JAPANESE COMPANIES RECEIVE ORDERS FOR POWER GENERATION EQUIPMENT FROM EGYPT

The Nihon Keizai Shinbun reports that Egypt has recently been putting in orders for electricity generation equipment from Japanese companies. According to the Nikkei, demand for electricity in Egypt is expanding by 7% year on year. For the most part, European and Japanese companies are competing for contracts. It appears that Japanese companies have won the most recent round.

Two major deals have just been announced. The Hitachi Group has won US$50 million contract to supply equipment for an electrical generation plant in southern Cairo, due to be in operation by June 2008. Additionally, Fujikura has won a US$60 million contract for a plant in Alexandria. For the Hitachi Group, this is their second such contract in Egypt; their first coming in 2002. For Fujikura, this is their first deal in Egypt. The Sumitomo Corporation played a supporting role in both of the new Japanese deals in Egypt.

The Nikkei also points out that yen loans to Egypt had been suspended between 1991 and 2002 due to Egypt “not living up to its international commitments” in that period (I’m not exactly sure what this refers to: peace process? human rights? debt?). However, since 2002 Japan has been playing a significant role in building the Egyptian infrastructure.

In December 2002, when Egyptian Foreign Minister Fayza Aboulnaga visited Japan, the joint statement noted the following: “The Japanese side also expressed its intention to seriously consider supporting Egypt's efforts to upgrade its electricity and power sector and transmission lines.” We may thus infer that the recent orders won by Japanese companies may be related in some way to political support from the Japanese government.

According to the figures posted by the Japanese Embassy in Egypt, Japan exported goods valued at US$787 million to Egypt last year, while Egyptian goods coming to Japan were valued at only $US59 million in the same period. In fact, the value of Egyptian exports to Japan has fallen every year since 2000 in spite of the efforts to develop the relationship.