The Egyptian government and the African Development Bank (AfDB) signed two loan agreements totalling $140m alongside a grant of approximately $1.7m, according to a Ministry of International Cooperation statement on Friday evening.
The provided amounts will be used for the development of the second phase of Sharm El-Sheikh’s international airport.
The official signing took place on the sidelines of the annual AfDB meetings, taking place in the Ivory Coast’s economic capital, Abidjan. It was signed by Minister of International Cooperation Naglaa Al-Ahwani and Solomon Asamoah, in charge of the AfDB’s Regional Integration, Infrastructure and Private Sector.
A total of $90m will be financed from the bank’s resources, with the second loan, which is worth $50m, is provided by the “Africa Growing Together Fund” (AGTF), a co-financing fund created between the People’s Bank of China (PBOC) and the AfDB.
Both loans will be injected into the construction of an airfield and a control tower within the airport’s borders, the statement said.
The loans are to be repaid by the Egyptian Holding Company for Airports and Air Navigation over a period of 20 years, with a five-year grace period, the statement added.
“This project loan for infrastructure development is a landmark. It represents the signing of the first loan accord with Egypt in over four years. The project will mark the first bank’s engagement with Egypt in the transport sector, and ultimately, support economic growth in the country’s towns and cities,” Asamoah said on the AfDB’s official website.
The grant will be provided by the Middle Income Country Technical Assistance Fund, which is related to the bank, and will be used for establishing a centre of excellence in the field of airport development.
According to a press release issued by the bank in April, the project is expected to be completed within 44 months, and will expand passenger capacity to 18 million per year, compared to its current 8 million passengers.
“The bank’s contribution to the project represents 21% of the total estimated cost of $671m. The project is co-financed with the Islamic Development Bank and the Government of Egypt,” the press release read.
Sharm El-Sheikh is one of Egypt’s largest tourist centres, with the airport serving approximately 62,000 rooms in South Sinai out of 225,000 working rooms around Egypt, according to Ministry of Tourism statistics.
South Sinai provided 45% of the total tourism income last year, according to a Ministry of Tourism official, who requested anonymity. Egypt’s tourism income amounted to $7.5bn in 2014.
“Increasing the airport capacity will raise the number of charter air flights to South Sinai, in addition to increasing their passenger numbers, which, at the end, serves the occupancy rates of hotels,” the official said.