Egypt, new dimensions, new frontiers

Dr. Eng. Mokbel M. El-Shafie
National Authority for Tunnels

Interview with:

Dr. Eng. Mokbel M. El-Shafie

Cairo, April 26th, 2000

Ramses complex, Ramses square,
Tel: (202) 574 58 02
        (202) 574 72 12
Fax: (202) 574 29 50
Could you give us a brief overview of your organisation?

We are a Governmental authority which is part of the Ministry of Transport. We were established in 1983, and are responsible for the development and construction of tunnelling projects essential to the development of the Egyptian infrastructure, especially with regards to the metro system. We are presently working on an ambitious underground metro network, as well as the first road tunnel in Cairo, in the Al-Azhar area. This is a very exciting project, as we are really breaking new ground.

Can you tell us a little more about other on-going projects?

Our metro system is our biggest programme underway at the moment. We have completed the first line and we now working on two others. The first line goes from the very north to the very south, that is from El Marg to Helwan, and it is presently 44.5 km long, which makes it one of the longest metro lines in the world. It was inaugurated in 1989. Line two also comes from the north but goes to the west, that is, from Shubra El-Kheima to Giza. This line will be 19km long, and we have already completed about 16 kilometres of it, and the remainder is due to be completed later this year.

These two lines have been constructed by a consortium led by a company called Interinfra. The French Government gave us loans and grants for line number one. Line two, which will have cost more than 9 000 Million EGP by the time we finish, is entirely funded by Egyptian capital. This demonstrates both the strength of the Egyptian economy, as well as the importance that these infrastructure projects are given.

We chose the company for line two, by international tender, in 1992. Again we chose Interinfra, and they are still hard at work. A Japanese company, Mitsubishi, won the tender for rolling stock. They under cut Interinfra, in 1995, by 33%. We are free to choose the best deal, as we have financed the project completely.

You suggested that line number two will be completed in the year 2000. When, approximately?

In October. However, after this we are considering extending it a further three kilometres to the ring-road. The new Giza station is very impressive, with the metro station on the second floor, above the main-line railway station.

Have you advertised for tenders for the extension of the Metro system?

Yes, we have advertised in the newspapers, and been in contact with several companies

Was the tendering process not supposed to have been completed by the 25th of March?

Oh! The glories of transparency! We have received offers from 22 companies and we are now evaluating them. Of course, after evaluation we will enter a second round of bidding. In this way we will pick a company with good technical specifications, at an acceptable price.

How will this extension be financed?

We are looking for capital from the same companies who will be involved in the construction.

How are you going to fund line number three?

After financing line number two without external help, it is unlikely that we will have sufficient revenue to fund the third line in the same manner. So we are looking to foreign companies and foreign Governments for help. The line will go from Imbaba to the Airport, that is, from the far west to the far east, and the priority is the central section. Line number two has been tunnelled under the Nile, which was an exciting progress, and of course line 3 will need to cross the river too, on its way to Attaba, where we are building the road tunnel, and after that on to Cairo Airport.

We hope to have the basic design ready in six months, and shortly after that we will be ready to put out international tenders.

Have you decided who the tender for line three shall go to, and how do you intend to finance this line?

As yet we do not know who this tender will go to. We are looking for people to help us with the design at the moment, however.

Concerning the finance, we have already received two offers, both informally as yet, one from the Japanese Government and one from the French Government. I must emphasise that neither of these have been formalised yet. The French Government is considering a grant to cover the basic design, whilst the Japanese Government are talking about funding the whole project, using an environmental link credit scheme, which they use a great deal for environmental projects. Both the Japanese and Egyptian Governments look upon the metro as an environmental solution. The Ministry of Information is still studying these two offers, and naturally we will take the best one. There has been some discussion about funding the project through a BOOT scheme, together with the Alexandria metro, but as yet this is still undecided.

Back to the road tunnel you mentioned before beneath the Al-Azhar area, the old Islamic neighbourhood. It must be a huge project for you, surely?

Yes, the idea was to pedestrianise both Kuwait street and the Al-Azhar road. It is in the area of Khan Al Khalili, which is full of Islamic monuments, so it is a good idea to move the traffic underground. The twin tunnel system will actually have traffic moving in both directions, from Salah Salem road to the Opera roundabout, and vice versa. The main objective of these tunnels is to ease traffic flow above ground, as congestion is becoming an issue. Campenon Bernard is working on this project along with Arab Contractors, and the project will be inaugurated by March next year, possibly earlier.
It has been rescheduled a few times, has it not?

Yes, we are tunnelling underneath one of the oldest areas of Cairo, and it is full of Mosques, some of them close to 1000 years old. Of course we have to exercise the utmost caution to preserve these monuments for the future. We are very proud to say that there has been no damage whatsoever to any of these fantastic structures.

Regarding the construction of the road tunnel, are you working together with some other governmental authorities?

Yes, we are working with the Cairo Governorate, the Ministry of Culture, and also the Ministry of Housing, as well as the Supreme Council of Antiquities.

Can you tell us a little about your project of a metro in Alexandria?

We have already finished the design for the Alexandria metro line, and we have received many offers from contractors, but as yet none of them have been formalised, so I can not tell you too much I'm afraid. I have been meeting with Spanish, French, Italian and German tunnelling professionals, and we have had one formal offer from the Arab Development Bank. I'm reasonably confident that this bank will be involved in the project.

However, there are another three lines proposed for Cairo too. One from Giza to Nasr City, one from Nasr City to Heliopolis, and one from Maadi to Shubra El Kheima, and we have been putting a lot of time and energy into these as well.

When do you expect all these lines to be competed?

I really cannot say, but if we restrict ourselves to line three then we are talking about 10 years, as it involves 29 kilometres of tunnelling. According to international planners, there should be about one metro line for approximately every million people in the city. The city of Cairo is about 12 Million, so we still have a lot of work to do.

The readers of Forbes Magazine are always looking for important financial figures, such as net profit, number of employees, and so on. Could you help us out with these?

Line number one was started in 1982 and was completed in 1989. The cost was around two thousand million Egyptian pounds, about one third of which came from the French Government. The cost of the second line is, up till now, about 8 800 Million EGP, and has been funded completely by Egypt. Line number three, will cost more than 13 000 Million EGP. Tunnelling infrastructure is very expensive, and this will account for around seventy percent of this cost. We do not operate the metro lines, they are run by a division of ENR, the Egyptian National Railway Authority. All metro systems here are subsidised by the Government, which obviously effects the feasibility of BOOT systems somewhat. The metro system is self sustaining in terms of maintenance and operation, but is up to the Government to find funds for developing the network.

Egypt is looking to attract foreign investors to areas which have traditionally been purely Governmental affairs, what is your opinion on this?

Of course, it is a very good idea and BOOT schemes have a lot of potential here in Egypt. I don't know to what degree the infrastructure of Egypt is an attractive proposition for foreign companies, but I am sure that they stand to gain a great deal from construction of stations and so on, as they will be allowed to build and run some of the associated structures and operations. We do try and encourage companies to become involved in infrastructure development however.

Concerning the tunnel beneath the Suez Canal, I understand that the contractor will have the right to collect tolls from the tunnel and develop land in the east Port Said zone. What do you mean exactly by 'develop land' in this area?

Let me explain the concept behind the tunnel. The Port Said Road Tunnel is to link the west side of the canal directly with the east side in order to compliment one of our national project, the Shark al Tafri'a Project, to the east of the canal near Port Said. The objective of this project is to establish a new harbour and industrial area. In order to service this project and assist in the development of the Sinai peninsular, a single bore, broad tunnel about three kilometres long will be constructed beneath the canal, twenty kilometres south of Port Said. Eleven companies were invited to tender, and we are now looking in depth at offers from two of them. The two companies are Campenon Bernard in collaboration with Arab Contractors, and a Spanish-Egyptian consortium.

You are right in thinking that contractors will be allowed to levy tolls, and of course there will be concessions associated with the contracts, by way of compensation for expenditure.

Concerning the future; what investment opportunities are there in the tunnelling sector?

It is my ambition to complete the metro system in Cairo, and we really must prioritise line three. We need capital for this, and it is a matter of some urgency, as the traffic situation in Cairo needs immediate attention.

Concerning the future, my dream is to complete the metro network of greater Cairo and to have six metro lines within 20 years.

 Read on 

© 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