The Egyptian Suez Canal Authority’s announcement of the start of studies on the “full duplication” project of the canal’s navigation channel raised concerns about the idea that this project would have a share of the hard currency that recently entered the country through the “Ras El Hekma” deal, to the point of describing it as perhaps being a “black hole to swallow.” Next money.”
The head of the authority, Osama Rabie, said on Monday that this project is in the study stage, pointing out that the authority will implement these studies in cooperation with major international consulting companies specialized in this field, to complete them within approximately 16 months.
After that, the project will be presented to the government, provided that the necessary funding for its future implementation will be provided from the authority’s investment budget approved by the Ministry of Finance, “without placing additional burdens on the general budget,” according to Rabie.
This comes at a time when Egypt is suffering from an economic crisis in which the annual inflation rate has reached a record level, currently reaching 35.2 percent, driven by the decline in the value of the local currency and the shortage of foreign currency. However, in recent days, the treasury of the Central Bank of Egypt has entered billions of dollars from a deal with the UAE to develop the “Ras El Hekma” area. On the Mediterranean coast in the northwest of the country.
Move amid threats
The project aims to “achieve full duplication of the canal in both directions, allowing for raising the canal’s classification and increasing its competitiveness, as well as increasing the numerical and carrying capacity of the canal to become capable of accommodating all categories and sizes of ships of the global fleet,” according to an official statement from the Suez Canal Authority.
Egypt is studying “full duplication” of the Suez Canal… and explains its importance
The head of the Egyptian Suez Canal Authority, Osama Rabie, said on Monday that the project to fully dual the canal’s navigational course is still in the study stage, which extends to include feasibility studies, environmental studies, engineering and civil studies, soil and dredging research, and other studies.
Rabie confirmed that the Suez Canal is moving forward towards completing its ambitious strategy to develop the canal’s navigational course, through implementing infrastructure development projects, “taking into account the technical and economic feasibility of the projects.”
In this regard, the economic expert, Abdel Nabi Abdel Muttalib, said in statements to Al-Hurra website, “In terms of the economic feasibility of Egypt and the world in general, it is certain that duplication is no less important than the establishment of the Suez Canal itself.”
But Abdul Muttalib pointed out that the timing was “not appropriate at all,” adding that talk about the project came in light of the current regional crisis in the Red Sea, and the problems that shipping traffic there suffers from, in light of the ongoing war in the Gaza Strip.
Following the Houthi attacks on shipping traffic in the Red Sea, Suez Canal revenues decreased by between 40 and 50 percent, according to statements by Egyptian President Abdel Fattah El-Sisi.
In the fiscal year 2022-2023, the Suez Canal achieved financial revenues amounting to $9.4 billion, which is the highest annual revenue recorded, with an increase of about 35 percent over the previous year, according to what the authority announced last June.
For his part, Ahmed Khattab, professor of political economy at Suez Canal University, said that the project aims to “advance the maritime transport industry in general and attract large investments in that region,” noting in an interview with Al-Hurra website that the issue of the Houthi threat “is an urgent matter.” It is temporary and will not last more than 6 months, because almost all countries in the world reject it and will confront it.”
Billions of heads of wisdom?
The price of one dollar reached about 73 pounds at the end of last January, before it began to decline since the Egyptian government announced on February 23 the “Ras El Hekma” development project, in a deal that would give the state treasury about 35 billion dollars within two months, for a total of 150. One billion dollars, according to official data.
The dollar reached the limit of 40 pounds in the parallel market, while its official price determined by the Central Bank is still around 31 pounds, with continued expectations of a new float (devaluation of the pound).
Some feared that the complete duplication of the Suez Canal project would consume a reserve of hard currency that had recently entered the country.
Abdel Muttalib continued his speech, saying that the timing problem is also represented by “the scarcity of foreign currency in Egypt, which will increase the burdens of the project.”
At the same time, he continued: “But if the state has evidence that there are parties willing to bear the costs in exchange for a share of the profits, then this is a good thing. Loading those costs onto any budget of any party in the state is difficult.”
He pointed out that the foreign investor in general “will be aware of what happened after the previous dual project known as (the New Suez Canal), which caused a scarcity of the dollar after it was depleted in the project.”
In turn, the writer and researcher in political science, Ammar Hassan, said in a post on his social media accounts: “The authority is talking about money that began flowing from the proceeds of the Ras al-Hikma project, and instead of directing it to what is more beneficial, through the four T’s (education, manufacturing, etc.) Export – Operation) I fear that the announcement of new drilling in the Suez Canal will be a black hole to swallow the money coming in.”
As these fears spread, Rabie appeared last night in a television interview on MBC Misr, and said that the project, if approved by specialists after studying it, “will be from the budget of the Suez Canal Authority already specified in the budget. All spending will be in Egyptian pounds because it is due to efforts.” Commission”.
He continued: “It may take 5 to 7 years, and we will not come close to financing it from the Authority’s sovereign fund or from other funds,” when asked about financing the project from the billions of Ras Al-Hikma deal.
To avoid talking about alternative channels
The official website of the Suez Canal Authority indicates that the goal of establishing the new Suez Canal in 2015 was to reach a daily passage rate of 97 ships, compared to about 77 ships before the opening of the new canal.
but Revenues It declined in the year following the opening of the new canal, reaching $5.1 billion during the fiscal year 2015/2016, instead of $5.36 billion during the year 2014-2015.
But revenues began to rise again after that, and the authority announced in June 2023 that it had achieved record annual revenues during the fiscal year 2022-2023, amounting to $9.4 billion, compared to $7 billion in the previous fiscal year.
The increase in traffic fees played a major role, as Egypt raised them starting in January 2023 by a rate ranging between 10 to 15 percent, after two other increases the previous year.
After Houthi threats, alternatives to the Suez Canal return to the forefront
The turmoil taking place in the Red Sea in recent weeks off the coast of Yemen has prompted shipping companies to divert their ships away from the Suez Canal and take the Cape of Good Hope route, which circles the entire continent of Africa before reaching Europe.
In his statements to Al-Hurra, Khattab considered that the process of developing the Suez Canal “is for future generations, and the new project will improve the navigation rate by 28 percent. With the deepening to between 66 and 72 metres, there will not be the slightest difficulty in the movement of any type of ship.”
He continued: “If it were not for the infrastructure and ports in general, a deal like Ras El Hekma would not have occurred. Infrastructure attracts investments. This is not an entertainment project, but rather a purely investment project. Maximizing the capabilities of the Suez Canal gives it a high competitive opportunity.”
For his part, Rabie confirmed in his television interview that without this complete duplication, “Egypt will lose a number of ships, as navigation traffic grows, and there will be a longer waiting time to cross the shipping lane, and talk of alternative channels will increase.”
It is noteworthy that the number of ships that crossed the Suez Canal during the 10 years between June 2013 and 2023 amounted to about 187 thousand ships, according to a report by the Central Agency for Public Mobilization and Statistics, published by the government newspaper Al-Ahram. Instead of an average of 17,000 ships passing through in 2013, the number reached about 25,000 in 2022.
2024-03-05 13:33:27
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