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Al-Ahram Weekly 17 - 23 February 2000 Issue No. 469 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 17 - 23 February 2000 Issue No. 469
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Focus Profile Travel Living Sports People Time Out Chronicles Cartoons Letters Not just any port
By Niveen WahishSeeking the ideal position to export to Africa, Asia or the Mediterranean basin? Two industrial areas and their adjacent ports may provide just the location you are looking for -- the industrial development project northwest of the Gulf of Suez and the east of Port Said international distribution centre.
The two projects are high on President Mubarak's priorities. Last week he met with the ministerial committee for mega projects to discuss the best means to promote the two projects and ensure their success.
The two projects aim primarily at expanding Egypt's industrial base and encouraging local and foreign investors to set up export- oriented industries capitalising on Egypt's comparatively cheap labour and natural resources. Located close to sources of raw materials, they have been provided with a basic infrastructure including water, energy, sewage and roads. The government has further provided 10-year tax breaks for businesses relocating to the areas.
The north-western Gulf of Suez Project, 40 km south of Suez, will be developed at an estimated investment cost of $150 billion. It consists of a 150 square kilometre industrial area -- the New Economic Zone -- as well as the North Al-Sokhna Port, established to service the industrial area.
According to a study prepared by the American Chamber of Commerce in Cairo, the objectives set out for the Suez Project include the establishment of a heavy industry complex comprising petroleum, petrochemicals, fertiliser and iron and steel production. The area offers abundant energy sources, including gas and oil pipelines. A building material industry that will make use of readily available natural resources is also envisaged, and the upgrading of port services, warehousing, container handling and transit facilities can only boost the maritime industry.
The special economic zone is divided into plots, each allocated to a a private company. During his meeting with the ministerial committee, the president demanded that one company be formed to oversee developments, comprising representatives from all the parties that now hold land. The committee will also examine appropriate legislation for the management of the area, formulating incentives and setting parameters for the relationship between the government and the managing company.
Master plan: Port Said
East Development
Source: Ministry of Transportation
While the government is responsible for connecting water and electricity lines as well as roads to the periphery of the New Economic Zone, each developing company assumes the responsibility for extending the infrastructure within its own area. Internal roads and rail tracks will be financed by the developing companies, as will community services within the specified plots.
Each plot will be subdivided and marketed to local and foreign investors. To this end, each of the developers is striving to attract more investors by offering better services. Moreover, developers have appointed international consulting companies to provide them with insight on what multinational corporations need in these industrial zones.
Ahmed Bahgat, project coordinator for Suez Industrial Development Company (SIDC), pointed out that multinationals remain concerned about excessive bureaucracy. Developing companies, though, are in charge of everything within their zone and will act as middlemen between investors and the government.
The industrial zone will be serviced by the 25 square kilometre North Al-Sokhna Port. Expected to develop into the largest port in Egypt, it is also the first fully private port, established under a law issued in 1998 permitting the private sector to establish general cargo or specialised ports. The law also allows the private sector to establish and supervise specialised terminals in already existing ports for a period that can extend to 99 years.
Mamdouh Hamza, principle associate of Hamza Associates, the port's project consultant company, is satisfied with the direction of the port's development. Although the port, due to become operative by mid-2000, was initially established to service the industrial area, "the way things are going, it could be servicing all Egypt."
A deep-sea port comprising four in-land berthing basins, it will be equipped to handle general cargo, bulk liquids and container vessels. A Build-Operate-Transfer (BOT) contract was signed in March 1999 between the Egyptian government and the Al-Sokhna Port Development Company (SPDC) for the development of the superstructure of the port and 25 years of management and operations.
SPDC is 60 per cent owned by the Egyptian Container Handling company, the first private stevedoring company in Egypt, 25 per cent by Stevedoring Services of America (SSA), a US-based stevedore and marine terminal operating company, 10 per cent by Suez Industrial Development Company and five per cent by an individual investor.
While the Egyptian government has invested LE1 billion in the infrastructure of the port, SPDC is putting in some $200 million for the first phase, which includes the first basin. The development of the remaining three basins will depend on demand on the port and growth of the industrial zone.
According to Hamza, the development of the Al-Sokhna Port may be faster than anyone expects. The first phase of the port will comfortably accommodate the handful of factories already setting up shop in the industrial zone. And it is very probable that construction of the second basin of the port could begin as soon as the first is operative.
Currently, some eight industrial complexes are settling in the industrial zone. These include Al-Ezz Heavy Industries' $700 million steel plant, an Egyptian Fertilisers Company complex to produce ammonia nitrate and urea, a GB (Ghabour) for Buses assembly plant and a DECOM Gulf of Suez facility producing concrete, reinforced concrete and asphalt.
The location of the new economic zone and its proximity to the port has been its main attraction, and the industries which have already chosen the zone are targeting up to 60 per cent of their output for export. Not only can raw materials be delivered cheaper to the Al-Sokhna Port, but it is the ideal position from which to export to Africa and Asia.
The project consultant is not the only one optimistic about the project. Experts are pinning their hope on the fact that the privately operated port will be offering world class service. Osama El-Sherif, chairman of SPDC, addressing representatives of the German-Arab Chamber of Commerce, said that although the tariffs which the Al-Sokhna Port will be charging may be higher than other Egyptian ports, it will be saving them time and other expenses. Moreover, he announced that customs transactions will be fully computerised, by-passing the time-consuming bureaucratic procedures experienced in other Egyptian ports.
John Ducich, general manager of SPDC and the representative of SSA, which holds a 25 per cent stake in SPDC, said that his company had chosen to take part in the scheme because of the potential it saw in the port. Once operative, the port could be a focal meeting point for trade heading to Asia or Africa and vice versa.
With these target markets, Al-Sokhna Port does not compete with the East of Port Said Port, for the latter is positioned to attract vessels sailing around the Mediterranean basin.
While the Al-Sokhna Port was especially set up to service the industrial zone, the opposite happened with the East of Port Said Port. The idea of setting up an industrial zone came after the decision to establish the port.
Overlooking the Mediterranean, the port lies east of the Suez Canal bypass, a water passage crossed by an average of 16,000 vessels annually, all of which are affiliated to major international shipping lines.
"The success of the port will depend on how much international trade it can attract," Hamza commented.
Some 22.5 square kilometres have been allocated to the port, which will comprise a container terminal, general cargo terminal and liquid cargo terminal. The original scheme was for a container terminal, but when the industrial zone was initiated a general cargo terminal was added.
Like the New Economic Zone the industrial park will house heavy, medium and light industries. The area has already been divided into plots of land some of which have been allocated to developing companies to market.
The Egyptian government has invested a little over LE1 billion on the first phase of the port which includes dredging, a 1,200 m quay wall and port utilities including roads, railway, water, waste water, power and communications. Private investors, under a BOT agreement, will be responsible for terminal equipping.
Long- term plans can accommodate a 15 km quay wall, although beyond the first phase -- which will be operative by mid-2001 -- future development will be according to demand.
The port is designed to service third-generation ships, carrying 2,000-3,000 containers. It has a capacity to receive 1.7 million containers annually.
The coastal engineering works and dredging, which the government is paying for, have been awarded to an international consortium of Boskallis, Ballast Nedam, Jan De Nul and Hyundai. The quay wall is being built by Arabian International Construction and Rodio of Italy.
Suez Container Terminal Company, a joint venture between Europe Combined Terminal (ECT) of Holland, Maersk of Denmark and a group of Egyptian investors, won the bid for the building, operating, and transferring of the first phase of the container terminal.
Construction of the general cargo, quay wall and terminal is currently being negotiated between the government and a group of investors from the industrial area. This too will be a BOT contract.
