An Egyptian company appears to have resolved problems in respect of obtaining letters of credit (L/Cs) required for a contractor to resume work on a major construction project.

Tecnimont of Italy stopped work on the project in March 2015, after KIMA Fertilisers was unable to open L/Cs with banks.

Welcome news

KIMA has at last been able to open L/Cs with banks, according Reda El-Adle, the chairman of the fertiliser producer's parent company, Chemical Industries Holding Company (CIHC).

El-Adle did not say how the company finally managed to resolve its difficulties, but it is welcome news since Egyptian companies have suffered multiple problems with L/Cs since the country's 2011 revolution.

L/C woes

According to a representative for the General Division of Importers at the Federation of Egyptian Chambers of Commerce, the biggest difficulty faced by Egypt's importers is opening L/Cs (DC World News, 27 April 2015).

The country's vehicle agents and distributors meanwhile are amongst many types of business reported over recent months as being badly affected by Egypt's shortage of foreign exchange and L/Cs (DC World News, 21 August 2015).

Cancellation threat

In March, CIHC received a letter from Tecnimont informing the Egyptian company that the KIMA Fertilisers construction contract would be terminated.

The Italian contractor nearly cancelled the project, despite KIMA already having made a payment worth US$20m in January 2015.

CIHC is currently looking for new investors in several of its subsidiaries due to a shortage of internal funds.

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