CAIRO // Egypt's government has revived the fortunes of a US$500 million (Dh1.83bn) agricultural project in the south-western desert that represents one of the UAE's largest investments in the country.
A cabinet-level committee last week upheld a 2008 contract with Al Dahra, an Abu Dhabi farming company, to cultivate a 43,000-hectare tract in Toshka, a desert valley that the Egyptian government plans to turn into a lush farming region.
The committee's surprise decision, made with the caveat that Al Dahra provide an expedited plan for developing the land, reversed a ruling by an administrative court that had cancelled the contract.
The decision represented a rare bright spot for foreign investors in Egyptian land and property, who have watched prosecutors and judges open dozens of investigations into land deals that took place under the former president Hosni Mubarak. Government officials are eager to demonstrate that foreign investors are still welcome in a new Egypt, a senior official from the ministry of agriculture said.
Al Dahra has been given a second chance to make significant progress on the Toshka project, said Hussein Ghunima, the head of ministerial affairs at the ministry of agriculture. The company said in February it had not begun cultivation in Toshka because it had not received water from the state.
"This gives them a good opportunity to put them on the right way," Mr Ghunima said of Al Dahra. "There [now] is water, and they have got financial resources, so they can continue with the good work."
Al Dahra will need to offer the committee within two months a detailed plan for what crops it will grow and how it will develop the land, or risk cancellation of the deal, Mr Ghunima said.
The state council, an administrative court that provides legal expertise to Egyptian government ministries and rules on disputes between the public and the government, announced on February 21 that the government had broken the law in 2008 when it transferred the land to Al Dahra without holding an open bidding process.
The decision immediately set off a number of investigations into whether other land contracts awarded through such "direct order" processes had also violated the law.
But the decision to uphold Al Dahra's contract was not connected to the question of whether the "direct order" process was legal, Mr Ghunima said. He would not directly comment on whether the decision had implications for other land contracts awarded by "direct order".
"We must encourage any person coming to [Egypt] to continue. We need to develop our country," he said. "We need to invest more and more. We've got the resources, you know, we have got the land, we have got the water, we have the sun. All of these provide a good way to develop our country."
Al Dahra executives declined to comment on the decision. In February, Osama Abdul Lotif, the chief executive in Egypt, said the company would challenge the state council's ruling against Al Dahra's deal, arguing the contract "was signed with a full [Egyptian] ministerial commitment".
Al Dahra, which already operates three farms in Egypt and owns land in Sudan, signed the agreement in July 2008 with the Egyptian general body of agricultural development to cultivate more than 43,000 ha of land in Toshka with an investment of more than $500m. The land was to be cultivated in four stages of almost 25,000 feddans each - units of measure used in Egypt, Sudan and Syria.
The agreement, signed in the presence of Amin Othman Abaza, the minister of agriculture at the time, and Ahmed al Zaabi, the UAE ambassador to Egypt, was announced amid a string of deals by UAE companies to acquire farmland abroad, as the Government looked to secure the country's supply of imported food.