Distributors and traders are the reason behind cement price increases... and we intend not to deal with them

 

July 16, 2011

 

ACC resorted to the media to present its dispute with the government, which the former accuses of treating cement producers unequally and imposing mandatory fees on new cement producers to prevent them from competing in the market, according to Jose Magrina, ACC CEO. The company started its activity in 1997, with $566 million worth of investments, and was not able to get operation licenses as it was banned from participating in the tender held for that purpose. Consequently the company had to pay EGP560 million in addition to EGP230 million for electricity supply.

 

Moreover, the MoI refused to provide the company with gas required to operate the second production line. Kareem Hafez, the legal advisor of the company, said that it was founded in 1997 by Egyptian businessmen to produce 5 million tons of cement a year, then later on CLU bought 60% of the shares thereof in 2004.

 

The first production line was finished in 2007, and the second was finished earlier this year. He further said that ACC applied in 2006 to get the operation license however was not able to get it until 2007, where the government announced for a tender for cement production licenses, however although ACC was not allowed to participate in the tender, the government forced it to pay the highest amount paid in the tender. That’s when ACC filed a claim and is preparing an arbitration claim s well.

 

Jose Magrina denied that Al Gammal has any managerial role in the company, and said that he only owns 5% of the shares. He further explained the offer ACC proposed to the government, saying that they offered to pay EGP8 million a month to get the gas supply and operate the second line until a final verdict is issued. The ball now is in the MoI’s court, as we wait for a response to justify the above, especially that the international arbitration case will be accusing the Egyptian government of not adhering to the agreement signed with the Spanish government to protect investments.