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					P rivatization in Egypt - Q uarterly R eview                               July—September 2001

                     MINISTRY                  OF   TRANSPORTATION
Aviation Sector: The Ministry’s core strategy for the Civil Aviation Sector is to develop air-
ports, air traffic control systems, and to increase the number of airports within the coming
twenty-year period. The private sector is to participate in the construction of new airports
and to help to increase the capacity of existing airports. The Civil Aviation Policies Higher
Committee has approved new guidelines for establishing private sector airline companies.
Also, the government plans to transform EgyptAir into a company that will realize higher
levels of profit and provide improved services to its passengers. The modernization plan will
be implemented over five years. Employees of EgyptAir will not be detrimentally affected by
the restructuring.
Road Sector: The Ministry of Transportation will submit a comprehensive plan regarding
road projects already implemented as well as projects under completion to the Council of
Ministers. The rate of execution of roads projects within the 2001 plan has reached ap-
proximately 85% . The Suez Canal Hanging Bridge was inaugurated in early October as one
of the largest construction projects in Egypt, and will be built with a grant from the Japa-
nese Government of US$100 million.
Maritime Sector: A draft law is currently being prepared by the government for the transfor-
mation of the Ports Authority into an independent economic unit that would be managed on
a commercial basis to support the development of the national economy. The Alexandria
Port Authority is to pre-qualify companies for the maintenance and renewal of the port pas-
senger terminal.
Metro Sector: The People’s Assembly approved the establishment of regional metro lines to
connect new cites and urban communities to Cairo to alleviate traffic problems in the
Greater Cairo area.
Railways Sector: The Ministry has begun privatization activities by offering seven rail sta-
tions for lease to an investor to manage.

Aviation Sector                                       revenues, the status of projects under con-
                                                      struction, and the status of completed pro-
Developments in Privatization                         jects. This included the Luxor International
Projects                                              Airport with a modernization cost of ap-
                                                      proximately $70 million and a concession
Modernization of EgyptAir                             period of 25 years. This project is being
                                                      executed jointly by the Civil Aviation Hold-

E    gyptAir will be transformed into a com-
     pany capable of realizing higher levels
of profit and improved services to passen-
                                                      ing Company and the Aeroport de Paris
                                                      joint venture with Banque Misr.

gers. The modernization plan will be imple-           Nine Banks Cover a Loan to EgyptAir
mented in stages and will be completed                Nine Egyptian and international banks
over five years from the date of project              have succeeded in covering a loan that was
startup. EgyptAir employees will not be               promoted over the last period in interna-
detrimentally affected by restructuring and           tional markets to EgyptAir. The value of the
the program for restructuring and mod-                loan is US$160 million, with loan manage-
ernization would in no manner harm the                ment and promotion managed by the Bank
interests of workers in the company.                  of New York. The new loan will be used to
Development in BOT Projects                           purchase two new aircrafts Boeing 777.

Development of Luxor International Airport
The Board of Directors of the Egyptian Air-
ports Company discussed the company’s

PCSU—Privatization Coordination Support Unit
CARANA Corporation                                                                              64
P rivatization in Egypt - Q uarterly R eview                                           July—September 2001

Main Utilities in Marsa Allam Airport                         Connection of Egyptian Airports via the SETA
Completed                                                     System
The contractors of the Marsa Allam Airport                    The Civil Aviation Holding Company has
Project in the Red Sea Governorate have                       contracted with the SETA telecommunica-
completed approximately 77% of the main                       tions company to execute a new project to
infrastructure. This includes the main run-                   connect computer equipment in aviation
way, the secondary runway, seven tarmacs                      companies and their branches with their
areas, and a control tower. The project is                    offices abroad. This system will eventually
expected to be mostly completed and inau-                     be implemented in the airports of: Sharm El
gurated by the end of this year. The con-                     Sheikh, Noza, Borg El Arab, Luxor,
tinuation of additional construction will not                 Hurghada, Aswan and Abou Simbel.
delay the opening of the airport.
                                                              Approval of New Guidelines for Private Sector
Developments in Aviation Sector                               Airlines
Transforming the Civil Aviation Training Insti-               The Civil Aviation Policies Higher Committee
tute into an Academy                                          has approved the new guidelines for estab-
                                                              lishing private sector airline companies. The
The Egyptian and French Ministries of                         committee also agreed to reduce the number
transportation are jointly studying the                       of key conditions necessary for establish-
transformation of the Civil Aviation Institute                ment of private aviation transport compa-
into an academy under a French loan and                       nies to nine.
grant. An agreement had been reached be-
tween the two sides that France would con-
duct the feasibility study for the project.

                                                      Figure 46:
                                           Status of Airport Projects

                              Concession Investment
   Airport Project Name                                         Project Stage           Name of Contractor
                                Period      Cost
                                                              Contractor Selected
 Bahareya Oasis Airport             50             N/A        and Negotiations       ABB – Manheim Germany
                                                                                     JV Artoc Suisse for Airport
 Hurghada Terminal                  5              $15        Completed
                                                                                     Services Investment & GOE
 Sharm El Sheikh
                                   N/A            $170        Awarded                ABB Equity Swiss
 Aswan Airport                     N/A             N/A        Bidding Underway       To be Determines
                                                              Bid Cancelled – Will
 Ras Sidr                          N/A             N/A                               To be Determined
                                                              be Re-offered
                                                              Inauguration End of
 Marsa Allam                        40            $40m                               EMAK (El Khorafi Group
                                                              Year 2001
                                                                                     Kato Corporation (Ibrahim
 Borg El Arab                       50            $200m       Under Construction
                                                                                     JV Aeroport de Paris/Banque
 Luxor Airport                      25         Approx. $70m   Under Construction
                                                                                     Misr & Civil Aviation HC
 Ein El Sokhna                     N/A             N/A        Offered                To be Determined
 Assiut                            N/A             N/A        Offered                To be Determined

 Source: PCSU Data

PCSU—Privatization Coordination Support Unit
CARANA Corporation                                                                                             65
P rivatization in Egypt - Q uarterly R eview                                                July—September 2001

Road Sector                                                     The rate of completion of road projects
                                                                within the 2001 plan has reached approxi-
Developments in Privatization                                   mately 85%. The total length of roads so far
Projects                                                        constructed is 1,821 kilometers, at a total
                                                                cost of LE962 million within the year 2001
There is a great need to resurface and                          plan. New plans for FY 2001/2002 include
widen existing roads and accelerate com-                        expansion of the ring roads and establish-
pletion of freeway networks. This will be                       ing the third lane for the Cairo-Alexandria
done under the BOT system. Additional in-                       highway. A total of 1,362 kilometers of
vestment will strengthen Egypt’s strategic                      roads will be established in 2002 with in-
geographic location in the Middle East by                       vestments of LE850 million
expanding the number of crossings over
waterways and the development of roads                          President Hosni Mubarak inaugurated the
parallel to highways.                                           Suez Canal Hanging Bridge in early Octo-
                                                                ber, one of the largest ever construction
The schedule for execution of road and                          projects in Egypt. The Japanese Govern-
bridge projects is going ahead according to                     ment has provided close to $100 million as
plan. The Ministry of Transportation will                       a grant to finance the construction of the
submit a comprehensive plan regarding                           bridge.
projects already implemented, as well as
projects under completion, to the Council
of Ministers during the FY 2001/2002.
Also to be submitted will be a maintenance
plan for roads and bridges.

                                                      Figure 47:

                                        Status of Road BOOT Projects

      Road Project Name                             Cost              Project Stage               Contractors
                                                 (LE million)
                                                                                              Ministry of
 Cairo – Ein Sokhna + Exits           175          600-800         Just Started
                                                                                              Ministry of
 Cairo – Kurimat + Exits              125            N/A           Just Started
 Alexandria – Fayoum +
                                      199            700           Cancelled
 Development of Cairo –
                                      520            900           Under Study for Offer
 Alexandria - Matrouh
 Development of Cairo –
                                      180            500           Under Study for Offer
 Ismailia – Port Said
                                                                                              Studies are being
 Sohag – Hughada                      250            500           Under Study for Offer
                                                                                              prepared by GARBLT*
 Luxor – Hughada Desert                                                                       Studies are being
                                      220            450           Under Study for Offer
 Road                                                                                         prepared by GARBLT
                                                                                              Studies are being
 Fayoum – Assiut                      260            500           Under Study for Offer
                                                                                              prepared by GARBLT
                                                                                              Studies are being
 Dayrout – Farafra                    263            500           Under Study for Offer
                                                                                              prepared by GARBLT
                                                                                              Studies are being
 Cairo – Center of Alexandria         180            400           Under Study for Offer
                                                                                              prepared by GARBLT
                                                                                              Studies are being
 Ein Sukhna – Marsa Allam             630            1200          Under Study f or Offer
                                                                                              prepared by GARBLT

 Source: PCSU Data
 *General Authority for Roads and Bridges and Land Transport

PCSU—Privatization Coordination Support Unit
CARANA Corporation                                                                                              66
P rivatization in Egypt - Q uarterly R eview                               July—September 2001

Maritime Sector                                      of 1998 and the ministerial decisions 30 and
                                                     31. The law will provide guidelines and con-
                                                     trols for the services provided within mari-
Developments in Privatization Projects
                                                     time ports to ensure the realization of fair
Transformation of Ports Authority                    competition between the public enterprise
                                                     sector and private sector.
A draft law is currently being prepared by
the government for the transformation of the         Amendment of Guidelines Governing Opera-
Ports Authority into an independent eco-             tions within Ports
nomic unit that would be managed on a
commercial basis to support the develop-             The Federation of Chambers of Commerce
ment of the national economy. The opportu-           has presented a memorandum to Minister of
nity would be given to the private sector to         Transportation concerning the possibility of
participate in the management and opera-             amending article 9 of the Minister of Trans-
tion of ports equipped with the latest tech-         portation’s decision number 680 of 2001
nologies.                                            pertaining to the guidelines and conditions
                                                     for granting licenses for operation in Egyp-
This is within the framework of a general            tian ports.     The General Federation of
policy being implemented by the government           Chambers of Commerce requested in its
to maintain Egypt’s standing in maritime             memo that the renewal of licenses be condi-
transportation. New and advanced technolo-           tional upon membership in branch maritime
gies would be introduced to improve the              chambers in chambers of commerce.
quality of services available and regional
competitiveness.                                     The new guidelines for maritime agency
                                                     companies will pertain to shipping and load-
Offering Alexandria Passenger Terminal to            ing activities, preparatory to opening the
Investors                                            door to granting licenses for the establish-
                                                     ment of companies. Amongst these guide-
The Alexandria Port Authority is to offer a          lines is the determination of company capi-
pre-qualification booklet to prospective in-         talization based on LE500,000 instead of
vestor companies for the maintenance and             LE250,000. The new guidelines also commit
renewal of the port passenger terminal. The          companies to the deposit of a letter of guar-
budget for this project is estimated to be ap-       antee in the amount of LE250,000 as insur-
proximately LE29 million. Work on the pro-           ance for payment of various commitments
ject is expected to be complete within two           including port fees and severing tariffs.
                                                     Development in the Sector
Modernization of Al Arish Port
                                                     Launching First Phase of Ein Sukhna Port
The North Sinai Governorate has completed
(in coordination with the Ministry of Trans-         Work on the first shipping canal in the Ein
portation and the Port Said Authority) the           Sukhna Port has been completed prepara-
preparation of detailed studies for the devel-       tory to starting the first stage of construc-
opment of the Al-Arish Marine Port and its           tion by the beginning of September 2001.
expansion. The harbor will be deepened to            Ein Sukhna Port Development Company
allow large vessels and new wharves and              would immediately begin implementation of
storage areas will be constructed. The pro-          the BOT concession contract at a total cost
ject will be offered to investors under the          of LE796 million, with a concession period
BOT system.                                          of 30 years. The government is currently
                                                     studying the establishment of a central labo-
Regulatory Developments                              ratory for analysis and inspection within the
                                                     port to examine incoming and outgoing
Implementation of          New     Amendments   to   cargo.
the Maritime Law
The Ministry of Transportation has started
implementation of the new amendments to
the maritime transportation law number “1”

PCSU—Privatization Coordination Support Unit
CARANA Corporation                                                                              67
P rivatization in Egypt - Q uarterly R eview                                         July—September 2001

Italian Training for Maritime Sector                      opment needs and to increase the level of
                                                          goods transported via rivers in order to re-
For the first time ever, a training program               duce traffic on inland roads. Among other
will be conducted to raise the efficiency of              things, the five-year plan seeks to allow for
workers in the ports and the maritime                     river transportation traffic on a 24 hour
transportation sector. This program will be               basis.
conducted outside Egypt. The Director of
the Central Department for Maritime Navi-                 Increase in Container Traffic in Port Said
gation stated that an agreement had been
reached between the Chamber, the Genoa                    The Chairman of the Port Said Harbour
Port Authority, and the Mediterranean Or-                 met with a Korean delegation from Korean
ganization for the dedication of 22 training              Pusan Harbour. The delegation described
grants to the Alexandria and Red Sea port                 and explained the containers handling sys-
authorities.                                              tem within the Korean port. It has suc-
                                                          ceeded in increasing traffic to 7 million
River Transport Service for 24 Hours a Day                containers annually within the port. Port
                                                          Said Harbour is seeking to implement the
An upcoming plan for river transport aims                 Korean experience.
to tie this sector to Egypt’s economic devel-

                                                   Figure 48:

                                       Status of Maritime BOT Projects

                       Project      Concession    Investment                     Completion    Name of
     Authority                                                  Project Status
                        Name          Period         Cost                          Date       Contractor
                     Petroleum                                                            MEDTAB (to build
Old Alexandria       Quay in                                    Signed end of Inaugurated quay pipes) MI-
                                     30 years      US$45 m
Port/ (Dekheila)     Alexandria                                     1998       July 2001 DOR refines raw
                     (Dekheila)                                                           petroleum
                                                                                          JV-European Con-
                                                                                          tainer Terminal,
East Port Said       East Port                                  Signed August             Maersk (Danish),
                                     30 years    US$480.846 m                  Early 2004
Port Authority       Said Port                                       99                   Ibrahim Kamel,
                                                                                          National Bank of
                                                                                          JV – ABL
Red Sea Port Au- North                                                                    Sawiris, SSA
                                     25 years     US$176 m Signed May 99 Early 2002
thority          Sokhna Port                                                              (American)
                                                                                          Sea Gas – JV
                     Damietta for
Damietta Port                                                                             Spanish Venus/
                     Liquid Gas      25 years    US$1.6 billion February 2001    2003
Authority                                                                                 Egyptian Com-

Source: PCSU Data

PCSU—Privatization Coordination Support Unit
CARANA Corporation                                                                                     68
P rivatization in Egypt - Q uarterly R eview                                      July—September 2001

Railway Sector                                           Connection of Borg El-Arab and Alexandria

Developments in Privatization                            An international British railways company
Projects                                                 will supervise the railway project to con-
                                                         necting Borg El Arab and Alexandria. The
Offering a High Speed Train Project to                   project carries a preliminary cost of LE 850
Investors                                                million, and will reduce travel time from
                                                         one and a half hours to 25 minutes.
The government plans to offer a high speed
train project to the private sector for execu-           Compensation for Railway Workers
tion under the BOT system. The project
would be offered among a number of other                 The general assembly forum of the general
projects in the railways sector to the pri-              syndicate for railway authority workers will
vate sector. A Spanish company is prepar-                discuss a number of reports regarding syn-
ing a feasibility study for the first phase.             dicate activities. The most important issues
                                                         include increasing the allowances for work-
Seven Stations for Lease                                 ers taking into account the risks they face.
                                                         The forum will also discuss a draft decision
The railway authority is currently undergo-
                                                         which increases the ‘end of service com-
ing major changes, the most important will
                                                         pensation’ from the social welfare fund
allow the private sector investment in order
                                                         from 40 to 50 months.
to replenish its financial resources and to
stop the wave of losses in the authority.                Electric Train to Connect New Industrial
The Ministry had started privatization ac-               Cities
tivities a few months ago by offering seven
stations for lease to an investor to manage.             Next year will witness the start of execution
Three of them would be under 15 to 25                    of a large project for the establishment of
year contracts. However, the authority has               an electric train line linking the new
not taken any steps for the award of these               industrial cities. The project will cost LE2.5
stations to investors.                                   billion. The Ministerial utilities committee
                                                         has approved the feasibility study carried
                                                         out for the project

                                Figure 49: Status of Railway BOOT Projects

      Railway Project Name               Length                      Project Stage         Contractor
 Boulaq El Dakrour – Alexandria                                    Bidding Underway
 Ismailia – Rafah                        225 km       $268m        Offered
 Giza – Sidi Gaber                                                 Announced
 Marsa Matrouh – El Salloum              260 km       LE50m        Bidding Underway
 Alexandria – Marsa Matrouh              300 km                    Bidding Underway
 Seidi Gaber/Borg Al Arab                 34 km       LE800m       Bidding Underway
                                                    LE10 billion   Feasibility Study   Spanish Railway
 Alexandria/Aswan (Supertrain)                       (estimate)    to be Conducted     Authority
 Cairo – Tebbeen                         225 km        $75 m       Offered
 Sinai – Saloum                                        $230m       Offered
 Dayrout – Rafah                        165 miles      $400m       Offered
 Salloum – Natrun                       315 miles      $520m       Offered
 Sallolum – Morocco                                   LE780m       Under Study
                                                                                       Supervised by
 Borg El Arab – Alexandria                           LE850m                            International British

 Source: PCSU Data

PCSU—Privatization Coordination Support Unit
CARANA Corporation                                                                                         69
P rivatization in Egypt - Q uarterly R eview                           July—September 2001

Developments in the Railway Sector                Tunnels
During the quarter Egypt celebrated the           Developments in the Sector
150th anniversary of the establishment of
the railway system, which historically is         Establishment of an Underground Transpor-
the second in existence after the British         tation Network
railways. New directions are being planned
                                                  Egypt is planning to establish an under-
for this important utility. A feasibility study
                                                  ground transportation network in Cairo.
is underway for transforming locomotives
                                                  Studies have indicated that the ‘overhead’
from diesel to electricity. The authority
                                                  traffic in Egypt will soon become seriously
consumes 2.2 million tons of diesel annu-
                                                  congested and could result at any time in
ally, costing them $100 million. Electrifica-
                                                  total gridlock. In addition, four new under-
tion could create significant long term sav-
                                                  ground metro lines would be added to the
ings, however the estimated cost of the
                                                  Cairo Metro. However, this project may be
Cairo-Alexandria line alone is LE2 billion.
                                                  difficult to execute under the BOT system.

Metro Sector
Developments in Privatization Projects
Ten BOT Projects Offered to Investors in Al-
The Governorate of Alexandria is offering
ten projects to investors under the BOT
system, including a project for the estab-
lishment of the metro second and third
stages at a cost of up to LE1.1 billion. A
report prepared by the governorate indi-
cated that a Canadian company was pre-
paring a feasibility study for the first stage
and that the project would be offered
through an international tender.

Developments in the Sector
Extending Metro Lines to New Cities
The People’s Assembly (PA) has welcomed
the idea of establishing regional metro lines
to connect new cites and urban communi-
ties to Cairo. The PA indicated in its re-
port, that the metro system is a safe and
efficient transportation means that contrib-
utes towards alleviating traffic problems in
the Greater Cairo area. The report called
for the need to carry out accurate feasibil-
ity studies before commencing the execu-
tion of any project.

French Companies Participate in Egyptian
Transportation Business
A consortium lead by French Intertravel
won a contract of LE260 million for the
second stage of the second metro line
which will extend from the Giza suburbs to

PCSU—Privatization Coordination Support Unit
CARANA Corporation                                                                          70

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