PARIS --- Egypt is close to signing a long-rumored order for 24 Dassault Rafale combat aircraft and one FREMM frigate, a package which according French media reports is worth about €4.5 billion.
The order looks imminent as the French and Egyptian governments are reported to have reached a tentative agreement this week on the related financing package, during a visit here by an Egyptian government delegation.
French Defence Minister Jean-Yves le Drian confirmed Sunday night that "advanced" talks with Egypt were continuing over a possible sale of Rafale fighters jets but provided no other details.
"There are presently pretty advanced discussions with Egypt, but they're not over," Le Drian told television station iTele.
Earlier, Dassault Aviation Chief Executive Eric Trappier said that “We are closing in on the first export contract for Rafale.” He declined to name the customer, but told the Paris daily Le Figaro in a Feb 7 interview that “We have several very active prospects in the Middle East. With Egypt, there are still several points to settle.”
The company has not denied media reports regarding an imminent sale of Rafales to Egypt, and Qatar is also reported to be negotiating the purchase of 36 Rafales – and possibly as many as 72 over the long term.
The agreement with Egypt, reported Feb 05 by Paris business daily Les Echos, primarily revolves around the French export credit bank, COFACE, as cash-strapped Egypt does not have the money to pay for the entire package. COFACE will guarantee 50% of the deal’s value, down from the initial 80-90% requested by Egypt, and financing will be provided by a pool of French banks and possibly Saudi Arabia. Egypt has reportedly agreed to make a down payment of €500 million.
Egypt wants to have its first Rafales in service by August, for the inauguration of the expanded Suez Canal, and also wants early delivery of the frigate, which requires agreement of the financing package and contract signature in a matter of weeks.
The financing package has now been agreed, and the Egyptian delegation has now gone home to submit the deal to Egyptian President Abdel Fattah al-Sissi, the Paris daily La Tribune, which first reported the talks with Egypt in mid-January, said late on Feb 06. It said the deal – now worth €4.5 billion – calls for the delivery of six French air force Rafales by the summer, with 18 more to follow later, and the handing over to Egypt of the Fremm frigate Normandie, which is completing its sea trials before commissioning into the French navy, after some modifications.
France has agreed to guarantee 60% of the deal’s value through its COFACE export financing bank, with the balance to be paid by a pool of banks headed by Crédit Agricole, the only large French bank still active in Egypt. The down payment required to activate the deal – which has increased to 15% of the total value -- will be evenly split between Egypt and the pool of banks, La Tribune said.
Barring any last-minute complications, and given the time needed to draw up the financing agreement, the contract could be signed as early as late February or March.
Meeting the delivery deadlines requested by Egypt depends, however, on whether and when it will make the down payment, which is required for the contract to come into effect.
-- Feb 08, 2015:
1. Added comment by Dassault CEO Eric Trappier, replacing previous "no comment" by the company.
2. Corrected the deal's estimated value from the original €5-6 billion to €4.5 billion.
3. Added additional information on the financing package.
-- Feb 09, 2015:
1. Added comment by French defense minister