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Al-Ahram Weekly 18 - 24 March 1999 Issue No. 421 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 18 - 24 March 1999 Issue No. 421
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Profile Features Travel Living Sports People Time Out Chronicles Cartoons Letters Shura debates maritime transport
by Gamal Essam El-Din
Members of the Shura Council, a consultative upper house, have warned the government against haste in opening up the maritime transport sector to private competition. To many members of the conservative council, private ownership of this vital sector should be limited to Egyptians -- not only because of its strategic importance to national security, but also because 90 per cent of Egypt's foreign trade with the outside world is conducted via maritime transport.
Members, however, agreed that the public sector's decades-long hold over port services and maritime transport have left them grossly inefficient and outdated. They warned that Israel's huge investments in upgrading its shipping sector at the moment could come at the expense of Egypt's competitive capacity.
According to a new 131-page report prepared by the council's Industrial Committee, the number of vessels in the Egyptian commercial shipping fleet decreased from 137 in 1993, to 122 in 1997 and to 97 in 1998 -- 46 of which are currently owned by the private sector. The report said, however, that gross loading capacity had increased from 1.43 million tons to 1.97 million tons during the same period -- 31.4 per cent of which was owned by the private sector. This tonnage capacity, the report said, accounts for a mere 0.23 per cent of the world's commercial shipping fleet's gross tonnage capacity. The report, however, pointed out that Egypt ranks first among Arab countries in terms of commercial shipping vessels count. As for shipping tonnage capacity, Egypt is outdistanced only by Kuwait, whose loading capacity currently stands at 3.941 million tons.
The report deplored the fact that most of Egypt's commercial shipping fleet vessels are old and antiquated. Worse, the report added, Egyptian oil tankers have all become too old (more than 20 years old) to venture into overseas operations. In other Arab countries, the situation is much worse, as the average age of commercial ships ranges from 18 to 29 years.
Within the same context, the report urged the government for a commitment to embrace port service reform as a vital tool for raising the domestic maritime transport sector's competitive capacity and as a means of boosting Egypt's exports.
According to the report, Egypt has 34 sea ports -- 13 general commercial ports and 21 specialised ports. The report said that during the period from 1981 to 1997, the state spent LE4.3 billion on improving port infrastructure and services. Egyptian ports, however, still face competition from a number of neighbouring countries such as Israel (Haifa, Ashdod), United Arab Emirates (Dubai), Lebanon (Beirut), Jordan (Aqaba), Yemen (Aden), Cyprus (Limassol, Larnaka) and Turkey (Izmir).
The report said that the number of containers handled by Israel's Haifa and UAE's Dubai ports in 1997 exceeded 500,000 and two million respectively. By comparison, the Alexandria port handled only 325,000 containers in 1997, the report said.
It emphasised that there is a pressing need for upgrading a wide range of maritime transport activities, including loading and unloading ships, establishing greater port storage facilities, conducting repairs and maintenance on ships and developing container quay capacity.
According to the report, the volume of Egypt's foreign trade in the year 2017 is expected to exceed 77 million tons. To cope with this huge growth, Egypt's port facilities and maritime transport potentials must be developed and upgraded to the highest level to face stiff competition.
It is regrettable, the report added, that most of the stevedoring and shipyard companies are crumbling. For instance, Alexandria's Shipyard Company is riddled with LE1 million in debts and suffers from deteriorating technical conditions.
According to the report, Law 12 of 1964 was amended in November 1997 to open up the maritime transport sector to private competition, which led to greater private investments in port services and maritime transport. "In four years, seven companies were established for container handling, 137 for shipping, 14 for loading and unloading ships and three for storage operations," the report said.
The report, however, warned of complete dependence on private investments in developing the maritime transport sector. "This sector requires huge investments which go beyond the capacity of the private sector alone. The state should be heavily involved," the report said.
In response, Transport Minister Suleiman Metwalli emphasised that the state gives top priority to investments in maritime transport. "For example, the state last year allocated LE1.7 million to establish two hub ports in Ain Al-Sukhna on the west coast of the Gulf of Suez and in East Port Said. The two ports are designed to receive very large container and cargo ships," Metwalli said. Eventually, he added, the ministry's plan is to raise commercial ports' capacities by establishing 169 container quays and dealing with 101.6 million tons of ship cargoes.
Going hand in hand with these efforts, Metwalli said, the government has offered the private sector great incentives in terms of exempting overseas ships from the sales tax and reducing freight fees. Besides, he added, container ships were given port fee discounts ranging from 20 per cent to 50 per cent, while foreign ships were offered a 30 per cent reduction in port fees.
He concluded by stressing that the Suez Canal Authority and major maritime transport companies will remain in the state's hands due to their strategic importance.
Admiral Ahmed Fadel, chairman of the Suez Canal Authority, stressed that rival canal projects, especially those planned by Israel, will never be able to pull the rug from under the Suez Canal's feet. "The competitive edge of the Suez Canal is greater than you can imagine and no rival canal will ever be able to reduce its competitiveness and importance to the world's shipping lines," Fadel said.
