Saturday,22 September, 2018
Current issue | Issue 1179, (9 - 15 January 2014)
Saturday,22 September, 2018
Issue 1179, (9 - 15 January 2014)

Ahram Weekly

Revisiting the canal

The Suez Canal region has once again been making headlines with the announcement of tenders for the region’s development, writes Noha Moustafa

Suez canal
Suez canal
Al-Ahram Weekly

The government announced this week that 14 international firms had met the tender specifications for the Suez Canal region development project and that they could now make their bids over a three-month period after which the selected firm would be announced.
The winner will then have another six months to come up with a master plan for the project.
In a press conference held on Monday in the Ismailia governorate, Prime Minister Hazem Al-Beblawi said that the master plan for the project was expected to be received by the cabinet this year.
The development of the region was one of the main projects put forward during the one-year rule of former president Mohamed Morsi, with plans to develop the area around the canal being announced by former prime minister Hisham Kandil.
The project was called the Suez Canal Corridor, but the proposals were never implemented.
According to Al-Beblawi, work is expected to begin on the infrastructure of the new project in 2015, and the proposals are expected to comprise projects already put forward by previous governments, such as the Technology Valley in Ismailia, which will boast several technology initiatives, and the industrial zone in the Gulf of Suez.
Adel Elamay, chairman of the Port Said Chamber of Shipping, said that the project had the potential to be the engine of the Egyptian economy over the next 30 years.  
“Parts of the master plan already exist, and there are ongoing projects in East Port Said and the Gulf of Suez. These ideas could be very successful,” he said.
The mega infrastructure and development plan includes work on four seaports: West and East Port Said, Ain Sokhna and Arish in the North Sinai governorate.
The project targets transforming the region into a global trading and industrial hub, earning Egypt billions of dollars.
“Until the final master plan is announced, nobody can tell exactly what the sectors or projects included in the plan are,” said Mustafa Al-Ahwal, president of a group of companies dealing in maritime transportation and a member of the Egyptian Businessmen’s Association.
“We have been subjected to such projects several times before,” he added, saying that he was sceptical about the project and feared it might be rushed.
“We need a major national project to regain confidence in the economy, but we also need to change our vision and culture,” Al-Ahwal said.
For this to happen, services along the canal need to be developed, from facilitating traffic to facilitating trade, including value-added services like shipping, refuelling, handling, storage, and loading.
“We need to see these proposals embedded within the national development plan for the whole country for the coming 10 years and to see a fully integrated plan for Egypt as a whole and not just for the Suez Canal region,” he said.
Forty per cent of the project’s targeted $100 billion annual revenues would come from the industrialisation of the area.
Thus far, Egypt has not been able to build a hub port with a free-trade zone, export processing, logistics centres, and industrial zones. The project seeks to address this by turning East Port Said port into such a hub for the transit trade. It is already listed as the second-best port in the eastern Mediterranean.
“Having a second container terminal at East Port Said could be an excellent plan, especially as the current terminal is achieving positive results,” Elamay said.
There is a plan to establish a second terminal at the port to add to the current one which is operated by a foreign company and had proven to be successful.
“We are preparing for the second container terminal at East Port Said at a total investment of $700 million. We are consulting with foreign and Arab shipping companies to choose a suitable foreign partner,” said Mohamed Youssef, president of the state-owned Holding Company for Land and Maritime Transport, which will function as the project’s national partner.
Foreign companies bidding for the project have objected to their designated 25 per cent share in the ownership of the intended joint venture, compared to the 75 per cent for the national partner, and have demanded that their share be raised to 40 per cent.
“The Holding Company has presented the companies’ demands to the ministry of transport. It is possible that the ministry will agree to their demands and increase their share,” Youssef said, adding that the second terminal was expected to be operating within 30 to 36 months.
The Suez Canal Authority (SCA) has been chosen as the umbrella organisation for the mega-project due to its industrial, economic and human resource capacity.
The canal is a vital commercial route between Europe and Asia that brings in around $5 billion a year. Experts estimate that about 10 per cent of global seaborne trade transits via the Suez Canal, worth $1.6 trillion a year.
Elamay said that an older master plan for developing the region, drawn up by a Dutch company in 2008, was also a useful reference. “It contained proposals for establishing new container terminals, industrial zones, urban development, housing projects, logistics services, ship building and repair, bunkering and a lot more,” he said.
The pledges to develop the canal made by Qatar during the rule of Morsi have now vanished, and most of the financing will now come from the private sector and Egyptian, Arab and foreign companies and investors.
A mega project of this type needs huge investments that the government on its own cannot afford. Qatar had earlier pledged to direct $8 billion into gas, power, and iron and steel plants at the northern end of the canal over five years.
“The government is launching a major national project that will involve the private sector, whether national or foreign. In all parts of the world, governments regulate and legislate for such huge projects, but it is the private sector that injects the money and implements them,” Elamay said.
Al-Ahwal agreed that the private sector would take a major role in the project, but the legislation and regulations needed to be amended, he said. “The national private sector can’t finance such a project on its own. Foreign investments are a must for such huge projects,” he added.
However, there have been concerns about land ownership in the area falling into foreign hands, given its strategic character.
To address such fears, Al-Beblawi said that the 14 firms chosen had been selected according to evaluation criteria that took national security into consideration.
Mohab Memish, chairman of the SCA, said the project would be put to the public for discussion before it was adopted.
Political violence in Sinai could also be a threat to the Suez Canal development project. There has been a deteriorating security situation in the Sinai Peninsula following repeated attacks on the army and police forces from terrorists.
However, Elamay perceived the security element in Sinai as temporary. “The security situation will be resolved in time. Soon we will have a new constitution, to be followed by legislative and presidential elections. This will allow us to move forward,” he said.

The writer is a freelance journalist.

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