Al-Ahram Weekly   Al-Ahram Weekly
9 - 15 December 1999
Issue No. 459
Published in Cairo by AL-AHRAM established in 1875 Issues navigation Current Issue Previous Issue Back Issues

Front Page

Mega-projects under scrutiny

By Gamal Essam El-Din

An orgy of reprisals against the policies adopted by former Prime Minister Kamal El-Ganzouri erupted in the People's Assembly this week. MPs charged El-Ganzouri with squandering huge budgetary allocations over a number of mega-projects , with legislation passed by his government motivated largely by personal interests.

Encouraged by President Hosni Mubarak's recent instructions that spending on investment projects should be kept within budgetary allocations -- "mega-development projects should be funded by the private sector rather than the public purse" Mubarak said -- MPs went on the offensive.

Three MPs -- Zakaria Azmi, chief of the presidential staff, and Wafd deputies Fouad Badrawi and Yassin Seraggeddin -- called for a series of hearings to assess the overall viability of mega-development projects.

Wafd deputy Fouad Seraggeddin asserted that the government was facing an enormous additional drain on its resources to foot the bill of Toshka project.

"We want the government to submit a detailed budget for this project to the People's Assembly, as soon as possible, so the assembly can assess whether Toshka will turn out to be an insupportable burden on the public purse," said Seraggeddin.

The budgeting and technical aspects of this project remain shrouded in mystery, he asserted, castigating El-Ganzouri's government for its involvement in the project alongside several other ambitious development schemes. These mega-projects, he suggested, had been the root cause of the liquidity squeeze which hit the national economy last summer.

Minister of Irrigation Mahmoud Abu Zeid said in response that 147 studies on the Toshka project had been completed, ranging from in-depth scientific and technical research to economic feasibility. President Mubarak's instructions in the last cabinet were not intended to bring these mega-projects to a halt. "President Mubarak was anxious to know what is the current financial situation of the Toshka project and how it will proceed as it is implemented," Abu Zeid said, adding that the Toshka project, by the end of its first stage in August 2002, will have led to the reclamation of 540,000 feddans. "This stage, which includes an LE1.5 billion pumping station to provide water for the reclaimed area, will cost a total of LE5.5 billion. Out of this sum LE2 billion has already been spent on the digging and water canal works. The project is scheduled to be completed by 2017 at a total cost of LE10 billion," he added.

The East of Port Said project also became embroiled in the parliamentary outburst. El-Ganzouri's government embarked upon the construction of a container transshipment hub port and industrial zone on the mud-flats to the east of the Port Said tafriaa (bypass) in March 1998. A company, capitalised at LE1.5 billion was formed to oversee the development and operation of the port.

MPs, however, in a tour of Port Said organised by the People's Assembly Transport Committee last week, had pointed to a host of technical problems, and alleged financial irregularities.

Omar Barakat, a Wafdist MP, questioned whether the projected returns justify the total cost of the project, estimated at LE1.5 billion.

"The sum of LE1.5 billion is to establish one container terminal. The capacity of this terminal, due to be completed by the year 2003, is expected to be 1.7 million containers per year. The return per container will be a mere $3.7. In addition, no terminal will be constructed to deal with other cargo ships which are needed to serve the industrial zone."

Other MPs questioned the commissioning of a foreign company to take charge of operating and managing 60 per cent of the hub port.

Magdi Nassef, undersecretary of the Ministry of Transport, said that thedecision to grant the franchise to run 60 per cent of the port to an overseas company was intended to guarantee good service at a reasonable price, and attract international lines. The cost of the project, he added, is perfectly reasonable when compared to other similar projects such as the LE1.8 billion Dekeila Port project in Alexandria, established in 1983.Economic returns on this project," he pointed out, "will include not only the fees charged on each container, but also those collected on a range of other essential maritime services."

Nor did the Aswan Iron and Steel Project (AISP) escape criticism. In the last cabinet meeting Mubarak asked Mostafa El-Rifai, minister of industry, to commission a Canadian consultancy to provide a feasibility study for the project.

According to official sources, El-Ganzouri's government pledged LE260 million towards a total budget that is expected to reach LE2 billion. But according to Ali Fath El-Bab, MP for Helwan, a large number of MPs had questioned the viability of AISP when initial studies of the project were presented to the assembly two years ago.

"It is by no means clear whether it will make economic sense to establish a new iron and steel company at a time when already existing iron and steel plants in Helwan and Alexandria are making huge losses. The international steel market is in chaos. The two Egyptian plants, facing increased dumping by overseas competitors, have been forced several times to reduce prices. Why, then build a third plant?"

Fath El-Bab continued: "While the assembly, whose members were treated with derision by the former prime minister, appears in the mood to exact revenge, this should not come at the expense of scrutinising mega-development projects in a scientific and impartial way."

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