The need for expansion of the energy sector has resulted in a government policy of establishing separately capitalised companies for downstream activities. Law 1 permits concessions to be granted to local and foreign investors for the establishment of general or specific maritime ports. Countries in other regions, such as Latin America and Eastern Europe, have undertaken large privatisation programmes that have resulted in substantial receipts. Using the IMF method of normalisation to account for a country's relative size and its pace of privatisation by measuring annual privatisation receipts as a share of GDP, Egypt's experience ranks among the top four countries. Egypt's strong market capitalisation, a sign of high-performing capital markets, places it among the top emerging market countries.
Much speculation exists with respect to the future of Egypt's privatisation.
The deteriorating quality of the remaining portfolios leaves room for expectations of a deceleration in the pace of sales. With respect to marginal companies, successful sales will only be achieved if the sale price is low enough to reflect the underlying financial situation of the company. Otherwise, the government will incur large costs by undertaking financial restructuring of the companies prior to sale. As for the non-viable companies, the issue of redundant labour and the financial burden associated with early retirement schemes will have to be addressed. Labour challenges Labour is viewed as one of the major obstacles to Egypt's privatisation process.