The Egyptian government has cancelled the memorandum of understanding signed between itself and UAE businessman Muhammad Al-Abbar over the construction of the new Egyptian administrative capital. Sovereign circles are considering the repercussions of calling off the project.
Egyptian newspaper Al-Misry Al-Youm on Wednesday published the headline: “The Egyptian government calls off the new capital’s memorandum of understanding with Al-Abbar”. The paper explained that the new administrative capital project was stopped because of a dispute between the government and Al-Abbar, who established a company called Capital City in order to implement the project and signed a memorandum of understanding in the presence of Egyptian President Al-Sisi on the periphery of the previous economic conference at Sharm Al-Sheikh in the south of Sinai.
The negotiations between the Egyptian and UAE sides failed because of the government’s insistence on securing foreign funding for the project away from Egyptian banks. In the meantime, Al-Abbar refused to involve his other company, I’mar, of which he is the board chairman, as a guarantor of any loans he obtained for the project.
Al-Abbar insisted on the independence of the two companies from one another and refused to involve the UAE company in any projects related to the capital project at the present time. His position did not encourage officials in Cairo.
In addition, Al-Abbar did not succeed in security foreign funding for the first phase of the project, estimated to cost 45 billion Egyptian pounds ($5.9 million). At the same time, there was an official objection to pumping any funds from state-owned companies for the implementation of the project, according to the memorandum of understanding. The newspaper explained that the UAE investor had promised the government to provide huge sums of cash for the implementation of the first phase, which was supposed to take just under seven years.
In the meantime, the Egyptian government has not cleared the proposed land of military units, despite an announcement by the armed forces that they would vacate the location as soon as possible and turn it over to the government, which had allocated funds for providing the land set for the project with the necessary infrastructure installations.
On the other hand, the Egyptian Al-Watan newspaper quoted an informed source at the ministry of housing as saying that the memorandum had not been cancelled and that negotiations were still going on.
The source informed the newspaper that the memorandum of understanding was valid for ninety days and that it expired on 15 June, and that this date was “just a formality”.
In its report, the newspaper also cited an informed source at the Ministry of Investment as denying that the memorandum of understanding was ever cancelled and stressing that such cancellation had been made neither by the Egyptian government nor by the Al-Abbar company. The source also said that the coming days would witness the final decision in the negotiations.
The paper also cited sources from within the UAE Al-Abbar Group as saying that Muhammad Al-Abbar decided to withdraw from the new administrative capital project, which was supposed to begin in the coming period. The sources added in a telephone communication from within the UAE that the Group’s legal advisors insisted on amending the terms of the contract dispatched to Al-Abbar by the Egyptian government. It is for this reason that Al-Abbar decided to withdraw from the project completely and to communicate to the Egyptian government the legal recommendations made by his special legal team regarding Eagle Hills Company.
The New Capital project is one of the most important projects announced by Egypt during the conference that was held on 13 March in Sharm Al-Sheikh (to the northeast of Cairo – about 45 km away from the city centre) in support of the Egyptian economy. The primary planning for the new capital focuses on turning it into the hub of economic activity.
It is worth noting that in a statement made previously by Muhammad Al-Abbar, the UAE property market tycoon, who sits over the board of I’mar real estate company that constructed in Dubai Khalifah Tower, the world’s tallest building, said that the total cost of the Egyptian project is expected to be $300 billion