On December 3, 2020, the Prime Minister issued the long-awaited regulations to the law on the facilitation of industrial licenses no. 15 of 2017 by virtue of Decree no. 47 of 2020 addressing the procedures and regulations for licensing heavy industries (“Decree”). This area had remained unregulated by both the law and its subsequent executive regulations, with the law leaving the cabinet in charge of issuing the regulations for licensing heavy industries. The issuance of this Decree marks an important step in completing the framework for industrial licenses and allowing investors to have greater clarity in terms of required procedures and documents for each industry.
The Decree lays out the requirements for the issuance of heavy industry licenses by the Industrial Development Authority (IDA). The Decree stipulates that heavy industries comprise the following industries:
In non-heavy industries, industrial licenses are applied for by factory owners. However, in the case of heavy industries, the Decree dictates that the IDA is charged with offering a number of heavy industry licenses to applicants and coordinates the projects’ locations. This offering process is governed by terms and conditions prepared by the IDA and distributed to the applicants. Prior to beginning the offering, the number, value, type and location of the licenses are approved by the cabinet in addition to the terms and conditions of the bid. This is followed by a public offering process which can be limited by approval from the cabinet if the need arises. The applicants submit their applications by providing the documents required in the Decree as well as any additional documents required by the terms and conditions of the offering.
It is important to note that it is possible for a company to receive a maximum of two licenses, provided cabinet’s approval.
When all the applications are in, a committee formed by the Minister of Trade and Industry assesses the license applications and ensures that they meet all the technical and financial specifications. Once the aforementioned committee makes its recommendations to the cabinet, the latter provides its final approval, after which the IDA notifies the approved applicants. Upon receiving the approval, the applicant must pay the necessary license fee within one month, otherwise, the approval is nullified.
In case there is an overabundance of applicants, a public auction on the licenses is held with the license fee as the starting bid.
The license holder is then required to meet all the industrial and environmental requirements and approvals necessary as well as arrange for the allocation of the land on which the project will be situated. Obtaining the necessary approvals and starting production must be completed within the timeline determined in the terms and conditions of the offering, otherwise, a license may be revoked or penalties may be imposed.
If you have any questions do not hesitate to contact our M&A team members: Ragy Soliman, Youssef Sallam and Nayera Hassan.
