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Tue 5 Aug 2014 03:16 PM

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Egypt plans to dig new $4bn Suez Canal

New channel to be 72 km long; Current canal brings in $5bn of revenues per year

Egypt plans to dig new $4bn Suez Canal

Egypt plans to build a new
Suez Canal alongside the existing 145-year-old historic waterway in a
multi-billion dollar project aimed at expanding trade along the fastest
shipping route between Europe and Asia.

The Suez Canal earns Egypt about $5 billion a year
in revenues, a vital source of hard currency for a country that has suffered a
slump in tourism and foreign investment since its 2011 uprising.

The new channel, part of a larger project to expand
Suez port and shipping facilities, aims to raise Egypt's international profile
and establish it as a major trade hub.

"This giant project will be the creation of a
new Suez Canal parallel to the current channel of a total length of 72
kilometres (44.74 miles)," Mohab Mamish, chairman of the Suez Canal
Authority, told a conference in Ismailia, a port town on the Canal. His
comments were broadcast by state television.

He said the total estimated cost of drilling the
new channel would be about $4 billion and be completed in five years, though
Egypt will strive to finish it within a more ambitious three-year deadline.

The original canal, which links the Mediterranean
and Red Seas, took 10 years of intense and generally poorly-paid work by
Egyptians, who according to the Canal Authority, were drafted at the rate of
20,000 every 10 months from "the peasantry".

It took weeks if not months off journeys between
Europe and Asia, otherwise necessitating a trip round the tip of Africa.

Egyptian President Adel Fattah Al Sisi, a former
army chief, said the armed forces would be in charge of the new project for
security reasons. Up to 20 Egyptian firms could be involved in the project but
would work under military supervision, he said.

Last year, Sisi orchestrated the ouster of elected
Islamist President Mohamed Mursi and oversaw a massive crackdown on Mursi's
Muslim Brotherhood.

This was followed by a rise in violence from Islamist
militants based in the Sinai peninsula, which has stoked some concern about the
security of the nearby Suez Canal. The government has since been fighting
militants in an ongoing military campaign in which hundreds have died on both
sides.

Any disruption to shipping along the canal tends to
have a serious impact on trade and oil prices.

"Sinai to a large degree has a sensitive
status. The army is responsible to Egypt for this," said Sisi, who has
previously said he would not hesitate to award major projects to help revive
Egypt's battered economy to the army.

Sisi's allies and supporters have likened him to
Gamal Abdel Nasser, the charismatic colonel who led a coup against the monarchy
in 1952, set up an army-led autocracy and rounded up thousands of Muslim
Brothers.

In 1956, Nasser 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 several big
projects during his 14 years as president.

Pro-government Egyptian media did not hesitate to
compare the Suez expansion plans to Nasser's own state-led infrastructure
projects that were a source of national pride.

Egypt has planned for years to develop 76,000
square kilometres (29,000 square miles) around the canal to attract more ships
and generate more income.

Sisi said the new canal was an unannounced part of
that project, which Egypt invited 14 consortia to bid for in January.

Reuters reported on Sunday that Egypt had chosen a
consortium including global engineering firm Dar Al Handasah, as well as the
Egyptian army, to develop the area.

A promotional video played at the launch event
suggested the project would cut waiting times for vessels and allow ships to
pass each other on the canal.

Mamish, the chairman, said the project would
involve 35 kilometres (22 miles) of "dry digging" and 37 kilometres
(23 miles) would be "expansion and deepening", indicating the current
Suez Canal, which is 163 km (101 miles) long, could be widened as part of the
project.

Among the bidders, according to Egypt's Al Mal
newspaper, were a group including state-run Arab Contractors and James Cubitt
and Partners, an international consultancy firm. Another included the McKinsey
& Co global management consulting firm.

Gulf allies Saudi Arabia, the United Arab Emirates
and Kuwait donated more than $12 billion in cash and petroleum products to
Egypt after the army overthrew Mursi. But Egypt remains in dire need of
longer-term investments.

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