Daily News Egypt

Egyptian Iron & Steel Company workers to be paid compensation soon: Public Enterprises Minister

Advertising Area

Advertising Area

Egyptian Iron & Steel Company workers to be paid compensation soon: Public Enterprises Minister

Total of 48 public enterprise sector companies lost EGP 60bn in past few years, says Minister Hisham Tawfik

Egypt’s Ministry of Public Enterprises Sector has sent the data of 6,400 employees at the Egyptian Iron & Steel Company (Hadisolb) to the Ministry of Manpower, to determine the compensation they will receive, as the company will be liquidated.

According to Minister of Public Enterprises Sector Hisham Tawfik, negotiations will also take place with the Egyptian Trade Union Federation (ETUF) as part of this.

In a roundtable held on Sunday, Tawfik said that his ministry is ready to compensate all employees at the company’s Helwan factory. A limited number of workers who have some of the skills needed by the companies affiliated with the Metallurgical Industries Holding Company may be transferred there.

The minister added that the Iron & Steel Company workers’ compensation will be rewarding and generous, and that the provision of sources to finance the compensation was partially behind the three to four month delay on the decision to liquidate the company.

He added that there is no intention to close any company which can potentially be developed and reformed, even if it continues losses. As an example, spinning and weaving companies which recently lost EGP 3.25bn were still able to commence with reform and development.

Tawfik added that the Delta Steel Mill Company has also seen a recovery, and two new production lines are being planned, the first of which has been completed.
The Ministry of Public Enterprise Sector owns 120 companies, of which 48 are incurring losses. These companies lost EGP 16bn in capital, in addition to EGP 44bn over the past few years, totalling EGP 60bn in losses, the minister noted.

“Most of the Public Enterprise Sector’s companies need completely new management systems,” Tawfik said, “Therefore, the ministry is going through three important steps, the first of which is to change the law in order for the shareholder to have the right to manage and to change heads of administration from outside the company, and representatives of companies have been reduced to one only.”

Tawfik revealed that his ministry has studied the development of 60 companies, with some companies found to be making a profit but not in the manner required. As a result, the decision was taken to develop them in order to achieve more profits.

He said that three companies have been closed so far, with only the National Cement Company closing in November 2018. The two other companies closed were the joint entity, the Egyptian Navigation Company and the Hadisolb.

As for the status of Iron & Steel Company, Tawfik said that the company had experienced decades of actual losses, reaching EGP 7.5bn over 23 years from fiscal year (FY) 1997/98 to FY 2019/20.

Nevertheless, the Central Auditing Organization estimated the real loss at about EGP 15.6bn during this period. This was financed from debts on mostly governmental bodies, some of which were from the Metallurgical Industries Holding Company with a value of EGP 3.4bn. This came in addition to debts to the Al-Nasr for Coke and Chemicals and others.

The value of Hadisolb’s debts amounted to EGP 9.5bn, of which EGP 1.2bn has been paid through land settlements. The company’s debt remains worth a total of EGP 8.2bn.

For her part, Abla Abdel Latif, Executive Director and Director of Research at the Egyptian Center for Economic Studies (ECES), said that the global iron and steel market recorded about $2.5trn in 2019. It is comprised of about 6 million employees working directly in the industry, and about 30 million employees working indirectly.

Abdel Latif added that this industry is highly valued, as every dollar spent on it makes returns of $2.5, and that each job creates 13 jobs on its margin.

She elaborated that Iron & Steel Company workers issue has some aspects that must be looked at, including the economic feasibility of the company’s continued operations. This would be offset aside by its historical debts, while studying its position in the market.

Additionally, a study must be done of the structure of Egypt’s iron industry, which includes the players in the market; degree of monopoly; quality of the products produced by the company and by other companies; the nature of trade; and products that are imported, but which can be manufactured locally.
In the event of the company’s final liquidation, alternatives must be put forward on manufacturing and how to improve value chains, as well as the role of the Ministry of Public Enterprises Sector in developing companies.

Advertising Area

Breaking News

No current breaking news

Receive our daily newsletter