Circular dated April 5, 2021 regarding municipal bakeries benefiting from the small companies initiative at a return rate of 5% to finance the process of switching to natural gas

Cairo on: April 5, 2021 Dear Mr. Chairman of the Board of Directors of the Bank,

Greetings,

Towards expanding the use of natural gas as an alternative fuel to diesel, rationalizing energy use in light of the state's energy policy and considering environmental and social elements, and achieving optimal benefit from this natural resource, and within the framework of the Central Bank of Egypt's initiative to finance small and medium-sized enterprises issued on January 11, 2016, and its amendments, which stipulate that banks lend to small and medium-sized enterprises at a low return rate of 5% (declining simple interest), a cooperation protocol has been signed between the Central Bank of Egypt and the Ministry of Supply and Internal Trade, to facilitate the process of obtaining the necessary financing for bakery owners to carry out the transition to using natural gas as an alternative to diesel. This is aimed at financing the installation of internal connections and gas meters, and the cost of supplying and installing the necessary gas burners for bakeries.

Based on the foregoing, the Board of Directors of the Central Bank of Egypt, in its meeting held on March 28, 2021, decided the following:

To allow municipal bakeries aiming to carry out the transition to using natural gas to benefit from the Small Companies Initiative issued by the Central Bank of Egypt in January 2016 and its amendments at a return rate of 5% (declining simple interest), without adhering to a minimum business size threshold, with the aim of improving their efficiency and developing their activities, subject to the following conditions:

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1. The financing bank must obtain a letter from the Ministry of Supply and Internal Trade or the General Authority for Supply Commodities in the name of the bakery owner wishing to obtain financing, containing all necessary information and the repayment mechanism, deducted from the bakery's dues with the Ministry or Authority.

2. The bakery owner must open an account with the financing bank through which payments to the executing entities (gas companies, Arab Organization for Industrialization) will be settled.

3. A signed declaration by the bakery owner accepting that the Ministry of Supply and Internal Trade or the General Authority for Supply Commodities will pay the due installment from their dues to the owner and transfer it directly to the bank immediately upon the due date for payment. This transfer shall continue until the full settlement of the financing and the issuance of a certificate by the concerned bank confirming the completion of clearance and payment of all dues.

4. The bakery owner must provide all documents and papers determined by the financing bank necessary for contracting, in accordance with the credit policy.

Please be kind enough to notify regarding the compliance with the above from its date.

Tarek Amer

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