Following four procedural sessions last week, Egypt’s Senate, the consultative upper house of parliament, got down to business this week.
On Tuesday, it gave final approval to a new government-drafted bill aimed at establishing a Supreme Council for Vehicle Manufacturing and setting up a fund to provide financing for an environmentally friendly vehicle-assembly industry in Egypt.
A report prepared by the Senate’s Industry and Trade Committee said the new 13-article legislation served the state’s strategy of turning Egypt into a regional hub for the production and export of electric vehicles (EV), targeting the markets of Africa and the Arab world in particular.
The legislation could also attract foreign investments to the vehicle-manufacturing industry, as this represents the central nerve of modern economies, said the report.
The legislation will also serve the government’s policy of seeking to protect the environment by expanding the use of environmentally friendly clean electric power and reducing transport vehicles with fuel emissions harmful to nature and human health, the report said.
The minister of environment and the Environmental Affairs Authority will set out the criterion upon which vehicles are considered harmful to the environment.
Head of the Senate’s Trade and Industry Committee Mohamed Halawa said the Supreme Council for Vehicle Manufacturing will offer incentives and facilities to investors to tap the EV assembly industry.
The proceeds of the fund for financing an EV industry will be used to support the state’s policy of switching to green and clean means of transport and increase spending on the research and technology centres necessary for creating a competitive EV industry, Halawa said.
Hani Al-Assal, a senator with the parliamentary majority party Mostaqbal Watan, said the value of the vehicle-manufacturing industry in Egypt is estimated at $4 billion. If Egypt is to become a regional hub for the EV industry, this could go up to $100 billion, he said.
But the legislation was rejected by some leftist senators.
Mahmoud Sami, leader of the parliamentary group of the leftist Egyptian Socialist Democratic Party, said the legislation setting up a Supreme Council for Vehicle Manufacturing and a fund for financing an EV industry would cost a lot of money.
“This is not the right time to set up such a council and fund as the country is reeling from a global economic crisis that should force the government to turn to adopting austerity measures rather than spending money to set up councils,” Sami said.
Sameh Ashour, a Nasserist senator, also rejected the legislation, arguing that it came while industrial investors in Egypt were facing bureaucratic complications. The state should first do more to solve problems facing industrial investors such as simplifying licensing measures, he said.
The council will be involved in drafting the general policies, plans, and strategies necessary for developing Egypt’s local vehicle-manufacturing industry, says Article 2 of the legislation, adding that “the council will also take charge of finalising the necessary legislative and administrative framework for this industry, eliminating obstacles and finding solutions to problems facing the auto industry in Egypt, and exchanging expertise and agreements with countries and institutions well-known for their pioneering role and rich experience in the field of vehicle manufacturing.”
The bill also states that a fund to manage financing will be set up, with its headquarters located in Greater Cairo and with branches and offices across Egypt. “To achieve its objectives, the fund will embark on offering a package of incentives and facilities to investors plus spending on the innovation necessary to create a competitive, local, environmentally friendly vehicle-manufacturing industry in Egypt,” Article 4 says.
Another bill aiming to stem air pollution was also part of the Senate’s debates this week.
Chairman of the Senate’s Energy Committee Abdel-Khalek Ayad said the amendments to Environment Law 4/1994 were in line with Article 46 of Egypt’s constitution, which obligates the state to take all measures necessary to conserve the environment and create the conditions for a healthy life.
To achieve this, the amendments propose a 2.5 per cent “green fee” levied on newly imported and locally produced vehicles fitted with engines that cause harmful emissions.
This includes vehicles with engines using diesel only, vehicles with engines using petrol only, or vehicles using combined fuel (diesel-natural gas).
Vehicles with electric engines or natural-gas-powered engines, plus government-owned and ambulance vehicles, will be exempted from paying the green fee, said the report.
Half of the proceeds of the new fee will go to the Automotive Industry Development Fund and the other half to the Environment Protection Fund, it said. The amendment will entrust the Environmental Affairs Agency with the power of inspecting vehicles and issuing “environment-adjustment certificates” after they pay the fee.
The law states that the 2.5 per cent fee could be increased annually by 0.5 per cent to reach five per cent maximum.
For locally produced vehicles, the percentage will be calculated according to the producer’s selling price, said the report, adding that for imported vehicles the fee will be calculated according to the value of the custom purposes bill plus the customs tax and other taxes and fees. In all circumstances, the fee will be imposed on vehicles once only.
The report, however, indicated that after consultation with government representatives, the Senate’s Energy Committee had decided to add a new article (47) to the environment law stating that the Environmental Affairs Agency will be in charge of issuing environment-adjustment certificates to locally produced and imported vehicles using diesel and petrol fuel only after they pay a green fee ranging between LE1,000 and LE50,000 maximum to be paid one time only.
This sum will replace the 2.5 to five per cent green fee after members of the two committees raised concerns that the fee violates the constitution in terms of discriminating against vehicles according to their price value, said the report.
The Senate’s Energy Committee also rejected splitting the proceeds of the green fee between the Automotive Industry Development Fund and the Environment Protection Fund.
It decided that 80 per cent of the proceeds of the green fee would go to the environmentally friendly electric vehicle-assembly industry, 10 per cent to the Environment Protection Fund, and 10 per cent to the State budget.
This new division of the fees will be more effective in achieving the objectives of the amendments in terms of offering the funds necessary for the creation of an electric vehicle-assembly industry in Egypt and at the same time helping the Ministry of Environment to play its role in conserving nature and stemming air pollution, said the report.
*A version of this article appears in print in the 13 October, 2022 edition of Al-Ahram Weekly.