Things not so rosy for OCI on the home front

A Dh146 million Abu Dhabi contract awarded to Orascom Construction Industries (OCI) is a triumph, but not enough to overcome challenges Egypt's biggest publicly listed company faces from project delays and cancellations at home. OCI, in a joint venture with the Italian engineering company Tecnimont and the South Korean group Samsung Engineering, will carry out civil works for Abu Dhabi Polymers Company, also known as Borouge, it was announced on Wednesday. Borouge is a 60-40 joint venture between the Abu Dhabi National Oil Company and the Austrian plastics company Borealis. But OCI is facing headwinds at home. Rania Zayed, the senior adviser to the Egyptian ministry of finance, said this week that the country might have to extend bid submission deadlines for four infrastructure projects worth $2.6 billion. OCI had prequalified for the $1bn Rod El Farag Highway project, which was among those delayed. Bid submissions for a hospital project had been due this month, followed by road projects in May, and water and sewerage plants in August. All have also been delayed. "OCI witnessed an interruption in the award of new construction contracts in Egypt," said Samir Murad, an analyst at National Bank of Kuwait. "The company's construction business outside Egypt continues to operate normally through its satellite offices in Abu Dhabi, Dubai and other places." Mr Murad placed the rating and target price of OCI shares "under review" on February 7. Shares of the company, listed on the Egyptian Exchange, have been suspended since the bourse shut on January 26 because of the unrest that led to the ousting of the country's president, Hosni Mubarak. The exchange is due to open on Sunday, officials said this week. OCI is also tradable on the London Stock Exchange, where shares have declined 10 per cent since January 26. But OCI has healthy liquidity, with a cash balance of $900m at the holding company level and $400m with various associates and joint ventures.