Egypt seeks $33.9m in compensation from Orascom Development

Government agency says the company caused environmental damage to El Gouna's coastline due to improper disposal of dredging materials

Orascom Development has accused Egypt's environment ministry and the EPA have not providing enough evidence back up their claims. Dana Smillie for The National

Egypt's environment ministry has sent a compensation claim worth $33.9 million to Orascom Development Egypt for causing environmental damage at the Red Sea resort city of El Gouna, the contractor said.

The Environmental Protection Agency, a department of Egypt's environment ministry, claims that Orascom Development improperly disposed dredging materials off the coast, damaging the surrounding marine environment, the listed company said on Wednesday.

However, it countered the claim and said the ministry and the EPA failed to provide enough evidence to back the claims and had not responded to the company’s requests for further information.

Orascom Development “has not been given the opportunity to respond, whether technically or legally, to the allegations before the issuance of the claim”, the company said.

Egypt's environment ministry has not issued a statement about the issue and declined to comment when The National reached out to it.

However, a formal letter that the EPA reportedly sent to Orascom Development in July, which was leaked by an online Egyptian publication and seen by The National, claims that some of the damages in question took place when El Gouna was hit by the “dragon storm” in early 2020.

Others were reportedly caused by the company’s dredging of the city’s coastline to make way for the construction of a new extension of El Gouna.

The EPA’s letter claims that several articles of the country’s environmental law were breached during the company’s construction efforts.

Legally, companies are required to submit an environmental study, which details any potential damages that their work may have on Egypt’s natural spaces, before they start work.

The EPA’s earlier letter claims that Orascom Development, one of the flagship businesses in the Sawiris family empire, did not submit any such report, which makes it liable to such compensation claims now.

The EPA has asked the company to pay a reconciliation fee of 333,300 Egyptian pounds ($21,266) on to 33,300 Egyptian fines ($2,118) for breaching several articles of the law, according to the letter.

Orascom Development said it contesting the compensation sum and claimed that it had paid to clear the rubble left over by the “dragon storm” out of its own pocket – a matter that was clearly communicated to the ministry at the time.

The construction company has also requested the ministry to furnish it with ample evidence about the damage, it said. The environment ministry has yet to respond to the company’s requests for more details.