Orascom Development Egypt has signed a $151 million deal to acquire rights from the Egyptian government to develop the last remaining land bank in the resort city of El Gouna and to settle a prior dispute over environmental infractions.
The master agreement, to which a number of ministries are signatories, allows the company to make significant changes to its flagship project, it said on Wednesday.
It will also exonerate ODE from charges filed by Egypt's Environmental Protection Agency in 2021, accusing it of dumping dredging materials off the coast.
The company had denied the claims.
The master agreement includes a plan to develop the 17.4-million square metre land bank, the company said.
The plan will also allow Orascom to develop about 1.2 million square metres of connected lagoons and build 1,000 hotel rooms every 10 years, it said.
El Gouna’s lagoon system will also be connected to the sea through two new canals to “improve water quality in existing and future projects”, Orascom said.
ODE also received permission to reduce its shoreline setback to 105m, from 200m, which will allow it to make better use of the most valuable land in the city.
It also received permission to undertake 24 environmental projects in El Gouna.
The transfer fee for the land bank amounted to $112 million, with $21 million payable upon signing the contract. The remainder will be paid in instalments over 15 years, the company said.
ODE will also pay $39 million for the reduction of the shoreline setback, the 24 environmental permits, the approval of the two new canals and the settlement of all disputes with the EPA.
The company said it would finance the deal through its cash and equivalent balances, which stood at 141 million Swiss francs ($152 million) in 2022.
It will also take out a loan worth $30 million from its main shareholder and use cash from future operations, it said.