Egypt plans new Suez canal cost $4 billion

On 5th July 2014, Egypt said that they are planning to build a 45-mile new Suez Canal alongside the existing 145-year-old historic canal.

The total estimated cost of digging for the new channel will be about around $4 billion.

The main purpose of new multi-billion dollar canal project is to expand trade along the fastest shipping route between Europe and Asia. The channel project will involve 35km (22 miles) of dry digging and 67km of "expansion and deepening" of the existing canal.

This will increase the volume of ships along this route and boost the canal's annual revenues to Egypt from $5bn to $13bn by 2023.

Egyptian Armed Forces Engineering Authority was selected to undertake the development of this project. 

This shows that there is wide sphere of business influence of the army (some estimate their assets to total 40% of the Egyptian economy).

It would be finished 5-year deadline.

It is considered as a major step by new President Abdel Fattah al-Sisi to stimulate Egypt's struggling economy and recalled some of the Grand National programmes of one of Sisi's predecessors, army strongman Gamal Abdel Nasser.

What are the advantages of 45-mile new Suez Canal to Egypt?

• The political upheaval which has defined the country since the Arab Spring began in 2011 has had a huge impact on tourism and foreign investment which is a vital source of income for the Egyptian economy.
• In 2010, before the Arab Spring, 14.5 million tourists visited Egypt. That figure had fallen to 9.5 million in 2013, as tourists continue to be concerned by reports of violence.
• Throughout this time, the Suez Canal has been the most reliable and constant source of jobs and hard currency for the Egyptian government.
• In recent years they have raised entry tariffs in order to capitalise further on the canal, which has led some freight operators to look elsewhere.
• This project will enable to keep tariffs lower, but allow more freight traffic to pass through.
• As such, it is embarking on a series of projects which will allow it to further profit from the Suez Canal, of which the new waterway is just one.
• The new channel, part of a larger project to expand port and shipping facilities around the canal, aims to raise Egypt's international profile and establish it as a major trade hub.

Egypt’s President Abdel Fattah al-Sisi said that the armed forces would be in charge of the new project for security reasons. He even mentioned that up to 20 Egyptian firms could be involved but would work under military supervision.

About Suez Canal

The Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea and the Red Sea.

Its construction started on 25 April 1859 and  was opened in November 1869 after 10 years of construction.

It allows ships to travel between Europe and eastern Asia without navigating around Africa.

Originally, when the canal was built, it was 164 km long and 8 m deep. At present, after several enlargements, it is 193.30 km long, 24 m deep and 205 metres wide.

It consists of the northern access channel of 22 km, the canal itself of 162.25 km and the southern access channel of 9 km.

The northern terminus of the canal is Port Said and at the southern terminus is Port Tawfiq at the city of Suez. Ismailia is on its west bank, 3 km from the half-way point.

The canal is single lane with passing places in the "Ballah By-Pass" and the Great Bitter Lake.

It contains no locks; seawater flows freely through it. In general, the canal north of the Bitter Lakes flows north in winter and south in summer. The current south of the lakes changes with the tide at Suez.

The canal is owned and maintained by the Suez Canal Authority (SCA) of Egypt. Under international treaty, it may be used "in time of war as in time of peace, by every vessel of commerce or of war, without distinction of flag."

17,225 vessels traversed the canal in 2012.

In 1956, Gamal Abdel Nasser Hussein (second President of Egypt) nationalised the Suez Canal, leading to a failed invasion by Britain, which controlled the channel, as well as France and Israel.

Nasser was praised by Egyptians for pursuing big projects during his 14 years as president.

Egypt has planned for years to develop 76,000 sq km around the canal into an international industrial and logistics hub to attract more ships and generate income.