By Islam Atris
The Ministry of Transportation is set to announce next week all private sector projects for the coming fiscal year. All of these projects will be operated on Build, Operate, Transfer (BOT), and Public-Private Partnership (PPP) schemes, according to Mohamed Al-Agroudi, adviser to Minister of Transportation Hatim Abdel Latif.
Al-Agroudi stated that the projects will be announced to investors during a government-sponsored conference, adding that the projects will be launched as partnerships with the private sector or operated under usufruct schemes. These steps, he said, have been taken to help Egypt’s government avoid having to bear the high costs of funding such projects, due to shortages seen in state resources.
He added that the government in the future will increasingly come to rely on the private sector and state companies in order to fund and operate infrastructure projects.
The advisor said the International Finance Corporation (IFC), under the jurisdiction of the World Bank) the European Investment Bank (EIB), the European Bank for Reconstruction and Development (ERBD) and the Agence Francais de Development (AFD), recently informed the Ministry of Transportation of their desire to help fund infrastructure and transportation projects undertaken by Egypt’s Urban Transport Agency and the Traffic Organisation of Greater Cairo.
With regards to Egypt’s railway sector, Al-Agroudi stated that the government sought to complete the Belbes-10th of Ramadan railway (known as Al-Rubiki) by next year, saying that studies conducted to review the quality and feasibility of the project are set to take place within the coming weeks. He added, however, that neither the Transportation Ministry nor Egyptian National Railways (ENR) know whether the project will operate as a partnership or under a usufruct scheme.
The ministry sought to increase and encourage dialogue regarding the Al-Rubiki railway over the coming months, according to Al-Agroudi. It is being constructed as part of a partnership with the private sector and the Ministry of Finance.
Al-Agroudi also stated that the terms of operation for each project announced by the Ministry of Transportation would be determined by the form of funding received and the length of time needed to implement the project. He added that the ministry was seeking to decrease the amount of time required to complete the final implementation of such projects. Private investors, Al-Agroudi asserted, would be discouraged by projects that take one and a half years to be completed.
The ministry stated that it seeks to increase the total percentage of goods being transported via railways to 5% by the end of next year, with this number increasing to 10% for the following year. The adviser stated that one way of increasing transportation efficiency the high speed Cairo-Alexandria railway project, saying that the Transportation Ministry was currently reviewing a study conducted in 2010 on the quality and benefits of such a project.
The railway line would help improve the rail transport efficiency by limiting high speed trains to transporting passengers only and not commercial goods, according to the ministerial adviser.
Al-Agroudi also stated that the ministry also sought to complete construction of the country’s Luxor-Marsa Alam-Hurghada tourist railway, in cooperation with the Ministry of Tourism. The project would help boost tourism and state revenues, he said.
A large tourist company operating in Hurghada, whose name Al-Agroudi asked not to be mentioned, recently announced that it was willing to provide funding for the line, due to the positive effect its construction would have on tourism in the region. Such a line would particularly have a significant effect on the flow of passengers going from Luxor to the Red Sea.
Cost of constructing the line was expected to reach upwards of EGP 5bn, with the Ministry of Transportation asking that the World Bank, European Union and Agence Francais de Development to conduct quality studies on possible challenges that may be faced when implementing the project. Final cost estimates for the project will be determined after the conclusion of the study, Al-Agroudi stated.
He went on to say that the ministry had recently finished establishing the terms and conditions for the construction of its new Werdan Railway Institute. The ministry plans to announce its opening during a conference for transportation sector investors scheduled next week. The construction of the project itself will launch within the next month and a half, Al-Agroudi said.
The ministry recently made contact with a number of foreign and local agencies and institutions with experience in the railway sector seeking to get involved in the educational institution project, he stated. It would be necessary, he added, to develop and operate the project through a consortium of local and international companies, in order to ensure that degrees received by students at the institute were accepted and recognised internationally.
Al-Agroudi described the institute as one of the Transportation Ministry’s largest projects, and one that will help serve and improve Egypt’s railway system as well as those throughout the Middle East. The ministry, the adviser said, plans to make the Werdan Institute the largest in the region, serving and aiding engineers from other Arab countries, in particular those in the Gulf. The ministry also seeks to promote the services of the Werdan Institute to those engineers living in other African countries who are also seeking to construct new railway systems.
He went on to say that the Ministry of Transportation will seek to rely more on the Nile River as a means of transporting commercial goods, increasing its share of total yearly transport of goods from 0.9% to 3% by the end of this current fiscal year. The ministry, Al-Agroudi said, plans to use billions of Egyptian pounds, recently acquired in investments, to construct new ports during the 2013-2014 fiscal year. Three of these ports will be located in Upper Egypt in the cities of Qena, Asyut and Sohag, and a fourth port, known as Ithr Al-Nabi, will be constructed in Greater Cairo.
Al-Agroudi added that the Ministry of Transportation will seek to increase the amount of passenger traffic being transported on the Nile River over the coming months and years in order to decrease congestion seen in Cairo’s streets.
He also mentioned a new security company was contracted by the ministry to administer, operate and regulate traffic on Cairo’s Metro line. The company’s tasks will include making sure that all passengers pay the necessary ticket fees required in order to ride the Metro. He added that it has been estimated that around 40% of metro passengers do not pay ticket fees.
Al-Agroudi said he expects the metro and railway revenues to increase this year as a result of new malls and commercial vendors being constructed in and around the vicinity of train and Metro stations, in addition to increased numbers of advertisements set to be placed on the side of trains.
He further stated that the ministry seeks to sell Metro subscription passes via its new smart card programme, as part of a project to expand the use of smart cards in all transportation sectors throughout Greater Cairo. Such a programme, he hoped, would expand to all of Egypt. Plans to renovate and perform maintenance on old ticket taking machines are also underway, he said, in order to improve the efficiency of normal magnetic Metro ticket readers.
Al-Agroudi added that the Transportation Ministry seeks to complete the renovation and construction of the Cairo-Alexandria Desert Road, a project which has remained temporarily stalled for the last six years. He stated that the ministry was in the process of reaching agreements with a number of government agencies to undergo renovation of the road, in particular the country’s Armed Forces, due to its high rate of expertise in various economic sectors.
The ministry was currently working to draft the terms and conditions for the conversion of Egypt’s Cairo-Ismailia and Cairo-Suez roads into freeways, at a cost of EGP 20m, saying the conversion of each freeway was expected to cost upwards of EGP 3bn.
He added that the budget allocated for the Roads and Bridges Authority for the coming fiscal year was $2.7bn, a number which highlights the need for the private sector to play a bigger role in providing funding for infrastructure projects.
He added that the Japanese International Cooperation Agency (JICA) previously concluded two comprehensive studies on the state of transportation throughout Egypt; one study, known as the “MinTS” study, was submitted to the Ministry of Transportation last year. The second study was conducted in 2002 and was limited to the state of transportation seen throughout Greater Cairo.
Minister of Transportation Hatim Abdel Latif recently asked JICA officials to change which projects were discussed in the MinTS study, in an attempt to highlight and give priority to construction of the Suez Canal Corridor Development Project as well as various logistical projects related to the transport of commercial goods. The minister stated that JICA’s studies on transportation in Egypt failed to take into account the importance of the Suez Canal project.
Latif added that he was also concerned with the construction of the country’s logistical corridor, set to extend from Alexandria to 6th of October City, eventually reaching Ain Sokhna, saying that implementation of this project would be among the ministry’s top priorities in the coming months.
Transportation Minister Latif asked JICA again to update the contents of the two studies conducted in order to include the construction of a new freight station in a port of Eastern Port Said, an industrial and technology zone located in the northwest area of the Gulf of Suez, and a new national road and railway network to extend throughout the country.
Al-Agroudi said the Ministry of Transportation was seeking to restructure Greater Cairo’s Urban Transportation Agency through a $300,000 grant given to Egypt by the World Bank and European Union.
The project would seek to decrease the number of cars seen throughout the streets of Greater Cairo, and increase the frequency of citizens travelling by microbuses, in addition to full-sized buses. Such a project will precede the later establishment of three new lines of public transportation in the Greater Cairo region, including the construction of a “super tram”, “metro bus” and “tunnel metro”.
Al-Agroudi stated that improving the Urban Transportation Agency’s relationship with other authorities and government institutions located in Cairo, Giza and Qaliubiya was also a top priority for the ministry, saying that in order to do so a package of new laws and regulations would need to be passed and implemented over the coming months.
The Urban Transportation Agency also sought to renovate and reconstruct the railway lines upon which much of the country’s public transportation operates, particularly those lines discussed in JICA’s 2002 study of transportation conditions throughout Greater Cairo.
The agency’s Board of Directors shed light on the construction of the previously mentioned “super tram”, whose construction costs were estimated to be $500m. The tram would operate similar to the city’s metro tunnels, except that all tram lines would exist over ground. Stops along the tram would begin at the Heliopolis Girls College, and extend towards the Fifth Settlement. They added that studies regarding the safety and feasibility of the project had already been conducted and that the agency was ready to begin construction.