Egypt plans to build a new Suez Canal next to the existing one – built 145 years ago – in a $4bn bid to nearly triple income from the vital sea route linking the Indian and Atlantic oceans through the Mediterranean Sea.
The ambitious scheme, announced last week by President Abdel Fattah al-Sisi, would seek to mimic Dubai’s success at transforming itself into a global logistics hub.
"This giant project will be the creation of a new Suez Canal parallel to the current channel of a total length of 72 kilometres," Mohab Mamish, chairman of the canal authority, told a conference in Egypt last week, Reuters reported.
He said the total estimated cost of digging the new channel would be about $4bn, and it would be completed in five years, although Sisi said he hoped it would be finished within just one year.
Sisi said that, for security reasons, the armed forces would be in charge of the project and would oversee up to 20 Egyptian firms in its construction.
The Suez Canal earns about $5bn a year, a crucial source of hard cash for Egypt, which has suffered a slump in tourism and foreign investment since the 2011 uprising.–
An official in the canal authority told Reuters that the new canal would boost annual revenues to $13.5bn by 2023.
The original canal, linking the Mediterranean and Red Seas, was built over 10 years by tens of thousands of poor Egyptians. It dramatically reduced sea-journey times between Europe and Asia by removing the need to sail around Africa.
Reuters reports that Egypt has planned for years to develop 76,000 sq km around the canal into an international industrial and logistics hub to attract more ships and generate income.
"The strategic location of Egypt and the canal is a key advantage… being a key point where cargo can be distributed or worked on," Neil Davidson of London-based Drewry Maritime Research, told Reuters. "This hubbing concept is extremely valuable."Â
The expansion would relieve bottlenecks in the existing canal, which is too narrow in places for ships to pass in opposite directions. The new canal is expected to cut the waiting time for ships to three hours from 11 hours.
Funding the mega project will be a challenge for Egypt, whose public debt is estimated at over 90% of GDP, the Standard Chartered bank told the Wall Street Journal (WSJ).
The WSJ reported that Egypt won’t seek foreign funding but would instead offer 500 million shares to Egyptians, establishing a joint-stock company and filing for an initial public offering in September.
The ambitious civil scheme has prompted Egyptian media to compare Sisi, a former army chief who took power after the army ousted the elected president Mohamed Morsi last year, to Gamal Abdel Nasser, who launched similarly ambitious projects during his 14 years as president.