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November, 19th 2017

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SEP 13
16:09

Egyptian MP calls for Hadisolb export dealings probe

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An Egyptian member of parliament has called on authorities to establish whether there has been any wrongdoing in the export business of state-owned steelmaker Hadisolb.

Mohamed Fouad MP of Egypt’s Wafd Party tells Kallanish he has submitted a so-called request for clarification to determine whether action against Hadisolb is necessary. This is one of several tools available to Egyptian MPs to investigate state issues.

This follows reports that Hadisolb reneged on a contract to export billet to Algeria. A source at the European-based trading company involved in the deal says a letter of credit was opened in May and delivery of the export cargo, comprising 5,000t, was scheduled for end-June. However, Hadisolb kept delaying the delivery until it eventually cancelled the contract, he adds.

“Such things could get us into problems with potential investors,” Fouad says. “It could have a damaging effect… We just approved a new investment law and want to make sure Egypt is an investor-friendly environment.”

Nevertheless, “Hadisolb recently changed their management – this could just be a bad management decision,” Foaud concedes. Egypt’s public sector minister must respond to Fouad’s request within a month of its filing date, which was on Sunday. The next step will be to hold a hearing to figure out the subsequent steps.

“I’ve had a conversation with the people with whom I’m collaborating and they’re optimistic about the outcome,” says the trading company source. “We expect to get the material in full in September at the original price.”

Hadisolb’s official channels did not respond to repeated requests for comment. However, a source close to the firm says the steelmaker issued a pro-forma invoice for the billet cargo, rather than a fully-blown contract. This must be approved by the company’s export committee before a contract is validated; however, this approval never came. The source expects nothing to come of the parliamentary probe.

An Egyptian metallurgy chamber official suggests Hadisolb may have been unable to fulfil the contract because of its persistent production problems, with utilisation still at only 30%. “There is a shortage of liquidity, shortage of coke,” he observes. “They try to import coke but coke prices are very high. There is a lot of trouble in the economic situation of this company.”