As Egypt seeks to open up its infrastructure to private sector participation, the Ministry of Transport (MoT) has established a public-private sector project unit to identify bankable infrastructure projects. “We are in a good neighbourhood for the public-private partnership model because there is a lot of cash around,” transport minister Mohamed Mansour says of the significant Gulf investment that Egypt receives.
But there is much work to be done if Egypt is to reap any reward from the private sector. Until recently, the state-owned rail network was losing $288m a year. The MoT reduced losses by 75% this year through revenue raising and cost-cutting initiatives.
Next year will mark the first year of profit for Egypt’s railway system, which Mr Mansour says is now in a position to attract foreign operators such as The Orient Express and South Africa’s Blue Train.
Egypt’s 46,000-kilometre (km) road network includes an MoT portfolio of 22,500km of intercity roads and bridges. While toll roads offer an opportunity for foreign investment, it is the maritime sector, according to Mr Mansour, which holds the greatest growth potential.
Of Egypt’s $10bn-worth of inward investment this year, $3.5bn is in works that have already started in the port sector, a figure which the government expects to reach $5bn within three years. Egypt benefits from its strategic location on the main Asia-Europe sea route through the Suez Canal, used by 21,000 vessels a year. “We have rebuilt our biggest port, Alexandria, in just two years,” says Mr Mansour. “It is time for our ports to take their rightful place on the international maritime map.”
Although there is a determined will among Egypt’s leadership to embrace the private sector, there is still a strong sense of nationalism among the old guard. This is demonstrated by the chairman of the Suez Canal Authority captain Ahmed Fadl’s flat refusal to consider any private sector participation in the operation of the globally strategic waterway. “It would be like privatising the pyramids,” he says.
The MoT is not looking to privatise ports but rather to operate its ports using the landlord concept. International port operator Maersk arrived in Egypt in 2002, correctly predicting huge growth of the sector, which has seen a 150% increase in maritime capacity since 2007, says Mr Mansour. The company has become the majority owner of the Suez Canal Container Terminal at Port Said East.
The Red Sea port of Sokhna, which began operations in 2002, is Egypt’s first public-private partnership. DP World assumed operation of the marine terminal in February 2008. “We have the location but ships were stopping in Dubai instead because it has the service,” says Mr Mansour.
“With no private investment in Egyptian ports, the authorities had become ‘jack-of-all-trades and master-of-none’; we operated everything down to the catering, docking and unloading,” he adds.
“We, the government, do not have the marketing capability to attract the main shipping lines to Egypt,” he says, adding that the presence of international operators such as Maersk has been key to bringing in more ships. “As a result, the revenue to the ports increases, as does our service ability, and the return to the country improves,” says Mr Mansour.