By Jack Kohane
In the ancient land of the pyramids and Nile River, are there still wonders to see? Behold the coming of the new Suez Canal Area Development project, an undertaking of Biblical proportions that could strengthen East/West commercial links.
This mega-development scheme, which will carve 72,000 square kilometres out of the Egyptian soil and shorelines, and the first large-scale expansion project of the Suez Canal since its opening in 1869, was launched last August by Egypt’s President Abdel Fattah el-Sisi. The goal: to increase the role of the Suez Canal region to international trade and to develop the three canal cities: Suez, Ismailia, and Port Said. The newly expanded Suez Canal, initially planned to be completed three years hence, has recently been fast-tracked to open for vessel shipping this August.
Details of its key elements and latest developments in the Suez Canal Area Development (SCAD) project were shared with an audience of Canadian marine industry movers and shakers by Hazem Ghonima, President and CEO of Ottawa-based TAF Consultants. He spoke at the 10th annual Highway H2O Conference in Toronto, taking the place of Admiral Mohab Mameesh, Chairman and Managing Director of the Suez Canal Authority (SCA) that’s spearheading the project, but who was unable to attend the Highway H2O event. “There will be great potential impact on Atlantic Canada, which will see containers from China going through the Suez Canal to Atlantic Canada and on to the Great Lakes/St. Lawrence Seaway,” said Ghonima. “East Port Said, which only existed six years ago, went from about 500 TEUs at the start, to 3.2 million TEUs today. It’s a huge shipment port.” He estimates that 14 million TEUs could be coming to U.S. and Canadian eastern ports from China once the widened waterway becomes operational.
Ghonima, whose company provides freight transportation analysis through the Canadian and U.S. transportation systems, pointed out to delegates the present limitations of the Suez Canal. It only provides for one-way ocean vessel traffic, with several passing lanes and no locks. With only 1,000 feet at its narrowest point, the Canal is unable to handle the VLCC (Very Large Crude Carriers) and ULCC (Ultra Large Crude Carriers) class crude oil tankers. The Suez Canal Authority is continuing enhancement projects on the canal, extending depths in places to 66 feet to allow over 60 per cent of all tankers to safely ply the Canal.
The development blueprint includes a 72 km (45 mi) lane that will permit ships to travel in both directions for just under half of the canal’s 193 kms (120 mi). This will involve 35 km (22 mi) of dry digging, and 37 km (23 mi) of expansion and deep digging. This giant project will create a virtually new Suez Canal that runs parallel for most of the length of the current channel.
Estimated total costs for the SCAD are around 60 billion Egyptian pounds (US$8.4 billion), of which 30 billion Egyptian pounds is targeted for digging the new canal, the remaining funds earmarked for building seven new tunnels in Ports Said and Ismailia to connect the Sinai Peninsula to Egypt. (Note: a recent estimate (2015) pegged the total cost at US$15 billion). At first, foreign investors were not allowed to invest in the SCAD. Instead, Egyptians were urged to participate in bankrolling the project through a stock market IPO. In the wake of the announcement of the new megaproject, Egypt’s stocks rose to it highest level in the past six years, and based on SCA forecasts of revenues from the Suez Canal to jump from US$5 billion today to US$12.5 billion annually, following completion of the new Canal.
It was later announced that the project would also be funded through investment certificates and domestic debt. When investment certificates aimed at funding the Suez Canal development project were made available for purchase at Egypt’s four public banks, it took just one day to raise 6 billion Egyptian pounds (US$839 million).
Called “The Great Egyptian Dream,” SCAD could well reinvigorate a stagnant Egyptian economy after years of civil unrest and corruption. Ghonima emphasized that driving of the project is, “The patriotism of Egyptians who are keen on contributing to such an enormous national project.”
In total, about 20,000 technicians will work on the new Suez Canal Development, according to Ghonima, along with about 80 national companies. The Egyptian Army Corps of Engineers is helping in the dry part of the project but not in the dredging. The wet part is being done by several international companies (two Dutch, two Belgian, and one American), under the umbrella of the United Arab Marine Dredging Company.
Ghonima addressed the principles underpinning the Suez Canal Area Development. “Egypt has a pressing need for such giant national economic projects that will support the Egyptian economy to the benefit of present and future generations,” he remarked. “The development will make use of the existing potential at the Project’s key ports. Importantly, the project will provide job opportunities and create new urban communities that will attract people from densely populated areas to the Canal zone. And it will get Egypt ready to maximize the many benefits from the growth of world trade in places such as China, South East Asia and India, heading for Europe and North America via the Suez Canal.”
A cornerstone feature of the Suez watercourse expansion project is the creation of industrial zones to tie into the surge of goods shipped through the Canal. Sectors proposed for these industrial zones include ship factories and services, car assembly plants, electronics, oil refining facilities, bunkering, and the manufacture and repair of containers. “This will give a boost to the national income of Egypt, and an increase of foreign currency earnings through the expected increase of the Suez Canal revenues, as more ships shall be using the waterway as a result of the Project,” Ghonima stated.
New fish farms will be built along the eastern side of SCAD, creating 23 tanks of 3-5 metres in depth that will cover 120 km, with the aim to produce high quality fish food. According to Ghonima, the benefits of these proposed aquaculture farms, “Will generate fast returns and provide much-needed job opportunities for the young people of Egypt.”
What’s in it for Canada? The New Suez Canal will mean that ocean vessels will be able to save time as they sail the length of the Canal non-stop in 11 hours rather than the usual 20-hour voyage. About 18,000 ships sail through the canal every year, a figure set to double after the new project increases the number of giant cargo vessels passing through, raising revenues and the canal’s share of world trade.
Glowing guesstimates boost shipments going through the Canal destined for the eastern ports of Canada and U.S. Ghonima offered attendees at Highway H2O his own predictions. “We initially estimated about 1.1 million TEUs coming to Atlantic Canada, now I think it’s possible to ship 3 million TEUs. And assuming 20 percent goes through the Seaway, there’s great potential for the whole Seaway system.”
In his concluding remarks, Ghonoma said, “To make the dream come true, we hope all Egyptians will work hand in hand for the success of this great Project.”