(AFP Photo)
By Mohammed Ayyad
The Suez Canal Authority’s Board of Directors has consulted with a number of local investment banks with regards to establishing a company for the development of the Suez Canal. The company will obtain funding through a stock market IPO, which all Egyptians can contribute to, said media spokesperson for the Suez Canal Authority Omar Fouad on Sunday.
Establishing a company through the stock exchange is considered one of the government’s tools to finance major national projects and establish one that all Egyptians can contribute to and share in the profits, he added.
“A stock market offering is still in the consultation stage as we have not begun the process of establishing the company with the Investment Authority. We are waiting for the selection of the winning consortium, whether Egyptian or foreign, who will be responsible for developing the expected master plan. This announcement should come in the first week of June. We are consulting with experts at investment banks to determine whether it is best to found the company through an IPO or establish the company and put forward an IPO later for additional capital,” said Fouad.
The authority is funding preliminary studies, infrastructure, and the cost of developing the master plan and establishing the company through a $2bn account in the Central Bank, according to the media spokesperson.
The government seeks to “transform the waterway from merely a corridor for tariffs to a logistics area providing transportation, loading, unloading, storage, lodging, and marketing services to all ships passing through, thus raising canal revenues by billions of dollars, especially in foreign currency,” Fouad stated.
According to Fouad, the government, with representatives from the ministries of Justice and Investments, is considering new legislation that protects the rights of investors involved in the canal project and “prevents public money from being wasted”.
“Legislation is also needed to overcome obstacles that have previously hindered investments, match global standards, and ensure that investments do not conflict with the interests of the country,” Fouad added.
Mahmoud Rizk, director of the department of planning at the Suez Canal Authority, said the Board of Directors is holding talks to encourage Arab and foreign capital, which is needed to implement the master plan, as well as “benefit from other expertise without compromising national security”.
The talks include a visit to the UAE and meetings with officials of the Dubai Ports Authority and the Port of Fujairah. The talks also include the Netherlands, and a visit to their Rotterdam Port to learn about the country’s expertise regarding its development.
Rizk added that representatives of the Canal Authority are holding consultations with British companies during their visit to the United Kingdom, in addition to a meeting with Kim Ong, a South Korean economic adviser.
The Suez Canal Authority’s Board of Directors met with Chairman of National Bank of Egypt Hesham Okasha to explore the possibility of the bank, which currently has a liquid surplus, funding the project. This was followed by consultations with a number of state-owned banks. The authority is looking to capitalise on the banks’ strong liquidity positions, which have occurred as a result of decreased opportunities for financing companies and individuals in light of current security concerns.
Suez Canal revenues increased by EGP 2.7bn, or at a rate of 17%, during the first half of 2012-2013, said Rizk.
National income from hard currency is expected to witness growth after the implementation of the project, as it will benefit from the expected increase in maritime traffic to and from Egypt and the exploitation of the site as a hub for electronic communications to the broader world, especially the Mediterranean and Red Sea area.
According to the director of the Planning Department, the Suez Canal Authority is currently working to develop a plan to broaden and deepen the waterway of the canal, and ultimately double it, in accordance with the demand of the maritime transport industry. This will prepare it to deal with larger ships and feeder vessels, the director added.
He said that the authority is working to improve maritime services for vessels passing through the Suez Canal, including fuel supply, maintenance, and marketing services. The authority also plans to build dry docks for building and repairing ships, starting with the activation of the Suez Canal Authority company for fisheries.
