Assiut Cement Plant is one of the largest in Egypt. It produces around 5.7 million tonnes a year, or about 11.5% of local production. With an area of 1,300 acres, the plant was privatized in the 1990s in the midst of the controversial privatization policy adopted by the government at the time to overcome the economic crisis, which led to the laying off of thousands of workers.

Assiut Cement Plant is one of the largest in Egypt. It produces around 5.7 million tonnes a year, or about 11.5% of local production. With an area of 1,300 acres, the plant was privatized in the 1990s in the midst of the controversial privatization policy adopted by the government at the time to overcome the economic crisis, which led to the laying off of thousands of workers.

After the revolution in March 2011, the Administrative Court ruled for the renationalization of the companies Omar Afandi, Tanta Flax, Steam Boilers and Shebine Spinning, which were privatized in the 1990s, given their corrupt privatization processes and low selling prices, which were not commensurate with their real values. This unprecedented ruling brings hope to the workers of the plant that a similar ruling might be issued regarding their plant.

“Before privatization, the plant used to achieve annual profits of L.E. 400 million (US$ 80 million), and after privatization, this figure increased to L.E. 1 billion. Workers however haven’t received their share of these profits since 2004, which has prompted them to file a lawsuit against the plant administration,” said Muhammad Sayed, a current plant employee.

Moreover, the plant heavily relies on day labour so as not to be committed to any cash or in-kind obligations towards the workers. In addition, the plant health services have deteriorated, while previously, according to Sayed, all workers used to undergo a regular examination. On the other hand, workers weren’t able to organize themselves and establish their own union to claim their rights before the revolution.

Adel Farghali, the financial advisor of the company, admits that the workers haven’t actually received their shares of profits from 2004 till 2011 and no judgment has been pronounced yet regarding the relevant lawsuit filed by the workers; adding that the company management has recently held a meeting with them to negotiate these profits and offered to grant them the profits of only 12 months, which they rejected. No proportion of the profits shall be given to any workers retired during that period.

Farghali says that the last year profits amounted to L.E. 902 million (about US$ 180), and that the costs of health insurance, which used to be less in the past, justify the poor health care of workers: “What happens now is a kind of routine examination.”

Layoffs after privatization

The workers’ problems date back to the commencement of privatization when they faced the risk of dismissal and early pensioning off, according to Attef Youssef, the Secretary General of the Chamber of Commerce in Assiut and the former spokesman for the plant workers: “The plant was founded in 1986 as an Egyptian joint-stock company to reconstruct Upper Egypt and meet the citizens’ needs of the cement industry.”

The number of workers increased from 1,000 to nearly 2,500 workers by 1999 when it was privatized, when that number decreased to 1200.

Abdulazeem Shaban Hashem, one of the plant’s prematurely pensioned off workers and a member of its union committee, says that in November 1999, the company’s board of directors started privatizing the plant after having been sold to the Mexican Cemex Company, which subsequently laid off a great number of workers.

The company then started to put pressure on the workers through empowering the state security service over them to settle their remunerations prematurely where about 1,300 workers were dismissed in three phases starting with the privatization year and until 2002. Each dismissed worker received a remuneration of no more than L.E. 30,000 (US$ 5,000) without a pension.

Lawsuits to re-nationalize 

The Administrative Court ruled for the renationalization of the companies of Omar Afandi, Tanta Flax, Steam Boilers and Shebine Spinning, which has given hope to the current and dismissed workers to renationalize the Assiut Plant.

That hope has made several lawyers file different suits on behalf of the workers to revoke the plant privatization, including Hassan Humam who has filed a case challenging the plant’s sale process, based on the fact that it was sold at L.E. 1.3 billion (US$ 216.6 million) at a time when its market value was ten times that figure. Consequently, the sale contract lacks the good faith condition in addition that the plant value wasn’t assessed by a global experienced body, which means there is a suspicion of fraud in the sale procedures in violation of the Bid and Tender Law no. 89 of 1998. This facilitates the process of challenging the sale contract before the Administrative Court.

Among the other examined cases is one filed by lawyer Ali Adawi against Cemex Company to renationalize the plant and reinstate the dismissed workers. A verdict is awaited in September.

Traders lamenting

The conditions in the plant concern not only the workers but also those working in the field of construction and building and those seeking housing. Even though the plant profits have increased after privatization, the traders’ profits have not increased accordingly.

Mamdouh Saad Abdulradi, a cement trader in Assiut, says the situation before privatization was much better as the price per one tonne back then was L.E. 155 and they sold it for L.E. 180.  After privatization it has become L.E. 555 to be sold at L.E. 560 and sometimes at the same price.

“Moreover, before privatization we used to get 4,000 tonnes per month, but now we get only 1,000 tonnes, which has led to a recession in the cement business and consequently in the real estate market,” Abdulradi added.

Privatization increases real estate prices

Sayed Bshandi, Head of the Contractor Section at the Chamber of Commerce in Assiut said that although basic materials in the cement industry are available, the price per tonne tripled after privatization; noting that the cement price represents 40% of the value of the construction materials.

The construction of a school, Bshandi gives an example, used to cost L.E. 1 million a few years ago, but now costs 5 million.  He thus demands the activation of the Antimonopoly Act because the contractors’ businesses have been greatly affected.

In 2001, explains Bshandi, there were 900 contractors in Assiut Governorates, while in 2006 there were only 250 because of the increased prices of construction materials. “Some of them went bankrupt and sold the furniture of their houses, while others were imprisoned given the insane increases in construction materials, on the top of which was cement.”