Sink or swim
The government's decision to open the agricultural irrigation and drainage water sectors to private investment has sparked a wave of mixed reactions. Gamal Essam El-Din
tests the waters
Three weeks ago, Minister of Irrigation Mahmoud Abu Zeid took political and economic observers by surprise when he unveiled a government plan aimed at privatisating agricultural irrigation projects. Abu Zeid said the government is in the process of drafting a new law aimed at privatising agricultural irrigation and drainage water projects. "The costs of establishing and maintaining these projects have become too high for the government to bear," said Abu Zeid, arguing that, "it is far better for the private sector to take charge of providing these services and facilities to farmers under the supervision of the government."
Abu Zeid explained that irrigation projects, such as digging water canals and drainage facilities, would be a new sector for Egyptian, Arab and foreign investors. "Investors will provide services which farmers will pay for," explained Abu Zeid, "while the government will make sure that costs are not too high, and that investors make good profits and spend the money on improving drainage systems and protecting irrigation infrastructure."
According to Abu Zeid, the principle of privatisation has become a matter of necessity in water management projects. "With increasing scarcity of water and underground water containing a high rate of salinity, it has become crucial for farmers to pay for irrigation services in a bid to ration the use of irrigation water and establish sustainable drainage techniques," argued the minister. Besides, he continued, the coming two five-year development plans (2007-2017) aim at reclaiming 3.4 million feddans. "To achieve this objective, Egypt will be in desperate need for giant irrigation stations to carry water to the newly reclaimed lands," stated Abu Zeid. He further noted that "the private sector will be most capable of building these stations", and will use "sophisticated irrigation systems, such as the sprinkling and dripping techniques."
Abu Zeid, however, emphasised that private investment in agricultural irrigation projects will be confined to newly reclaimed lands. "For the time being, the private sector will not be allowed to work in the old cultivated lands around the Nile Valley, because these have their own old systems of irrigation," he confirmed.
But many observers disapprove of the government's plan, saying that it came as a shock. "The government's announcement came only a few days after an earlier shock, namely its decision to sell 80 per cent of the shares of Banque du Caire," said Hamdin Sabahi, an independent MP with leftist leanings. To Sabahi, the consecutive announcements of privatising Banque du Caire and agricultural irrigation projects clearly demonstrate that Prime Minister Ahmed Nazif's government primarily aims "to sell as many public assets as possible in the shortest time." Sabahi disdainfully added: "I'm afraid that one day very soon this government will surprise us with a new decision to privatise the High Dam, Suez Canal and even the Pyramids."
To leftist and Muslim Brotherhood figures, the banking and irrigation sectors must remain closed to privatisation. "The irrigation sector has been a state monopoly since the days of ancient Egypt because it is the government's main tool to control floods and ensure that farmers toe the line," pointed out Ali Laban, a Muslim Brotherhood firebrand MP. In a letter to Abu Zeid, Laban attacked Nazif's government for "daring to break a 5,000- year-old taboo," and questioned whether the decision was in response to pressure from the World Bank.
"There are reports that the World Bank refused to give Egypt a loan of $145 million for land reclamation projects unless it embarks upon privatising irrigation and drinking water projects," claimed Laban. He continued that reports are rampant that the government will give licence to private businessmen to establish drinking water projects under the BOT (build, operate and transfer) system for 30 years. The MP warned that privatising irrigation water will make crop prices skyrocket. "Even if selling irrigation water in the old Nile Valley is out of question right now, privatising this water in new lands will make prices of crops and foodstuffs go up," argued Laban.
Irrigation experts, however, varied in their reaction to private irrigation projects. Reda El-Damak, manager of water projects in the Ministry of Agriculture, agrees that the participation of the private sector will be confined to newly reclaimed land to the west of the Nile Delta. El-Damak also agrees that this privatisation step will lead to rationing the use of water and relieve the government of the huge costs of giant irrigation projects required in the coming few years. "The agricultural sector consumes 75 per cent of water resources in Egypt," he noted, "and to maintain this share, the use of these water resources must be greatly rationed."
This expert revealed that the World Bank will help Egypt build irrigation barrages in the Nubariya project to the west of the Delta, and that it "stipulated that the private sector play a role in irrigation projects in order to approve funding. El-Damak expects that the Nubariya project will help the government reclaim 250,000 feddans and the involvement of the private sector could help meet the government's target of reclaiming three million feddans through the year 2017.
Abdel-Reheim El-Ghoul, chairman of the People's Assembly Agricultural Committee, also believes that the costs of irrigation projects have become too high for the government. "At the same time," emphasised El-Ghoul, "I oppose allowing the private sector to establish irrigation projects in the old Nile Valley." According to him, farmers in the Nile Valley are already burdened with the costs of buying fertilisers, pesticides and seeds. "If irrigation water is privatised, farmers may find themselves obliged to pay more than four thousand pounds to irrigate one feddan," estimated El-Ghoul. This could lead to a revolt by the farmers "which is the last thing, I think, this government needs," he warned.