Cairo – The signing of the General Authority of the Economic Zone of the Egyptian Suez Canal sparked an agreement with the Abu Dhabi Ports Group; To develop and operate a logistical industrial area on the Mediterranean coast near the Suez Canal, questions about the motives and feasibility of the “project”, which came with the usufruct system for 50 years, renewable, in exchange for Egypt obtaining 15% of its revenues.
According to the agreement, the Abu Dhabi Ports of the Abu Dhabi Sovereign Fund will receive the right to develop and manage the (Kizad Port Said) area, which extends over an area of 20 square kilometers of the total area of the East Port Said Port area of 64 square kilometers, located at the entrance to the northern Suez Canal.
The project includes 3 stages; The first starts at the end of this year over a period of 3 years, with the construction of a sea berth on an area of 2.8 square kilometers, to include the construction of a 1.5 square kilometer berth, which may later include a multi -purpose shipping plant, with investments estimated at 120 million dollars.
While Egypt is responsible for providing external infrastructure, the value of the internal infrastructure of the project is estimated between one billion and two billion dollars.
Egyptian motives
Egyptian Prime Minister Mustafa Madbouly says that the agreement comes within the framework of the strategy of developing the areas surrounding the Suez Canal, stressing that there is no relationship between it and the administration or ownership of the same navigation corridor, whose full responsibility remains on the Suez Canal Authority.
During a press conference held on Wednesday, Madbouly explained that the agreement includes and targeted:
- Maximizing the economic benefit from the distinctive geographical location by attracting foreign investments directly.
- The development of lands not equipped with infrastructure through the “industrial developer” system used in a number of projects of the economic zone.
- The agreement is no exception; Similar agreements were previously signed with 14 industrial developers in other industrial areas; In order to establish factories and operate Egyptian workers.
- The contracts are concluded with the “usufruct” system only, not ownership, according to the Law of the Economic Zone of the Suez Canal.
- The government is working to create an attractive investment environment without prejudice to strategic assets.
- The agreements support the national economy, and to activate the role of the private sector in development.
Between Kizad Port Said and Sokhna
The UAE is active through the Abu Dhabi Ports and Dubai Ports Groups in 6 ports out of 16 civilian commercial port owned by Egypt, as it has previously acquired regional shipping companies, ports operation, shipping and discharge work, and concluded long -term concession agreements, to develop and operate tourist ships stations in the Red Sea ports, in Safaga, Hurghada, Al Ain Sokhna and Sharm El Sheikh.
There is a noticeable similarity between the formula of the Kizad Port Said deal, and other similar Emirati deals, for example the deal is similar to an agreement signed by Egypt and Dubai Ports; To develop Ain Sokhna Port on the Red Sea coast at the entrance to the Gulf of Suez in 2008, the Emirati company gave a 90% stake and the right to operate the port until 2049 compared to $ 670 million at the time.
In 2015, the agreement was set against the trading of one container from 0.6 to 6 dollars, raising the expected annual revenues of Egypt from less than 300 million to one billion dollars, according to reports.
Despite the obligations of Dubai Ports, according to the agreement, to increase the capacity to 1.2 million containers by 2009, trading did not exceed 900 thousand containers in 2023, according to a report of the maritime transport sector in Egypt.
In 2021, Egypt resorted to a Chinese alliance to develop the port and raise its capacity to 3.5 million containers.
The Emirati company was delayed in implementing the project of developing an industrial and residential area and a port on an area of 95 square kilometers agreed in 2017, and its implementation did not start actually except in the late 2022, and the first stage is still incomplete until February 2025 (65%was implemented), amid criticism of observers of the delay of Dubai ports in its obligations.
It is noteworthy that the Egyptian government signed a concession agreement with Abu Dhabi Ports to operate the Safaga port on the Red Sea (southeast) for 30 years, and investments in the ports of Al -Arish and West Port Said on the Mediterranean at 30 million dollars.
From a legal perspective
From the perspective of international law, a professor of international law and a member of the American and European associations for international law, Muhammad Mahran, says that the “Kizad Port Said” agreement is in line with international investment standards.
He explained to “Al -Jazeera Net” that the 50 -year period is an international standard, which is familiar with most of the major investment projects, especially those that require a huge infrastructure and long -term investments, stressing that the agreement does not in any way affect Egyptian sovereignty, but rather a model for the strategic partnership between the two countries.
On legal guarantees, Mahran pointed out that the agreement includes integrated legal and supervisory mechanisms, ensuring that Egypt guarantees the right to supervision and fully organize activity within the region.
In response to a question about the concerns that are related to the extent of the commitment of the Emirati side to the agreement, the law professor explained that the current agreement included clear conditions that guarantee the commitment to the agreed schedules, stressing that the accredited industrial developer model provides sufficient frameworks to achieve the desired goals.
He added: “From the perspective of international investment law, this agreement represents a model for balanced economic cooperation that preserves common interests and enhances sustainable development, and is not a waiver of sovereignty or resources in any way.”
Unprecedented advantages
On the project’s advantages to Egypt, the expert of transport economics and feasibility studies, Ahmed Al -Shami, says that he is considered a promising and important for the two countries, explaining that the region has a strategic location overlooking the Mediterranean, which makes it a window on Europe and a pivotal center in world trade.
It is expected in a comment to Al -Jazeera Net that Egypt will obtain an annual opposite for the right to use the land, which may reach one dollar per square meter, while maintaining the ownership of the land, stressing that Egypt’s percentage of revenues is 15% and exempting it from the cost of infrastructure, which are rarely achieved in similar deals.
He added that the UAE plans for projects in transportation, energy, environment and recycling, and a large part of which will be applied in East Port Said, which distinguishes the project by its comprehensiveness in logistical, industrial and environmental activities.
Although the concession period is long compared to the traditional contracts that do not exceed 30 years, he stressed that it is justified; Due to the UAE, huge investments, indicating understandings in the form of “Rabeh-Rabeh”.
Regarding the impact of the project on the competitiveness of the Egyptian ports, he pointed out that the port of Jebel Ali is the highest global operation, and its maximum capacity by 2027, in addition to that, Al -Shami believes that the Emirati expansion is not competitive but complementary, especially with partnerships in Egypt, such as Sokhna Port, and its endeavor to distribute its operations to strategic ports that serve its interests and agents.
He added that the project reflects Egypt’s tendency to cooperate with partners who have financial solvency and investment experience, to maximize the benefit of its resources and geographical location.
Strategy caveats
On the other hand, the researcher in the political economy and expert in feasibility and development studies, Mustafa Youssef, believes that the Emirati acquisition deal cannot be separated from an extended pattern from the Emirati acquisition of strategic sectors in Egypt.
Youssef criticized in a comment to Al -Jazeera Net, “Policies of waiver of economic sovereignty” through long -term concession agreements, saying: If there is a need to develop such a strategic area, then the first is to be done through Egyptian companies and investors. “
He stressed that there is a competitor between the Suez Canal, the ports of Egypt and the alternative and competing Emirati projects, such as the port of Jebel Ali and Khalifa Port, noting that the UAE is involved in major projects such as “India Corridor Europe”, in a way that contradicts the interests of the Suez Canal and aims to undermine its role in international trade, in addition to increasing coordination with Israel, which may threaten Egypt’s development ambitions in the region, he said.
A message to the IMF
A little compatible with the previous offering, political economist Abdel Nabi Abdel -Muttalib believes that the Emirati deal came in the context of Egypt’s commitment to its pledges to the IMF, especially in the privatization program in the port sector, while avoiding prejudice to the sovereign companies of its sensitivity.
In a comment to Al -Jazeera Net, it is believed that the deal “may deprive” Egypt of exploiting its resources efficiently, noting that the Egyptian government possesses cadres and experiences that qualify it to achieve the same gains.
He also warned that the length of the use period may lead to neglecting the rest of the ports or imposing restrictions on their development, in a way that encourages other foreign companies to claim similar conditions.
However, he pointed out that Egypt may bet on attracting Emirati capital and technology to establish an expanded logistical area, provided that effective implementation mechanisms and appropriate contractual conditions are available.
