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Arabtec to renegotiate $40b Egypt deal

arabtec sharesArabtec’s chairman will meet officials of Egypt’s housing ministry on Wednesday to renegotiate the terms of a $40 billion plan to build one million homes in that country, a source familiar with the matter said.

Dubai-listed Arabtec announced last March that it had reached agreement in principle with Egypt’s army to build the homes at 13 locations around the country, on land provided by the armed forces.

But while that preliminary deal was with the army, Arabtec’s subsequent negotiations for a final agreement have been with the Ministry of Housing, the source told Reuters on Tuesday.

 The two sides agreed terms late last month, but the contract which Arabtec subsequently received included less attractive terms for the company than it had approved, the source said.

The ministry had agreed to grant Arabtec the land upon which the project would be built, and in return the construction firm would give a certain proportion of the completed housing units to the ministry in lieu of payment.

But the ministry has now demanded that it be given a much higher proportion of units than the two parties originally agreed, prompting Arabtec chairman Khadem Abdulla al-Qubaisi to fly to Cairo to resume talks on Wednesday, the source said.

“Hopefully, things can be resolved tomorrow or the day after,” the source added.

Repeated calls to a housing ministry spokesperson in Egypt were not returned, while Arabtec declined to comment.

Construction on the project had originally been due to start in the third quarter of 2014, with the first homes to be delivered in early 2017 and the whole project to be completed before 2020, but negotiations between Egypt’s government and Arabtec have been slowed in part by management changes at the company.

Qubaisi is also chairman of Abu Dhabi state fund Aabar, which owns 35 percent of Arabtec, according to Reuters data.

The Egyptian housing project is seen as part of economic and political support to the country by the United Arab Emirates, which has provided billions of dollars of aid to Cairo since Islamist president Mohamed Mursi was ousted in 2013.-Reuters