 Pharaonic projects
Five multi-billion dollar "mega-projects " are planned or underway to transform agriculture, industry and trade in Egypt. The projects will provide vastly more living space and employment for a growing population and increased opportunities for foreign and national investors. They stretch from the southwestern corner of the country, deep in the Sahara Desert, to the Sinai Peninsula, and they are a large part of the country’s ambitious move from state control to an open, or at least more open, economy. When finished they will increase by 20 % the habitable land in a nation that since Pharaonic times and earlier was largely confined to the banks of the Nile and its Delta.
The projects are Toshka, East Oweinat, East Port Said, Gulf of Suez and North Sinai Development Project. The largest and most ambitious of the projects are the two pieces of the South Valley Development Project in Upper Egypt, Toshka and East Oweinat. Together they are planned to bring bleak desert and sleepy Saharan oases to productive life. East Oweinat – where dozens of wells have already been sunk
– will tap an abundance of groundwater discovered by oil companies in the 1970s and add 200,000 feddans of farmland. Toshka, definitely the bigger, will run a canal from Lake Nasser west to four desert areas. The availability of water to the western desert is supposed to add 1 million feddans (a feddan is about an acre) of arable land. Toshka, with a projected $88 billion price tag, broke ground in 1997.
Water from Lake Nasser will be transferred west by a $422 million pumping station. The canal and pumping station, along with highways, make up most of the government’s 20-25 % contribution to the project’s costs; the rest is reserved for private investment. A
224 kilometer road has been opened between Toshka and East Oweinat, along with a 45 kilometer highway between the pumping station and the Aswan-Abu highway. Electricity lines will be extended into the desert from the High Dam hydroelectric facilities.
The pump station is being built by Arabian International Construction (AIC), the largest private construction company in Egypt, which is working on the project as a joint venture with Caverner and Hitache.
Though the construction sector is currently dominated by public sector infrastructure construction companies, Arabian International Construction has become one of Egypt’s fastest growing construction companies. AIC competes with international contractors in the areas of tourism, industry or real estate by using what CEO Mohamed Metwalli calls the ninety-sixty formula. The company says it offers 100 % of the quality that an international company would bring, but with 90 % of the services and at 60 % of the cost. "Construction is a service and clients had to go to big international companies to get good service. That meant they had to pay very steep premiums without necessarily needing all those international standard services". "In Egypt, the ninety-sixty formula works very well," says Metwalli. Today AIC has 7 international joint ventures. In tourism, AIC has 7 five-star hotels under construction including a Sheraton, a Hilton, an Oberoi, and a Holiday Inn. The company is listed on the stock exchange and has been a star performer.
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The company reported net income of 43.4 million pounds in 1998, up
50 % from the year before, and recently announced plans to sell bonds. As it grows, the company targets that by the year 2000, 50% of its turnover will come from outside Egypt. Currently AIC is also participating in another mega-project, including building four tunnels under the Suez Canal to transport water to the Sinai.
Meanwhile, at the south end of the Suez Canal, developer companies are being offered attractive land acquisition prices and payment schedules to construct utility networks and infrastructure to expand industrial exploitation of the area’s resources. Plans also include a privately operated port, North el Sokhna, with mineral and petrochemical jetties, a container terminal and other facilities. Major industrial projects planned include petrochemical, fertilizer, ceramics and shipbuilding, with production scheduled to begin in 2000. The Gulf of Suez special economic zone, initiated by a 1997 Egyptian-Chinese agreement, is aimed at attracting multinational corporate investment.
The government is testing a new theory of development with the project. It has sold four strips of land to four private development groups and placed Minister of Electricity and Energy Maher Abaza in charge of the project. The four developer groups are : Suez Industrial Development Co., majority owned by Orascom Construction Industries ; Eldorado, controlled by Mohamed Abul Einein’s Cleopatra Group, a market leader in ceramics ; Gulf of Suez Development Co., chaired by Ahmed Ezz. The fourth is Chinese Egyptian Co., controlled by Arab Contractors.
As Ezz Group Chairman Ahmed Ezz explains it, the project is a public-private partnership with the government fulfilling certain obligations including electricity and water and the private sector investors building the rest of the infrastructure and then sharing the facilities. Ezz Group is already building a $600 million steel plant in Suez that will produce 1 million tons of steel when completed in 2002. Ezz has 20 square kilometers of land in the project which it aims to develop with infrastructure and services and then attract direct investment in manufacturing by multinational companies. Ezz is looking for investments in the petrochemical industries and other energy intensive industries because the energy is available in Suez. He says he is also looking for export oriented industries that would take advantage of the new deep water port to be built. Auto parts, electronics, appliances would all be suitable manufacturing investments because Suez has a large and able labor force, Ezz says.
Orascom’s Vice Chairman Naguib Sawiris says that his allocated zone has been divided into heavy, middle and light weight industry. "The area is structured to accommodate all kinds of activities. The heavy industries are located closer to the sea because they need cooling water. The middleweight industries are located in the middle of the area whereas the lightweight industries like IT or semiconductors and those industries that do not need heavy machinery, are in the end, towards the road." |
EGYPT
