EU’s top bank puts big squeeze on lending to Turkey

EU’s top bank puts big squeeze on lending to Turkey
The office of the European Investment Bank in Luxembourg. (Reuters)
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Updated 31 January 2020

EU’s top bank puts big squeeze on lending to Turkey

EU’s top bank puts big squeeze on lending to Turkey
  • European Investment Bank — the lending arm of the EU — has announced it will restrict loans to Turkey

ANKARA: One of the world’s biggest financial institutions is to squeeze its lending to Turkey this year following tensions between the EU and Ankara over its controversial oil and gas drilling operations in waters off Cyprus.

The European Investment Bank (EIB), the lending arm of the EU, has announced it will restrict loans to Turkey which over the last decade have amounted to around €19 billion ($20.94 billion).

Brussels is against any exploration for oil and gas in territory that falls under EU member state Cyprus’ exclusive economic zone. However, Ankara claims Turkish drilling ships are operating within Turkey’s continental shelf.

The EIB is one of the biggest sources of finance for Turkish infrastructure projects, but it has now said it will stop lending to public agencies in the country, while adopting a selective approach to the private sector in Turkey. However, the bank added that funding taps would remain closed to companies with links to the Turkish government.

The EU has felt obliged to take countermeasures against Turkey after it ignored demands not to send a new drilling ship to the Eastern Mediterranean, and its foreign affairs commissioner, Josep Borrell, recently said Brussels was preparing to impose sanctions.

Since last year, the EIB has only made one loan to a private company in Turkey, and that was after two years of negotiation for the construction of a greenfield glass-fiber manufacturing plant.

Kader Sevinc, a Brussels-based senior EU expert, said that although EU sanctions may have little impact on Turkey’s economic relations with the bloc and its members, they still sent a strong political message.

“Turkey’s growing financial and energy dependence on certain non-Western actors is worrisome and may lead to grave dangers in the years to come,” she told Arab News.

“Progressive local authorities, the winners of 2019 local elections in all major cities, have been subjected to a strong political and administrative pressure from the government, suffering from unfair treatment in terms of allocation of resources,” added Sevinc.

In that regard, the EIB’s lending restrictions are likely to affect important infrastructure projects planned in Turkish cities such as Istanbul, Ankara, Izmir and Antalya, which are now governed by opposition mayors. Work in the popular tourist destinations cannot be carried out using municipal resources alone.

According to Sevinc, the EU and the West should develop a constructive agenda and create new mechanisms focused on the promotion of democracy and infrastructure development in support of local authorities.

“Despite the current government’s policies, Turkey still has a pluralistic society and the EU has a role to play. Let’s not forget, only a constructive Europe can play this historical role,” she said.

Turkey has been holding discussions with Brussels about joining the EU since 2005, but prospects faded after talks were de facto suspended following the failed coup attempt in Turkey in 2016.

Amanda Paul, senior policy analyst at the European Policy Centre (EPC), said: “Unless there is a change of policy from the EU, the EIB seems set to maintain this approach. A change in stance from the EU would require a change of approach from Turkey vis-a-vis its drilling activities in the Eastern Mediterranean. There is no sign of that happening for the time being.”

Paul told Arab News that Turkey might be able to seek alternative finance, but it would be difficult to fill the funding gap left by the EIB’s lending restrictions.


Saudi share of Gulf economy rose to almost 50% in 2020

Saudi share of Gulf economy rose to almost 50% in 2020
Updated 14 min 31 sec ago

Saudi share of Gulf economy rose to almost 50% in 2020

Saudi share of Gulf economy rose to almost 50% in 2020
  • Saudi GDP contracted 11.8 percent to $700.1 billion in 2020
  • UAE GDP fell 15.9 percent to $354.3 billion

RIYADH: Saudi Arabia increased its share of the GCC economy to almost half in 2020 as it weathered the COVID-19 pandemic better than its neighboring Arab states.

The Kingdom’s made up 49.8 percent of the bloc’s economy in 2020, up from 48.4 percent in 2019, Al Eqtisadiah newspaper reported, citing data from the International Monetary Fund (IMF) and Gulf statistical agencies.

Nominal gross domestic product (GDP) for the six GCC countries fell 14.3 percent in 2020 to $1.41 trillion, while Saudi GDP contracted 11.8 percent to $700.1 billion.

The UAE’s economy shrank 15.9 percent to $354.3 billion, representing 25.2 percent of GCC output.

Qatar had the third largest regional economy in 2020. It shrank 16.9 percent to $146.1 billion, representing 10.4 percent of GCC GDP.


Saudi vegetable traders accuse consumers over price increases

Saudi vegetable traders accuse consumers over price increases
Updated 23 April 2021

Saudi vegetable traders accuse consumers over price increases

Saudi vegetable traders accuse consumers over price increases
  • Consumers buy more than they need during Ramadan, traders said

RIYADH: Vegetable traders and wholesalers in Saudi Arabia have blamed over-buying by consumers for price rises during the first days of Ramadan.

Prices have now returned to normal after doubling in some cases following a flurry of purchases at the beginning of the holy month, they told Al Watan newspaper.

The increase in vegetable prices was limited to 6 or 7 local agricultural products, while imported product prices are fixed, they said. There is no shortage of vegetables in the Kingdom’s markets, they added.

“We witness the unjustified rush of consumers of double shopping that exceeds the actual need, every year with the advent of the holy month, not only for vegetables, but for various food products,” a vegetable merchant said.

A vegetable trader in the Kingdom said that citizens should maintain the usual consumption of vegetables in Ramadan to ensure the stability of prices. He said that most of the customers deliberately buy above their actual needs at the beginning of Ramadan, which causes increased demand and higher prices.

“The farmers and suppliers are the ones who set the price and cause it to rise when the demand from consumers increases, while our role does not exceed the disposal of the product with a small profit,” he said.

Consumers on the other hand accused traders, farmers and suppliers of unjustified price increases with the advent of Ramadan.


PIF’s Innovative Energy nears completion of ADES International acquisition

PIF’s Innovative Energy nears completion of ADES International acquisition
Updated 23 April 2021

PIF’s Innovative Energy nears completion of ADES International acquisition

PIF’s Innovative Energy nears completion of ADES International acquisition
  • Innovative Energy has acquired 98.6 percent of ADES shares
  • ADES to be delisted from LSE within 20 days

RIYADH: Public Investment Fund (PIF)-owned Innovative Energy Holding is close to completing its acquisition of UK-listed oil and gas services provider ADES International Holding.

The cash offer from Innovative Energy has been declared unconditional in all respects, ADES said in a statement to the London Stock Exchange on Thursday. Innovative Energy has acquired or contracted to acquire 98.6 percent of ADES International and is commencing the compulsory acquisition process to acquire the remainder of the ADES shares.

The offer price of $12.50 per share in cash for each ADES share values the existing issued share capital (excluding Treasury Shares) of ADES International at approximately $516 million.

Innovative Energy intends to apply a request to the UK’s Financial Conduct Authority to remove the listing of ADES shares from the official list, and it will also submit a request to the London Stock Exchange to cancel trading of ADES shares, which is anticipated to take effect about 20 business from 21 April.

ADES accepted Innovative Energy’s $516 million offer to take it private in early March.

Following the completion of the transaction, ADES Investments Holding will own 57.5 percent of Innovative Energy, PIF will own 32.5% and Zamil Group Investment will hold 10 percent.

ADES International will move its operational headquarters to Saudi Arabia from the UAE, CEO Mohamed Farouk said in the statement.

“The partnership will create a national champion in Saudi Arabia in a critical part of the upstream value chain, said PIF Head of Local Holding Investments Division Yazeed Alhumied.

“Alongside the creation of significant employment opportunities in the Kingdom, this will help localize best-in-class practice and lead to the important knowledge transfer of fuel usage reduction technologies which can deliver both cost savings and environmental benefits,” he said.


Egypt introduces minimum hotel room rates

Egypt introduces minimum hotel room rates
Updated 23 April 2021

Egypt introduces minimum hotel room rates

Egypt introduces minimum hotel room rates
  • Minimum rates will apply to 4-star and 5-star hotels
  • Rates will be enforced from November 2021

RIYADH: Egypt has set minimum room rates for 4-star and 5-star hotels as it aims to improve the quality of services offered to tourists.

Guests at 4-star hotels must be charged at least $25 per person per night, while 5-star hotels must charge $40 or more, Minister of Tourism and Antiquities Dr. Khaled Al-Anani said, Al Arabiya reported citing a ministerial statement.

The decision is scheduled to take effect from November 1, 2021.

Egypt’s tourism revenues fell by about 69 percent during the past year as international travel was curtailed by the coronavirus pandemic.


Miners seek gold under the desert sands after Egypt changes rules

Miners seek gold under the desert sands after Egypt changes rules
Updated 23 April 2021

Miners seek gold under the desert sands after Egypt changes rules

Miners seek gold under the desert sands after Egypt changes rules
  • Five firms have signed gold exploration contracts
  • Government seeking $1 billion of investment annually

CAIRO: Mining companies awarded blocks in Egypt’s Eastern Desert are set to start exploring for gold under a legislative overhaul that seeks eventually to unlock vast untapped mineral resources.
Despite plentiful reserves and a rich mining history that gave rise to elaborate Pharaonic gold jewelry, Egypt has just one commercial gold mine in operation. Foreign investment in oil and gas has grown, but mining has languished.
Now, the country is banking on high gold prices and amended mining laws that scrap red tape and a profit-sharing rule, unpopular in the industry, to lure interest.
One year after launching its first bid round under the new rules, it has so far clinched five gold exploration contracts in a first bidding round and kept the tendering system rolling as it tries to build momentum.
The government is looking to attract $1 billion in annual investments in mining, a target industry sources say could be within reach.
“Success is ultimately going to be measured by how many mines are going to be discovered and advanced to production,” said Patrick Barnes, Head of Metals & Mining Consulting EMEARC at Wood Mackenzie, which advised Egypt’s government on its mining law reforms.
“Early indicators show us that this bid round was much better than the ones held previously.”
In its initial tender, Egypt in November awarded 82 exploration blocks to what metals analysts say is a healthy mix of 11 companies, ranging from junior explorers to industry giants such as Barrick Gold.
The blocks on offer are in the Arabian-Nubian shield geological formation, which flanks the Red Sea and is believed to be one of the most mineral rich areas in the world.
Egypt’s mining drive is still at an early stage.
UK-based Altus Strategies told Reuters it was looking to build up its technical team and conduct remote sensing and mapping operations on the 1,500 square kilometers of land it has been awarded before starting exploration.
It expects to invest several million dollars in the short term but that could rise above $100-$200 million if a economic discovery is made.
A spokeswoman for Canada-based B2Gold, which also won concessions, said the company was looking forward to starting exploration soon “given the relative under-investment in modern exploration, and therefore untapped potential in the historically prospective Arabian-Nubian Shield.”
Mining firms welcomed the elimination of a requirement to form joint ventures with the Egyptian government, and the capping of state royalties at 20 percent.
However, the retention of a tendering process for exploration blocks limits the chances of any gold boom, said Sami El Raghy, Chairman of Australia-based Nordana.
“No other successful mining countries use this process. They all have a clear transparent mining laws stipulating the qualification, obligations and the rights of investors. (They) work on the principle first come, first served,” said El Raghy, who was also a founder of Egypt’s first and only commercial gold mine, Sukari.
The Ministry of Petroleum and Mineral Resources declined to comment.
On average, a mining project goes from discovery to production in 10-15 years. While gold prices have eased after reaching a record in 2020, economists expect they will remain high by historical standards over coming years.
“If you get to a point where several discoveries are made, Egypt could be one of the largest gold producers in Africa ... It had top-tier potential,” said Steven Poulton, CEO of Altus Strategies.
Environmental campaigners, however, say there is no justification for gold mining. It generates emissions, can add to water-stress and in contrast to copper and battery minerals is not in demand from technologies that can bring about a low carbon economy.
The government has said it is open to other minerals, but gold is the focus for now.
“Gold is absolutely the best thing for them to start with, because there’s a known amount of it,” said Wood Mackenzie’s Barnes.
“Egypt has immense potential for mining copper and gold and other commodities. The biggest concern in the industry is lack of supply for copper, places like Egypt which are considered under explored and high potential are going to get a lot of attention if they can maintain investment conditions,” he added.