Egypt, new dimensions, new frontiers

New Dimensions... - Economy - Banking - Investment - - Fueling the Region -
Privatising Power - Building for the future - The Past as Present - The next step

Building for the Future

Egypt's infrastructure is being developped using the BOOT ( Build-Own-Operate-Transfert) system

Following the appointment of the Ebeid government last October, many criticisms were launched by political opponents against the outgoing government of Kamal El-Ganzouri. Among these was an assertion that the development of several megaprojects--including the Toshka project in Egypt's southwest, and the East Port Said and Ain-Sokhna ports--were investments the government could not afford.

The Toshka project is the most visible, involving the diversion of more than six billion cubic meters of water from Lake Nasser each year to irrigate one of the world's largest land reclamation projects. So far, almost $600 million has been spent out of a total budget of $1.6 billion for the first phase, which will run until August 2002.

Of that, some $450 million has gone towards the construction of a pumping station, with the remainder allotted towards the construction of the Sheikh Zayed Canal, which will provide water to farms located northwest of Toshka towards the desert oasis of Kharga.

Another megaproject includes East Port Said, where the Egyptian government has contracted with Norwegian, Dutch and German companies to operate the new port efficiently. At the southern end of the Suez Canal, another port project, Ain Sokhna, is going online, serving a massive new industrial zone nearby. It will be operated by a private venture in which the largest shareholder is the local Orascom Construction Industries.

Several BOOT projects are getting under way, including an estimated $120 million contract to design, build and operate a road tunnel under the Suez Canal. Overseeing this project is the National Authority for Tunnels (NAT) , which also directs the Cairo and Alexandria metro projects and a tunnel from Cairo's ring road through the Al Azhar area to the downtown.

Mokbel El-Shafie , chairman of NAT, says that after the Egyptian government financed a second line, foreign companies and governments are being asked to get involved in a third line from the airport west to the popular area of Imbaba. "According to international planners, there should be about one metro line for approximately every million people," says El-Shafie. "Cairo is a city of 12 million, so we still have a lot of work to do."

Making matters more complicated is the fact that the metro system is operated and subsidized by the government, affecting the feasibility of a BOOT system. "It is my ambition to complete the metro system in Cairo," says El-Shafie. "We need capital for this, and it is a matter of some urgency, as the traffic situation in Cairo needs immediate attention."

A BOOT option is also being considered for the estimated $400 million project to build a third terminal at Cairo Airport to deal with the influx of tourism. The Egyptian government is extending the BOOT program to other transport sectors. Minister of Transport Ibrahim El-Demiri says besides seeking investors for six new airports for tourist cities on the Red Sea and in Upper Egypt, the government is also seeking investment in railways as well.
H.E. Dr. Igrahim El-Dimeery

"We are looking for investors to rebuild all the main railway stations here in Egypt with new and more modern specifications," says Demiri, in response to the Egyptian Railway Authorities' LE122 million deficit. "Investors involved will benefit from the ability to build associated hotels, parking facilities and shops, and we will share with these companies the operation and maintenance business."

Overall, the construction sector has been burdened by the absence of a mortgage law, but with the new parliament set to address the issue as its first priority in November 2000, Egypt's new construction projects are set to take off.

Despite the sector's relative depression, work has begun on the construction of the new Cairo Financial Center, which will house the Cairo and Alexandria Stock Exchanges starting in 2003. The CFC will be surrounded by approximately 200,000 square meters of prime, American-standard office spaces, a five-star hotel, an exhibition and entertainment center, and a car park for 6,200 cars. Marking the rebirth of Cairo's capital markets, Alkan Group Chairman Mohammed Nosseir shares his motivation: "My attraction to this project is that this is something that Egypt needs."

Meanwhile, efforts to solve Cairo's congestion have kick-started a new urbanization trend, leading to the construction of new residential cities in and around Cairo. One of these new real estate developments is the El-Rehab city being built by the Alexandria Company for Real Estate and Investment (AREI), a member of the Talaat Mostafa Group .

"This is a new concept from the private sector, and there is a huge demand for this business," says Hisham Mostafa , CEO and managing director of AREI. "The population of Egypt is around 63 million, and 60 percent of these people are under 30 years old. This means that we need to create 600,000 units per year. Looking at Greater Cairo, we need at least 150,000 housing units per year, and the private sector is doing its best to meet this need." The El-Rehab City is a complete city, which will include 7,500 units and 1,500 villas, as well as hospitals, schools, universities and shopping malls.

"The government is encouraging these quality housing projects, because they know that they are needed," says Mounir Ghabbour , chairman of the ATIC Group , which is building the Mirage City and Golf Course, a 400-acre residential compound of 200 villas and an internationally designed 18-hole golf course. Construction of a 450-room hotel, to be administered under the JW Marriott label, is set for completion in the first half of 2001.

PreviousRead onNext

© World INvestment NEws, 2000.
This is the electronic edition of the special country report on Egypt published in Forbes Global Magazine.
August 7th 2000 Issue.
Developed by AgenciaE.Tv