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TDA intensifying financial demands from investors over next fiscal year: Authority CEO - Daily News Egypt

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TDA intensifying financial demands from investors over next fiscal year: Authority CEO

Tourism Development Authority also demanding reconsideration of allocation decisions for projects that have only been 10% implemented

We will offer lands in South Sinai under the right to use for a period of 30 year, Authority CEO (Photo By Omar Korashi)
We will offer lands in South Sinai under the right to use for a period of 30 year, Authority CEO
(Photo By Omar Korashi)

The General Tourism Development Authority plans to intensify the financial obligations it asks of companies investing in tourism and which are implementing projects on its lands, according to the head of the CEO of the General Tourism Development Authority, Siraj Al-Din Saad.

According to a dialogue between Al-Din Saad and Daily News Egypt, targeted revenue during FY 2014-2015 is EGP 462m, 75% of which represents past-due revenues owed to the Authority.


What procedures are being used to more intensively demand and collect financial obligations owed to the Authority during the coming period?

The Authority held several meetings over the past days with tourism investment associations, beginning with the Ain Sokhna investment association, and another with investors in the areas north and south of Marsa Alam. It is expected that there will be a meeting with the Taba and Ras Sidr associations during this month as well.

The Authority is continuing its meetings with investor associations in order to publicise the Authority’s new policy, which comes in the framework of achieving revenue of EGP 462m, 75% of which comes from past due financial obligations from investors.

Why are you more aggressively seeking claims for debt owed by investors during the current period?

The Authority’s new policy comes with full coordination of state agencies in obtaining financial dues, such that the policy does not harm the investment climate or worsen the difficult conditions the sector is facing.

We achieved revenues of more than EGP 572m during FY 2013-2014, EGP 140m more than our target. We expect the revenues from FY 2013-2014 to ultimately reach EGP 580m, meaning if 2010 was the peak of tourism arrivals to Egypt, then the last fiscal year was a peak in terms of Tourism Authority revenue.

But as I mentioned, the tourism sector has been facing very difficult conditions over the past three years.

The Authority is going to reconsider allocation decisions for projects which have been implemented less than 10% without there being compelling reasons that might have prevented completion of the project. It is inconceivable that lands assigned to projects should have had less than 10% of their projects implemented when there are no reasons the projects are not being completed.

We have provided several facilities over the past three and half years to deal with land withdrawals from investors, most recently we granted the projects which had implementation rates of less than 40% but more than 10% a deadline of until the end of the year to pay a late penalty of up to 15% of the land’s value.

Egypt needs every serious investors in order to inject funds and generate job opportunities, and the state will not turn its back on investors – we are aiming to set clear rules in dealing with investors over the current period.

How much in financial obligations are owed by investors?

This is a difficult question and I cannot answer it at the moment, but you have to know that a decision to withdraw projects from lands in which there is no excuse for it not being implemented, this will not be applied in the areas of Taba and Nuweiba. I would like to point out that the Nuweiba and Taba areas do not have projects whose implementation rates fall below 50%.

Does the issue depend on the financial obligations owed regardless of the rate of implementation?

Of course not. We are going to intensify the claims for financial dues with a view towards the implementation rates of the projects and evaluation of the projects to consider the continuity of the project.

We will review some of the elements related to progress on financial obligations, with regards to the value of the lands, value of implementation penalties and late payments, in addition to financial dues owed for private tourism housing units. The Authority will carry out these decisions with flexible mechanisms, especially with regards to collecting financial dues from investors.

What about the Authority’s plan to offer lands over the coming period?

We will be offering 20m square metres at the beginning of August 2014 for the establishment of 25,000 various types of rooms, including hotel rooms and tourism housing units. We are aiming to attract investments worth EGP 8.6bn with this space.

The offering will be made according to the tender and bids law.

There are major criticisms of the system for offering lands directly and that it is a back door for corruption.

When is there direct land allocation? Direct allocation is when there is a single tender to obtain the land, and this is impossible.

What is actually happening is that there are a lot of tenders received by the Authority, and these are broken down and evaluated according to financial solvency and technical competency. We are studying all aspects of the company from their previous experiences in constructing tourism projects, its reputation on the market, and its financial and technical competence.

Will you be proposing lands by way of the usufruct, or right to use, system? In what areas?

We are going to offer land by way of usufruct system in South Sinai in the area of Nabq and Ras Sidr. In terms of Ras Sidr, this area is promising for investment. The state aims at developing it in an integrated way with other sectors including industry through establishing an airport for the area.

The Ministry of Aviation is tasked with offering the Ras Sidr airport for investors and implementing is through the BOT (build – operate – transfer) system .The state aims for it to be fashioned along the lines of the Marsa Alam Airport, which was implemented by al-Khrafi company, owned by Kuwaiti businessmen Nasser al-Kharafi.

Investors in Sinai complain about the duration of the right to use. Will the land be offered according to a right to use of more than 30 years?

We will offer lands in South Sinai under the right to use for a period of 30 years and this can be renewed after 20 years. There are laws that compel us to limit the right to use period in the area, and we must respect them.

Will the system of  project implementation according to the plan of use be a part of the new offerings?

Yes. This system is in the brochure for offerings, and stipulates that the company is obligated to implement projects according to what was agreed upon.

The new offering will offer great flexibility in terms of integrated development for projects which have spaces exceeding 500,000 metres. This flexibility in the large areas will be offset by an agreement not to modify the basic system.

What about projects that were assigned through the past offerings?

Nine projects were assigned, with areas of up to 5.2m metres, and with targeted investments of EGP 3.7bn.

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