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Tabreed pulls the plug on Egypt contract, citing FX concerns: DFM-listed district cooling firm Tabreed has terminated a contract to build a heating and cooling plant for an Egyptian medical complex as Egypt’s foreign exchange challenges make the project “financially unsustainable,” CEO Khalid Al Marzooqi told Asharq Business. While the investment costs were in USD, its return was pegged in EGP, he explained.
BACKGROUND- Tabreed landed an AED 306.4 mn (USD 83.4 mn) contract in September 2022 to design, build, and operate a heating and cooling plant in Cairo for CapitalMed, a unit of Egyptians for Healthcare Services (EHCS). The contract came just months after Tabreed entered the Egyptian market with a contract to provide cooling services for mixed-use developer Marakez’s D5M shopping center in East Cairo.
How did EGP volatility impact the contract? Tabreed had asked EHCS to modify the water tariff rate set in the contract in response to the steeper-than-expected currency devaluation, but the latter declined the request, prompting the Emirati firm to withdraw from the project, Asharq reported, citing a source it says is in the know.
Moving forward: While Tabreed’s Chief Financial Officer Adel Al Wahedi said in July that the company was “slowing down” plans for additional investment in Egypt as it waits for a stable outlook on the EGP, Al Marzouqi told Asharq that Tabreed is “still committed to investing in the Egyptian market.”
