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Monday, 21 June 2021

Liquidation of the Egyptian Iron and Steel Company should come only after careful study, MPs say

This comes days after the board of directors of the Egyptian Iron and Steel Company passed, on 11 January, a resolution liquidating the company and dividing it into two new entities.

Gamal Essam El-Din , Sunday 17 Jan 2021
parliament
File Photo: A general view of the Egyptian parliament during a working session (AP)
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In a statement issued on Saturday, the Egyptian parliament's industrial committee said that the government's decision to liquidate the 67-year-old Egyptian Iron and Steel Company should be a matter of careful study.

"The liquidation process should be based on a logical review of the company's performance in terms of losses and profits in the last few years," said the statement.

It argued that the government's liquidation resolution has split society into proponents and opponents.

"So, there should not be a final scenario about the future of the company, but there should be a public debate supported by studies, figures, and scientific research about the capacities of the Helwan-based Egyptian Iron and Steel Company in the future," said the committee.

The statement indicated that the accumulated losses of Helwan's Iron and Steel Company, an affiliate of the Holding Company for Metallurgical Industries, have hit a record EGP 8.5 billion on 30 June 2020.

"Studies have also shown that the working capacity of the company's factories, estimated at 1.2 million tones per year, has greatly deteriorated," said the statement, indicating that "in 2017/18, the company's production reached 133,000 tonnes only — or just 11 percent of the working capacity — and in 30 June 2020, it further dropped to just 10 percent."

"This deterioration caused production costs to skyrocket and represent a big burden to the company," said the statement.

Chairman of the committee Moataz Mohamed Mahmoud said the committee will study the Egyptian Iron and Steel Company's financial and administrative conditions in a logical way.

"We will study all the figures and documents provided by the government in a careful way before we issue a judgment in this respect," said Mahmoud.

The above statement comes a few days after the board of directors of the Egyptian Iron and Steel Company (EISC) passed, on 11 January, a resolution liquidating the company and dividing it into two new entities.

The EISC has been one of the country's industrial icons since its establishment in 1954 and the start of its operations in the early 1960s.

The resolution stipulated that the EISC will be divided into a company for iron and steel and another for mines and quarries.

The move lays the groundwork for private sector investments to play a role in the two companies in the future considering the state’s plan to make use of its loss-making assets and untapped opportunities.

The EISC’s board said the decision was made as a result of the heavy losses that have been accumulating over the years, which hit EGP 9 billion, EGP 982.8 million of which were lost between July 2019 and June 2020.

Meanwhile MP Mostafa Bakri accused Minister of Public Enterprise Hesham Tawfik of invoking aggressive and arbitrary measures against public sector companies.

"Since he came into office two years ago, Minister Tawfik has never visited the company and most of his policies led the company to incur losses," said Bakri.

Bakri said Tawfik's policies aim at privatising public sector companies rather than encouraging local industries.

"Minister Tawfik's policies only aim to serve the private sector and sell loss-making public companies at cheap prices," said Bakri, warning that "Minister Tawfik's policies will lead to laying off the Egyptian Iron and Steel company's 7,500 workers."

"This company was established 67 years ago by late president Gamal Abdel-Nasser to meet Egypt's iron and steel needs and now comes minister Tawfik to sell off this iconic company rather than reform its conditions," said Bakri.

Bakri vowed that he would direct an interpellation against Tawfik in parliament, accusing his policies of undermining one of the Middle East's great iron and steel companies.

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