CAIRO: A consortium of UAE and Bahraini companies has signed an agreement with the Egyptian government to establish a $1 billion (LE 5.74 billion) holding company to upgrade the country s overburdened transportation infrastructure. The primary shareholders in the new company are UAE s Abu Dhabi Investment House (ADIH) and The National Holding Company, and Bahrain s Gulf Finance House.
In a ceremony held in Alexandria, attended by Prime Minister Ahmed Nazif and Minister of Transportation Mohamed Mansour on Monday, company representatives said the new venture will pump $30 billion (LE 172 billion) into the sector for projects including new roads, bridges, seaports and railway.
We see tremendous economic growth prospects in Egypt as the country is in the midst of a growth trail, and with the IMF predicting that the economy will grow at 5.3 percent in 2006, says ADIH Chief Executive Officer Rashad Janahi.
We feel that the potential to generate returns from [the transportation] sector, with Egypt being the most populous country in the region is very high, says the ADIH corporate communications office in a statement to The Daily Star Egypt. Moreover the government s thrust to join hands with the private sector on infrastructure development in the sector has also opened up a great opportunity, he adds.
According to a statement issued by the Egyptian Prime Minister s Office, the new holding company will also be responsible for financing construction of highways to link new developments to Cairo. The company will also finance new rail lines, taking advantage of the recent amendments to the railway law of 1980 which allows for the participation of the private sector..
The transport sector is one of the important service-oriented sectors where it is appropriate to implement the partnership between the public and private sector in favor of development, said the statement. Implementation of the legislation marks a dramatic shift from Nasser-era policies which kept the sector under tight control of the government.
A spokesman from the Prime Minister s office declined to comment further on the specific projects to be implemented by the holding company.
Mansour says the new company will serve as an umbrella for several subsidiaries, each responsible for projects in different areas of transport such as roads, seaports and seaports. The ministry’s sectors including roads and bridges, maritime transport and railways will constitute minority shareholders. All projects will be implemented under Build-Own-Operate agreements, he adds.
Earlier this year, work crews began construction on the first two phases of four to make up Metro Line 3. The 34 km line will run mostly underground eastward from Mohandiseen to Ataba, Abbasiya, Nasr City and finally connect to Cairo International Airport.
The first two phases, stretching from Mohandiseen to Abbasiya, will cost LE 6.5 billion ($1.13 billion) and are scheduled for completion in 2011, says Saad Hassan Shehata, president of the National Authority for Tunnels. The government-funded project has secured financing from several sources led by the National Bank of Egypt, says Shehata.
But if the country s transportation system is to see significant improvement, most future projects will have to find private sources of funding. At the signing ceremony, Mansour says the recent spring in economic growth is helping achieve just that.
The transportation sector in Egypt has stirred tremendous enthusiasm among the local and foreign investors and we are confident to draw in more investments to the country, he said.
The announcement of the holding company s launch comes on the heal of UAE s Etisalat winning Egypt s third mobile license for $2.9 billion (LE 16.6 billion); Emaar s acquisition of prime resort land in Sidi Abdel Rahman for $1 billion (LE 5.74 billion), with plans to build a $10 billion (LE 57.4 billion) resort in addition to a $4 billion (LE 23 billion) residential area in Cairo; and Saudi Arabia s Anwal finalizing the deal to purchase retailer Omar Effendi for $115 million (LE 660 million).
