The Golden License

September 12, 2022

Introduction

Over the last years, the Egyptian government has led structural reform in numerous industries to support the Sustainable Development Goals and Egypt Vision 2030 to attract investment in strategic sectors. In addition, to streamline and facilitate licensing requirements, two Cabinet Decrees have been issued over the last three months regarding the Golden License, a single-approval for the establishment, operation and management of national and strategic projects (the “Golden License”).

The Golden License was introduced under Article 20 of the Investment Law no. 72 of 2017 (the “Investment Law”), which states that:

“By virtue of a Cabinet Decree, companies incorporated to conduct strategic or national projects that contribute to development or partnership projects between the private sector and the State, the public sector, or the public business sector in public utilities and infrastructure, renewable energy, roads, transport, or ports may be granted one approval for the establishment, operation, and management of such project, including building licenses and allocation of the real estate properties required for the project. Such approval shall be effective without the need for any other procedure. This approval may also include the application of one or more incentives set forth in this Law. The Executive Regulations of this Law shall indicate the conditions and process for the issuance of such approval.”

Article 42 and 43 of the Investment Law Executive Regulations (the “Executive Regulations”) lists certain requirements that must be satisfied by the applicant company, which have been amended under Cabinet Decree 2300 of 2022 to facilitate obtaining such license. In addition, reference to “strategic and national projects” under Article 20 of the Investment Law has been defined in detail by Cabinet Decree 56 of 2022.


General Requirements

Article 42 of the Executive Regulations, as amended by Cabinet Decree 2300 of 2022, lists certain requirements that must be satisfied by the applicant company, including, most importantly, the following:

  1. The applicant shall take the form of an Egyptian joint stock or limited liability company incorporated following the provisions of the Investment Law or the Egyptian Companies Law no. 159 of 1981, and its issued capital shall not be less than 20% (twenty per cent) of the investment costs of the project. The company should also be established following the enforcement of the Investment Law.
  2. The applicant shall submit an initial feasibility study and a project execution timeline.
  3. The applicant shall undertake to provide the relevant infrastructure (roads, water, sewage, electricity, waste treatment).
  4. The applicant shall abide by requirements and conditions concerning the company’s purpose under the applicable laws and regulations.


“National or Strategic Project” Eligibility Requirements

With regards to defining what constitutes a “national or strategic project” in the application of Article 20 of Investment Law, Cabinet Decree no. 56 of 2022 provides that for a project to be deemed national or strategic, the project must meet two or more of the following criteria:

  1. The project contributes to increasing exports by exporting at least 50% of its production annually, within a maximum period of 3 (three) years from starting the activity.
  2. The project is financed by foreign currency funding transferred via an Egyptian Bank.
  3. The project aims to reduce imports, localize the industry, and increase the use of local components in production, including the use of local raw materials and production to represent at least 50% (50 per cent).
  4. The project is established in one of the areas that are in the most need of development.
  5. The project contributes to the transfer and localization of modern technology in Egypt and supports innovation, development, and scientific research.
  6. The project aims to secure strategic goods for the country and limit their importation.
  7. The project is labour-intensive, i.e., 500 (five hundred) Egyptian employees and salaries should equal 30% (thirty per cent) of the operating expenses.
  8. The project contributes to reducing environmental impact, reducing emissions, and improving the climate.


Activities

Cabinet Decree no. 56 of 2022 highlights that the project’s activity should fall within the following sectors and subsectors:

  1. Electricity and Renewable Energy
    1. Green Hydrogen projects (production, transport, storage, distribution and export).
    2. Electricity projects associated with providing high and extra-high voltage electricity to national agricultural development projects implemented by the State (such as the New Delta projects, Sinai Peninsula development, Toshka and Ayinat).
    3. Green Corridor projects that aim to maximise renewable energy in energy production.
    4. Energy transfer projects (high and extra-high voltage) to various regions and the State’s economic development projects.
    5. Renewable energy projects to supply desalination and green hydrogen production projects.
    6. Electricity interconnection project and electricity exports between Egypt and neighbouring countries.
    7. Electricity storage projects.
  2. Petroleum and Mineral Resources
    1. Projects to extend networks and pipelines for crude oil and petroleum derivatives to fulfil the local market’s needs.
    2. Projects to construct shipping ports and strategic storage sites for crude oil and petroleum products.
    3. Digital infrastructure development projects to be in line with the digital transition.
    4. Projects to decrease carbon emissions, as well as carbon capture and carbon storage projects.
    5. Expansion projects to use Compressed Natural Gas (CNG) instead of gasoline and diesel.
    6. Water treatment projects to be associated with the production of crude oil and gas.
    7. Projects for the atmospheric distillation of crude oil, development of the production units in refineries and manufacturing plants to produce high economic value petroleum products.
    8. Projects for the establishment of packaging factories as well as concrete and steel pipes.
    9. Projects for the establishment of refining laboratories, casting and stamping gold according to the international code.
    10. Petro-chemical plants or the production of metal silicon and polysilicon or the production of phosphate fertilisers and phosphoric acid or the extraction, concentration, and manufacture of tantalum ore.
  3. Transportation
    1. Maritime transport sector: construction of the base-superstructure, management and operation of container terminals in seaports.
    2. Rail sector: operation, management of freight rail lines, sleeping trains and maintenance workshops.
    3. Electric traction sector: management, operation and maintenance of electric traction lines, monorail lines, light rail, subway lines, and express air-rail network.
    4. Seaports and Logistics Centres sector: establishment, management, operation and maintenance of land and dry ports and logistic centres.
    5. River Ports sector: establishment, management, operation, and maintenance of river ports.
  4. Industrial
    1. The supporting industries for renewable energy production projects.
    2. The automotive industry and its supporting sectors, including electric cars, electric vehicle charging stations, natural gas vehicles and gas cylinders.
    3. Wood, furniture, and chemicals industries.
    4. Antibiotics production, oncologic drugs, and cosmetics industries.
    5. Food industries and agriculture.
    6. The engineering, metal and mining industries, including electronic and electrical devices, machines, equipment, electric motors, non-printed boards, benzocyclobutene (BCB) production lines, and the container industry.
  5. Telecommunications and Information Technology
    1. Designing and manufacturing solar cells and clean energy conversion systems.
    2. Producing and manufacturing professional/LED chips fabrication facility.
    3. Manufacturing LCD Open Cell and its dependent projects, such as mobile devices or tablet manufacturing.
    4. Manufacturing domestic lithium batteries.
    5. Manufacturing multi-layer Printed Circuit Boards (PCBs) and their dependent projects such as mobile devices or tablet manufacturing.
  6. Housing and Utilities
    1. Construction/development/upgrading of the main infrastructure stations (i.e. drinking water cranes stations - seawater desalination stations - sewage cranes stations).
    2. Construction of the main utility lines for transportation across different cities and governates to serve the new urban communities.
    3. Constructing/development/increasing the efficiency of the main internal roads and road links between cities and governorates.
    4. Urban development to eliminate slums.
    5. Housing projects to provide proper housing for various segments of society (Housing for all-Alternative housing etc.).
  7. Tourism
    1. Hotel projects in the hotel area between the Sphinx airport and the South of the Ahram-Plateau on the desert road; the governorates of Upper Egypt; the North Coast area; Dahab-Nuweibaa area.
    2. Environment-friendly tourism projects as per the standards set by the Ministry of Tourism and Antiquities.
    3. International entertainment projects in touristic areas and water parks.
    4. Countryside tourism projects in the Delta region and Upper Egypt.
    5. Curative tourism projects.
  8. Youth and Sports
    1. The establishment of sports clubs, youth centres, youth and sports development centres, national camps, cities and youth forums.
    2. The establishment of Olympic cities, stadiums, hospitals and sports medicine units.
  9. Environmental
    1. Manufacturing of environment-friendly alternatives to single-use plastic products.
    2. Integrated waste management activities.
  10. Agriculture
    1. Livestock breeding projects.
    2. Crossbreeding projects.
    3. Industrial agriculture projects related to exportation.
  11. Military Production
    1. Waste to energy stations.


Golden License Application Process

Article 43 of the Executive Regulations sets out the process of granting the Golden License, which is as follows:

  1. The applicant company must file a request for the Golden License to GAFI;
  2. GAFI shall study the request and ensure that the applicant fulfils all the requirements; and
  3. GAFI’s Chief Executive Officer shall coordinate with the competent minister to present the application to the Cabinet.

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