Egypt embarks on expanding the Suez Canal

By Vision reporter

The Egyptian government has embarked on an ambitious construction project of the New Suez Canal using local funding.

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By Isaac Omoding in Cairo, Egypt

The Egyptian government has embarked on an ambitious construction project of the New Suez Canal using local funding.

The new canal will expand from 60km to 95km, in addition to deepening and widening of the Great Bitter Lakes by-passes and Ballah by-pass, with a total length of 37 km. The total length of the project is going to be 72 km.

The construction that was launched in 2014, was supposed to be completed in three years, but the President Abdel Fattah El-Sisi instructed that the project be completed in one year. He echoed this recently (February 2015) while addressing about 30 journalists from 15 Africa countries that included all the East African countries at the presidential palace in Cairo.

President Sisi hinted that the New Suez Canal is one of the projects that the newly established Egyptian Agency of Partnership for Development (EAPD) has to conclude before end of this year. The opening ceremony is, therefore, slated for August this year. EAPD is administered by Ambassador Dr. Hazem Fahmy, who is its Secretary General.

Ambassador Dr. Hazem Fahmy (second-right), the secretary general of EAPD, greets President Sisi at State House in Cairo. Far right is Ambassador Hamzawi

The Suez Canal is an artificial sea-level waterway running north to south across the Isthmus of Suez in Egypt to connect the Mediterranean Sea and the Red Sea. The canal separates the African continent from Asia, and it provides the shortest maritime route between Europe and the lands lying around the Indian and western Pacific oceans. It is one of the world's most heavily used shipping lanes.

It is also one of the most important waterways in the world offering the fastest crossing from the Atlantic Ocean to the Indian Ocean. Tolls paid by the vessels is an important source of income for the Egyptian government.

Source of funding for the New Suez Canal

According to Ambassador Mohamed El – Hamzawi, the Minister Plenipotentiary, the Deputy Assistant Minister for Nile Basin Countries Affairs, the estimated cost that was required to do the work was Egyptian Pounds EGP 60 billion (approx. US$8 billion). 

Surprisingly, however, said Hamzawi, the Egyptians collected more than that required amount of EGP 64 billion in only eight days so it was declared that the project (the New Suez Canal) would be 100% funded locally through citizen’s collections. The funds were collected through Egyptian banks that issued certificates with an annual return of 12% per annum, upon presentation of one’s Egyptian identity card.

Hamzawi says that once complete, the project will increase the revenue to the Egyptian Government from $5.5 billion to $9 billion annually. Create new centres for trade, industry, logistical collection points for cereals and agricultural products, tourist resorts, among others.

The project will benefit Africa mainly by decreasing the crossing time of ships and tankers of the Suez Canal, hence facilitate trade to and from the Ports of Mombasa and Dar es Salam.

It will also create an opportunity for African traders and countries to benefit from the "logistical trading" centres, to stock their produce such as tea, coffee and maize for trading globally.

Ambassador Mohamed El-Hamzawi (right) greets President Sisi at State House in Cairo. El-Hamzawi is in charge of the Nile Basin Countries affairs

Why the New Suez Canal?

According to Hamzawi, the idea of the New Suez Canal was to create a new canal, parallel to the existing one, to maximise benefit from the present Canal and its by-passes, and double the longest possible parts of the waterway to facilitate traffic in the two directions and minimise the waiting time for transiting ships. This will certainly reduce the time needed for the trip from one end of the Canal to the other and will increase the numerical capacity of the waterway, in anticipation of the expected growth in world trade.

The project goes side by side with the Suez Canal Area Development Project. The two projects will add to the importance of the Suez Canal and will make it the route of choice for ship owners the world over, putting any alternative routes out of competition.

The project will also have quite a positive impact on the Egyptian national income as it will boost the hard currency earnings, provide much needed job opportunities and create new urban communities.

Importance of the Canal

The Suez Canal is considered to be the shortest link between the east and the west due to its unique geographic location; it is an important international navigation canal linking between the Mediterranean sea at Port Said and the Red Sea at Suez .The unique geographical position of the Suez Canal makes it of special importance to the world and to Egypt as well.

This importance is getting augmented with the evolution of maritime transport and world trade. The maritime transport is the cheapest means of transport, whereas more than 80 % of the world trade volume is transported via waterways (seaborne trade).

New Suez Canal project objectives

  •     Boosting the hard currency earnings for the Egyptian national income
  • Increasing the doubled parts of the Suez Canal to 50%
  • Shortening the transit time from 18 hours to 11 hours for the southbound convoy
  • Minimise the waiting time for vessels to become three hours at most instead of 8-11 hours, the matter that will cut down on trip cost and make the Suez Canal more attractive for ship owners
  • Attract more ships to use the Suez Canal, and add to the Canal classification as an important international maritime route
  • Increase the number of ships that the Canal can handle on a daily basis in order to cope with the expected growth of world trade
  • Support the Suez Canal Area Development Project and enhance the Egyptian national economy and turn Egypt into an international logistics center

Expected New Suez Canal project returns and outcomes

  •     Increase the daily average of transiting vessels to 97 ships by the year 2023, up from 49 ships at present;
  • Achieve direct unstopped transit for 45 ships in the two directions, and stepping up the permissible draft to 66ft all through the Suez Canal;
  • Increase the Suez Canal revenues from $ 5.3 billion at present to $ 13.226 billion in 2023; an increase equal to 259% that shall positively contribute to Egypt’s national income of hard currencies;
  • Create job opportunities for young people living at the Canal Zone, Sinai, and neighbouring governorates and creating new urban societies as well; and
  • Maximise competitiveness of the Suez Canal, excel its ranking among other alternative canals, and world classification societies due to the high rate of safety accomplished during transits.

History of the Suez Canal

Egypt was the first country to dig a man-made canal across its lands to connect the Mediterranean Sea to the Red Sea via the branches of the River Nile.

The Suez Canal is the first canal that directly links the Mediterranean Sea to the Red Sea. It was opened for navigation on November 17, 1869.

Egypt nationalised it on July 26, 1956. It was closed five times; the last time was the most serious one since it lasted for 8 years. The Canal was then reopened for navigation on June 5, 1975. It is the longest canal in the world without locks.

Egypt embarks on expanding the Suez Canal