Project Story

Success initiatives are always built on visions, and the best visions are those that originates from strength spots – we highly trust that we made good in choosing the successful initiative of converting a large area of desert land to an urban society, modern and active, to serve as a hub for the agricultural and urban development at the level of Arab world as a whole. Furthermore, our company enjoys great investment capacities and rare human talents that are table to create using such resources seeking to make our initiatives, and the following projects, as economic driver and additional resource to our community. The place itself is undoubtedly the cornerstone to push the initiative and subsequent projects forward for its strategic location on Egypt map. Such factors are the bases of our initiative that we have developed and planned to achieve a promising future for benefit of the coming generation.

 

Start-up of Contracting:

The company presented to the Ministry of Agriculture in 1999 a technical and economic feasibility study to develop 26 thousand feddans in “Tamha, Al Ayyat, Giza, Egypt”

  • The approval of Ministerial Committee of Major National Projects was given on 9/6/2001, provided that the company shall have all the approvals from the government concerned bodies

  • The company obtained all the required approvals from the concerned bodies, including, but not limited to:

Armed Forces

Archeology

Quarries

Water Resources  

It is worth noting that approvals from Irrigation and Water Resources required shifting water from Giza Channel to provide Nile irrigation water for the 26 thousand acres subject-matter of the project.

  • Accordingly, the General Authority for Urban Projects and Agriculture contracted on 16/2/2002 on selling the whole area and the company paid the full price thereby
  • Afterwards, the Presidential Decree No. 14 of 2004 was issued approving dealing with Arab investors shareholders to the company on equal basis with Egyptian citizen for the 26,000 acres, as published in the Official Gazette, issue 3, on 15/1/2004

Despite the challenges facing any development project in any place over the world, the project adopted by the company in Egypt has many natural elements that help success, whether in terms of the good planning or providing the financial credits and investments needed for performance. However, without the government being a neutral and supporting partner to cooperate and participate in the project success, it would not be finished within the timeframe that will render the project beneficial for the largest possible number of people.

 

 

Government Breach to its Contractual Obligation:

  • The government failed to provide the irrigation source needed to irrigate the 26 thousand acres area according to the contract made with the company. Nevertheless, the company managed, after several attempts, to obtain approval of Ministry of Irrigation to take a water resource to cultivate 150 acres as an experimental farm. Accordingly, the company, using the small available water resource and the modern irrigation methods, managed to achieve the following:

  1. Constructing infrastructure for about 10 thousand acres

  2. Reclamation of 5 thousand acres and planting 3 thousand acres

With a total investment exceeding EGP 800 million

  • Approval of Prime Minister was issued on 11/3/2007 on converting the land activity to an integrated urban society with requiring the company to make all the needed feasibility studies so that the approval will be given finally to change the land activity.
  • On 16/12/2008, Minister of Agriculture, being the competent official body with the land and his capacity as the Chairman of Board of the National Center for Planning Uses State Lands. Prepared an explanatory memorandum to be presented to President of Republic regarding approval of establishing the New Al Ayaat City, attached with the drafted Presidential Decree.

The company continued to work diligently overcoming a work environment filled with challenges and objectives that cannot be postponed or ignored, and require serious and immediate measures to finish the project within the specified timeframe, hoping that the government will cooperate with the company to finish all the project components.

 

Modifying the City Area in Violation the Contract:

  • The company received on 30/9/2009 a letter from Head of the General Organization for Physical Planning addressed to the company and giving instruction to implement the million-population city on area of 5000 thousand only out of the 26 thousand acres owned by the company at price of EGP 200 per meter including the utilities, and requiring the company to surrender the remaining area, in violation to the agreement.

  • On 21/12/2010, the company raised a complaint to the Kuwaiti Ministry of Foreign Affairs which, in turn, sent a complaint to the Egyptian Ministry of Foreign Affairs to solve the suspended Kuwaiti investment issues.

  • The Presidential Decree converting the land activity and was delayed until uprising of the Egyptian Revolution.

The company stressed on importance of exerting the efforts needed to overcome obstacles against the project after the radical changes experienced by Egypt. The company was supported in this respect by many officials who sought to proceed to advanced phases of implementation in light of strong belief that the infrastructure projects must be implemented within the expanding development policy as such strategic projects are necessary to enhance services that would attract more investments.

 

Post-Revolution Endeavors to solve the issue with the new government:

A letter was sent on 20/3/2011 from the Kuwaiti Deputy Prime Minister and Minister of Foreign Affairs to Dr. Yahia Al Gamal – Deputy Prime Minister of Egypt at that time – to explain the project issue. A team was delegated to meet Deputy Prime Minister in presence of H.H. Ambassador of Kuwait to Egypt, where the company received a promise to solve the project problem. Consequently, on 3/4/2011, the company delegation held a meeting with Minister of Agriculture, concluding that Minister of Agriculture asked the company to provide a definite proposal to solve the problem within 48 hours as of the meeting. The company responded on the same day, 3/4/2011, by sending a letter to Minister of Agriculture – as asked by him – including suggestions from the company to solve the project issue.

 

Arbitration as a way to solve the problem:

On 5/5/2011, the company met with Dispute Settlement Committee affiliated to the Cabinet at the headquarters of Technical Secretariat of the Committee of GAFI, in presence of all the concerned ministries where the company presented its problem. Accordingly, a memorandum was submitted to the Cabinet showing properly the company position and that the company is entitled to resort to international arbitration due to government failure in providing the irrigation resource necessary for agriculture nor did the government issued the final presidential Decree to convert the land activity from reclamation and planting, though the company has satisfied all the legal requirements to convert the land activity to urban one.

 

Investment Contracting Dispute Settlement Committee handling the issue and reaching new solution:

  • On 7/6/2011, the Cabinet referred the company issue to a new committee to solve the investment issues, called Investment Contracting Dispute Settlement Committee, formed by the Decree of Prime Minister No. 1009 of 2011, with presidency of Prime Minister and membership of Minister of Justice, Head of GAFI, Permanent Economic Consultant to Prime Minister and number of legal consultants.

  • The first hearing was set for us with the Investment Contracting Dispute Settlement Committee on 20/6/2011. After several meetings, the Committee settled the issue by maintaining the agricultural activity in the 3000 cultivated feddans while converting the remaining area to an integrated urban community

  • On 10/10/2011, a letter was sent from Dr. Naglaa Al Ahwani – Economic Consultant of Prime Minister to Dr. Ali Ismail – CEO of the General Agency for Urban Projects and Agriculture Development including the recommendations given by the referred to Investment Contracting Dispute Settlement Committee on 26/9/2011
  • On 21/11/2011, the Board of Directors of the General Agency for Urban Projects and Agriculture Development held a meeting and recommended to settle the issue with the company. On 24/11/2011, CEO of the General Agency for Urban Projects and Agriculture Development, Dr. Ali Ismail, the official approval of the Agency to keep the agricultural activity in the 3000 cultivated feddans, with converting the remaining area to an integrated urban community, and finalizing the required procedures with the company to develop the 26 thousand feddans of the project.  

 

Ministry of Finance Set the Financial Consideration for Converting the Activity:

The Investment Contracting Dispute Settlement Committee presented the issue to the Government Services Committee affiliated to Ministry of Finance to determine the financial consideration for converting the land activity from reclamation and agriculture to integrated urban community, according to the activities map submitted by the Company to the Committee. Consequently, we find that the consideration for converting the activity will not exceed EGP 12 Billion, and with noting that the maximum height licensed by the Armed Forces (the average height will not exceed one and quarter floor). We find that such consideration will not exceed EGP 2 Billion (It is worth noting that the Government Services Committee determined the price per meter in “Madinaty” project at EGP 250)

 

Disagreement over determining the fair price for both parties, and attempting to reach a mediation through the General Agency for Urban Projects and Agriculture Development:

  • The negotiation between the company and the government was met with obstacles. Accordingly, the General Agency for Urban Projects and Agriculture Development interfered attempting to reach a solution, and the company met with Dr. Ali Ismail – CEO of the Agency – where the proposed settlement was discussed. The suggestion to reach a logical solution for both parties was as follows:

  1. The company is given the maximum height by the Armed Forces up to 120 m above the sea level

  2. Applying the reconciliation principle adopted for the lands on Cairo-Alexandria Desert Road by EGP 1.5 million per net acre without restriction of height (so that the total settlement amount shall be EGP 22.25 Billion for the total area of 21 Thousand acres)
  • The company received an official reply from the General Agency for Urban Projects and Agriculture Development on 5/6/2012 regarding change of the land purpose of use.
  • Despite the challenges that kept growing and diversifying – as many months passed with radical changes in political and economic sectors affecting markets in general, which was reflected by the performance of different companies – the company has not deviated from the planned path and kept developing all the available parts of implementation on-site of the project, or through the technical specialized studies which were the basis for asserting and confirming its point of view built on the serious technical and scientific work.  

 

President Mohamed Morsi Comes to Office and Government puts new groundless price:

The Investment Contracting Dispute Settlement Committee resumed its work at the time of President Morsi. The company met with government that offered a new price for the land as issued from a special committee; that is, EGP 47 Billion without explaining how government reached such figure or what are the scientific methods adopted in evaluating the price for converting the land activity, which was rejected by the company.

 

The Company gives offer against the proposal of President Mohamed Morsi Government to solve the issue:

On 30/9/2012, the company met with Dr. Naglaa Al Ahwani in an attempt to mediate between the government and the company, where we propose an initial offer explaining the financial aspect and how to calculate the cost through our letter dated 8/10/2012. Upon the negotiations made in presence of Dr. Naglaa Al Ahwani – we proposed our final offer.

 

The Government allows the company to re-study offered by it to be consistent with the requested price:

The Company proposed an official offer to H.H. Prime Minister on 21/11/2012. Afterwards, the Company was invited to a meeting on 9/1/2013 with the Settlement Committee which indicated that the only requested price is EGP 47 Billion and the Company may reformulate the offered study including technical conditions and licensed so that they would be consistent with the EGP 47 Billion.

 

Referring the Questioned Technical Study to Ministry of Housing:

In our last meeting. The company rejected the offer as it is necessary first to settle the technical aspects, like heights, building areas, green areas, roads, population density and such other technical matters. Thereupon, they proposed to assign the technical aspects to Minister of Housing/ Tarek Wafik. Later, we received a letter from Dr. Naglaa Al Ahwani on 5/2/2013 regarding the urgency to provide the Committee with the maps requested by Minister of Housing so that he may consider the Company suggestions.

 

The Company insist on the requested price and the company agrees to pay the amount under certain technical conditions:

  • On 14/5/2013, Dr. Naglaa Al Ahwani requested to meet with the company to finalize our agreement with the government in presence of Minister of Housing, Head of Urban Planning Organization and representatives of Ministry of Defense and the Investment Contracting Dispute Settlement. The company sent a delegation to attend the meeting, where we were told that the EGP 47 Billion amount was the only choice available to the Company, which we rejected asserting that what we would pay should be consistent with the heights permitted by Ministry of Defense and with the project feasibility. Accordingly, the meeting was adjourned without concluding to a result.

  • On 19/5/2013, to show the company seriousness in reaching a solution and regain balance to the negotiation, the Company agreed officially on the offer valued at EGP 47 Billion proposed by the government but under certain technical conditions that would make the project feasible economically, and a reasonable payment mechanism according to the applicable laws.

 

Agreeing on the Company requests but with unachievable conditions:

On 21/5/2013, the company received a telephone call from the Chancellor Ahmed Al Hussieni, representative of the Investment Contracting Dispute Settlement, indicating that the government accepts in principle the company offer, but 50% of the settlement amount should be paid in advance (about EGP 23.5 Billion) with an acceptable cheque to be provided before signing the settlement and issuing the Presidential Decree and giving the company the required permits. After submitting the cheque to the government, they would present the settlement to the Cabinet, where the settlement will signed if approved by the Cabinet, and after paying the remaining settlement amount over three years in the US$, which means such are unachievable conditions not conformant with the applicable laws.

 

The Company rejects the unachievable conditions offered by the government, and insists on its previous offer:

On 23/5/2013, the company presented its answer rejecting the offer made by the Chancellor Ahmed Al Hussieni, and asked the officials to be reasonable as the offer made by the Chancellor is illogical and unachievable. The Company requested to re-examine the offer it presented to avoid complicating the matter with not reason. The Company management submitted a copy of the company attached with the company comment on the offer made by Chancellor Ahmed Al Hussieni to the following:

  1. President of Republic (Sent to Al Etihadeya Palace)

  2. Prime Minister
  3. Minister of Housing
  4. Minister of Investment
  5. Egyptian Ministry of Defense
  6. Investment Contracting Dispute Settlement Committee

 

President Adly Mansour takes power and the Company offer presented to him:

The company met with General Abdulfatah Al Sisi as the Minister of Defense in presence of Vice-President of Kuwaiti Parliament and H.H. Ambassador of Kuwait to Egypt, where the Company presented him the road map suggested by the Company, settlement procedures and the timeframe for implementing the settlement plan

 

Forming sub-committee of the Investment Contracting Dispute Settlement Committee and concluding that the company shall propose a framework to implement the offer given by it against the amount determined by the government:

  • On 24/11/2013, the company met with the Armed Forces which formed a sub-committee of Investment Contracting Dispute Settlement Committee, under approval of Prime Minister, to study the new heights and determine the financial consideration for changing the activity.

  • On 5/2/2014, the company was invited by Investment Contracting Dispute Settlement Committee. The Company attended the meeting in presence of representatives from Ministry of Defense, Urban Planning Organization, General Agency for Urban Project, and Dr. Naglaa Al Ahwani – Head of the Technical Secretariat of the Investment Contracting Dispute Settlement Committee – where the new heights presented by the Armed Forces were determined and the agreement was made that the financial consideration for converting the activity shall be EGP 47 Billion. At end of the meeting, the agreement was made that the Company will provide suggestions for mechanism and method of paying the financial consideration for the land, in light of the considerations agreed upon in the said meeting.

 

The Company presents the requested suggestion:

On 20/2/2014, the Company sent a letter to Dr. Naglaa Al Ahwani containing the company suggestion regarding the financial offer regarding changing the land activity from agriculture to urban according to the agreement made at the meeting minutes dated 5/2/2014. Through the said letter, the company showed the method it would pay the financial consideration for converting the activity along the permits requiring a ministerial decree approving the general outline of the project.

 

The Government proposes two solutions to finish the crisis:

On 25/3/2014,  the company received a letter from Dr. Naglaa Al Ahwani –  Head of the Technical Secretariat of the Investment Contracting Dispute Settlement Committee – in response to the financial offer given by the Company on 20/2/2014 regarding the settlement, proposing the company two suggestion to finalize the settlement:

First Suggestion: Adherence to the agreement made in the minutes dated 5/2/2014, and putting a definite timeframe by the company to complete the implementation

Second Suggestion: Adopting the original contract signed on 16/2/2002 between the General Organization for Urban Project and the Company, referring to the project as an agricultural activity

 

The Company insists on its previous offer for settlement and shows willing to accept the agricultural activity under condition of providing the irrigation source:

  • On 15/4/2014, the company sent a letter to Dr. Naglaa Al Ahwani – Head of the Technical Secretariat of the Investment Contracting Dispute Settlement Committee – in which the company confirms its adherence to the meeting minutes dated 5/2/2014 in case of failing to reach a final solution in relation to the settlement mechanism, the company if the government provide the irrigation resources required with the company reserving its right to claim compensation form the company for the losses it incurred due to the project suspension.

  • On 15/6/2014, the company received a letter from Dr. Naglaa Al Ahwani – Head of the Technical Secretariat of the Investment Contracting Dispute Settlement Committee – in response to the letter sent from the company on 15/4/2014 concluding that the issue can be solved in two ways only, the first of which is to proceed in the settlement according to the meeting minutes signed on 5/2/2014, and the second is adhere to the original contract signed on 16/2/2002 between the General Organization for Urban Project and the company to exploit the land in reclamation and farming only, and that the Egyptian Government reserve the right to take all legal actions required to protect its agricultural and real estate resources.

 

The government announce provided the irrigation source for the whole project area:

On 21/1/2015, the company received a letter from the CEO of the General Organization for the Urban Projects and Agricultural Development indicating the completion of the Al Ayyat Pump Station to feed Giza Channel, and confirming that the Ministry has provided the irrigation source needed to irrigate the whole company area, attached with a letter from Ministry of Irrigation and Water Resources in this respect

 

A new attempt to reconcile opinion between the Company and Government through proposing suggestion from each party to settle the issue:

  • The company was invited by Prime Minister Ibrahim Mehleb to meet with him on 24/2/2015 in an attempt by the government to reconcile opinion to reach the best solution. The meeting with held with H.H. in presence of Dr. Naglaa Al Ahwani, Minister of International Cooperation, Mr. Ashraf Salman, Minister of Investment, and a representative from the Armed Forces, where the government expressed agreement in principle on participating in the project, provided that the company would present its suggestions in this respect. Accordingly, the company sent a letter on 1/3/2015 to H.H. Ibrahim Mehleb, Prime Minister, on the meeting with H.H. at the Cabinet on Tuesday, 24/2/2015

  • On 16/4/2015,  a letter was sent from Prof. Dr. Naglaa Al Ahwani, Minister of International Cooperation – Head of the Technical Secretariat of the Investment Contracting Dispute Settlement Committee – to the Vice-Chairman of Egypt Gulf Company showing the facilities provided from the government to the Company, along with the company obligations, suggestions and violations.

  • On 3/5/2015, the company sent a letter to H.H. Dr. Naglaa Al Ahwani – Minister of International Cooperation – Head of the Technical Secretariat of the Investment Contracting Dispute Settlement Committee – in response to the letter sent to the Company on 16/4/2015   

 

Diplomatic Mediation between the Government and Company to solve the issue:

On 17/12/2017, the Company sent a letter to Ambassador Salem Al Azamanan – Ambassador of Kuwait to Egypt to arrange a meeting with Eng. Ibrahim Mehleb in an attempt to reach an amicable solution to the Company problem

 

The Company proposes a new suggestion to solve the issue:

  • On 12/1/2016, a settlement request was submitted through the company legal consultant, Mr. Yahia Badawi to Head of the Investment Contracting Dispute Settlement Committee including the financial and technical aspects and basis contracting with the government to reconcile the opinions between the Company and Government as the case was in Madinaty project. A copy of the letter was sent to the General Brigadier Abdullah Abdulghani (General Secretariat at Ministry of Defense) so that the consideration for converting the activity will be provided fully-finished building units to the company.

  • On 12/1/2016, the company received a letter from General Secretariat at the Ministry of Defense, indicating that a joint conference involving the company different government bodies at the headquarters of Ministry of Defense on Wednesday 27/1/2016 to discuss the final practical solutions in all aspects to maintain interests of both parties, to be presented to the Cabinet. The Company was asked to suggest a final solution in light of the conference held on 9/1/2016.

 

Raising Complaints to the Investment Contracting Dispute Settlement Committee:

  • On 12/1/2016, a complaint was raise to the Investment Contracting Dispute Settlement against Prime Minister in his capacity, Ministry of Agriculture in his capacity, and the General Organization for the Urban Projects and Agricultural Development.

 

Forming two specialized committees to investigate the project, but they were not held:

  • On 27/1/2016, a conference was held between the Company and different government bodies at the Ministry of Defense, where the project was presented in all aspects, including the airport and railways. At end of the meeting, a decision was taken to study the matters of the airport and the railways connection, provided that a meeting shall be held within two week, which has not happened.

  • On 7/2/2016, the Company sent a letter to General Brigadier Abdullah Abdulghani (General Secretariat at Ministry of Defense) requesting to set a date to hold the specialized committees recommended to be formed at the conference held at Ministry of Defense on 27/1/2016.

 

Expediting the complaint raised by the Company regarding the concerned settlement:

On 10/4/2016, the Company addressed the Investment Contracting Dispute Settlement Committee regarding the complaint, attached with a copy of such complaint, requesting to set an immediate hearing to examine the complaint and discuss the settlement suggestions presented by the company.

 

The Company urges the Government to expedite providing the irrigational resource so that the land will planted according to the original agreement:

  • On 17/4/2016, the company sent two explanatory memoranda to Minister of Agriculture and Land Reclamation and Minister of Irrigation and Water Resources, basing on the letter sent from the General Organization for Urban Projects and Agriculture Development to the company 20/1/2015 indicating the provisions of the irrigation source for the whole area. The two Ministers were asked, according to the original contracting of agriculture – to immediately determine method and time of providing the irrigation resource by the ministries, needed to irrigate the whole area (26 thousand feddans)

  • On April 2016, the company drafted a settlement contract upon the meeting with the Public Funds Prosecution, containing all the conditions discussed with the Governments, including the material payment, airport, railways and such other matters.

Egypt-Gulf for Investment & Development

The Egypt – Gulf Company for Investment and Development, S.A.E. (formerly known as the Egyptian – Kuwaiti Company for Investment and Development, S.A.E.) was founded in accordance with the applicable laws of the Arab Republic of Egypt, the provisions of Law No. 8 of 1997 of issuing guarantees and investment incentives, and the provisions of Law No. 159 of 1981 of issuing joint-stock companies with a capital of 3.8 billion Egyptian pounds paid from 381 million Egyptian pounds.

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