Transport Projects and Investment Opportunities for the Private Sector

Dr. Ibrahim El Dimeery, minister of transportation, spoke on September 26 at the Cairo Conrad Hotel about current projects to develop Egypt’s transportation network and how the private sector can take part in them. "Transportation systems can play a vital role in the economic development of any country, and certainly Egypt is no exception," El Dimeery said. "The question is how to support economic development in view of shrinking budgets for services."

The minister outlined the priorities in the plan that the ministry has been working on for the past two years. The transportation system, he said, should provide the highest possible levels of safety and security, while permitting the efficient movement of resources and products, locally, nationally and internationally. In addition, expansion of the system should go hand in hand with the government’s efforts to expand the inhabited area of Egypt from the present 6 percent to more than 20 percent in the next two decades.

In the short term, El Dimeery said, the ministry’s most pressing task is to preserve the country’s existing transportation assets while improving safety and efficiency. Medium-term goals are to increase capacity and enhance performance, while the long-term strategy is to add "new capabilities and capacities to address future demands and competitive requirements."

With the road network, for example, safety can be improved by increasing the number of divided roads, but in the long run the intention is to build a new freeway system.

The private sector is sure to play an important role. "The general policy of Egypt now is for the government role to shift from production to regulation," the minister said. "We are opening the door to other players, local and foreign, in the production of goods and services."

He acknowledged that legislative changes were still needed to open up investment opportunities and create the basis for "solid and fair public-private partnerships."

Having clarified the ministry’s broad agenda, El Dimeery went on to give an overview of key projects in the transportation development plan.

The proposed freeway project is expected to cost LE 20 billion and take 20 years to complete. Incentives for investors include collection of road tolls and use of adjacent plots of land.

Plans for the railways include the electrification of the Alexandria-Aswan line in three phases, at a cost of LE 10 billion over 12 years; the construction of a new line from Ismailiya to Rafah for LE 650 million over four years; and a Cairo-Ismailiya line, also serving some of the new desert cities, for LE 2 billion over four years. Incentives for investors will include revenue sharing, concession rights at railway stations and opportunities to use adjacent land.

There is also a three-phase plan to develop a high-speed train service between Alexandria and Aswan at a cost of LE 15 billion over 15 years. The upgrading of Egypt’s roughly 400 railway stations, meanwhile, is expected to cost LE 20 billion over a 20-year period, with similar incentives for investors.

The completion of the Cairo Metro network will involve building four new lines (92 kilometers in total) over the next 30 years, at a cost of LE 25 billion. Incentives will include revenue sharing and concessions at metro stations.

The plan for commuter services also calls for light rail lines from Alexandria to Borg Al Arab (three years, LE 2 billion); Cairo to 10th of Ramadan City (three years, LE 3 billion); and Cairo to Sixth of October City (two years, LE 2 billion). Again, incentives include revenue sharing and concessions at stations.

Maritime transport will benefit from the construction of the East Port Said terminal (two years, LE 2 billion) and the "Ain Sokhna 2020" port facility (20 years, LE 6 billion), as well as the improvement of the Alexandria port (three years, LE 1 billion) and other ports (six years, LE 3 billion). Investment opportunities include management and operation of port facilities on a revenue-sharing basis, along with concessions for the utilization of adjacent land.

Construction of new airports is another major part of the ministry’s plan. The improvement and expansion of Cairo International Airport with the construction of a new terminal will take four years and cost LE 2 billion, El Dimeery said. The expanded airport should be able to handle 11 million passengers per year. The long-term goal, however, is the construction of Mubarak Airport, with the capacity for another 15 million passengers annually, for LE 2 billion over four years.

Construction of other new airports in accordance with the National Tourism Development Plan will cost LE 4 billion over six years, while improvements to other existing airports will cost LE 5 billion over five years, the minister said.

According to El Dimeery, the Ministry of Transportation will seek a balance between local and foreign investors in all of these public-private projects. The transportation sector holds tremendous opportunities for investors amenable to "sharing responsibilities, risks, costs and benefits," he said. "These are the forms of partnership that suit both government and investor needs."

In the question and answer session that followed, the minister explained how potential investors are being made aware of opportunities for BOOT and BOT schemes, partnerships and joint ventures in the Egyptian transportation sector. He urged his listeners to "let us know your ideas and offers."

El Dimeery also went into greater detail about how the upgrading of airports and railway stations could be financed.

As for the possibility of EgyptAir being privatized, the minister said that the airline would have to be made "more appealing to investors." For the past year, he said, the ministry had been working on a five-year plan to restructure EgyptAir with a view to creating a holding company and segregating the company’s activities into three distinct areas.

The luncheon was attended by more than 320 guests, several of whom responded enthusiastically to the newly improved set-up of the speaking platform, flanked by two screens for video and data shows.

SPONSORS:

• Investia Holding Co.
• M.A. Kharafi Group
• Maersk Egypt S.A.E.
• Orascom Construction Industries
• Tecnico Contracting & Trading Co. / MenaRail
• Rafima

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