Four construction firms received 700 million Egyptian pounds ($39.1 million) in compensations, following Egypt’s new contractor compensation law, which aims to rectify the government’s devaluation decisions that have affected a lot of sectors, including the construction sector.
According to Shams El-Din Youssef, a member of the compensations committee at the Egyptian Federation Construction and Building Contractors (EFCBC), the money was given by four Egyptian governmental entities; the Ministry of Health, Ministry of Electricity, General Authority for Educational Buildings and the General Authority for Roads, Bridges and Land Transport. However, the Ministry of Housing was the main contributor to the compensations.
On 9 June 2017, Egypt’s President, Abdel Fattah El Sisi issued a law ‘New Law’ 84/2017 to compensate aggrieved contractors for the damages that emerged from the crucial economic decisions that created a financial imbalance in contracts to the construction, supply and public service industry. The economic decision include the decision to free float the Egyptian currency, increase customs taxes, remove fuel subsidies and impose Value Added Tax.
The law states that compensations will apply only on damages raised from the economic legislation’s occurring during the period from 1 March 2016 to 31 December 2016, especially when these damages or delays in implementation are not as a result of the contractor’s acts of omission.
Before the four contractors were compensated, a compensation request was submitted to the relevant government entities in Egypt stating all information about their contracts, outlining the damage suffered from the economic legislation and explaining how it disturbed the economic and financial equilibrium of their contract. Supporting documents to substantiate their claim was also submitted alongside the value of the compensation amount.