cannot afford to pay them what they want.”
Arabtec launched a recruitment campaign to attract staff for the massive project last year and is understood to have already filled a number of senior positions as well as appointed an architect and building consultants to manage the project.
Building work on the first phase is already running behind schedule. Construction was originally due to start in the third quarter of 2014 and the first homes were expected to be delivered in early 2017.
Arabtec declined to comment on the negotiations.
Calls to the Egyptian ministry of housing were not answered.
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