Billionaire Sawiris Plans Egypt Spending After Tax Court WinAhmed A. Namatalla and Shaji Mathew
Billionaire Nassef Sawiris’s OCI NV is boosting investment in Egypt after the company was told it no longer has to pay billions of pounds as part of a tax settlement.
The Dutch company’s unit Orascom Construction Industries is partnering with Abu Dhabi-based International Petroleum Investment Co. to build a coal-fired power plant on the Red Sea, subject to technical studies and government and corporate approvals, OCI said in an e-mailed statement today. The Egyptian court yesterday overturned a 7 billion-pound ($979 million) tax settlement Orascom Construction reached in April of last year with the government.
“Our appetite now has increased 10-fold,” Sawiris said in a phone interview from New York yesterday. The ruling is “an annulment of the extortion tax claim by the Muslim Brotherhood government” and “closes the final chapter of the entire saga and we can focus on investment opportunities and creating value,” he said.
The tax dispute started in October 2012 as part of an investigation by former President Mohamed Mursi’s government into possible tax evasion by a number of Egyptian companies. Orascom was accused of not paying taxes on the sale of its cement business to Lafarge SA. Mursi’s Islamist government was overthrown by the military last year, prompting the United Arab Emirates, Saudi Arabia and Kuwait to send Egypt billions of dollars in aid.
The coal power plant will have the capacity to produce as much as 3,000 megawatts of electricity using technology that complies with European Union standards for emission control, OCI said. The company hasn’t decided whether to pursue the 2.5 billion pounds that it has already paid as part of the tax settlement, Sawiris said.
“The ruling gives us all options,” Sawiris said. “But we are a good corporate citizen. We realize the state of the economy and we also realize the great investment opportunities that exist in Egypt.”
The decision to reject the probe came after a six-month investigation by the public prosecutor, OCI said in a statement. Sawiris relocated Orascom Construction to Holland from Egypt last year through a buyout by OCI, an entity he helped set up amid the dispute with Mursi’s regime.
“All other previous preliminary rulings related to the tax dispute that were appealed and pending the appeals committee’s final ruling are expected to be nullified, including all judgments issued against Chief Executive Officer Nassef Sawiris,” OCI said in yesterday’s statement.
OCI shares rose 0.8 percent to 28.215 euros as of 10:20 a.m. in Amsterdam, valuing the company at 5.82 billion euros ($7.27 billion).