Egypt will open an expansion to the Suez Canal amidst great fanfare on Thursday, the centerpiece of President Abdel Fattah El-Sisi’s plans to revitalize the country’s economy after years of damaging political turmoil.
Some analysts and economists however, say that the mega-project may fail to meet the great expectations.
The Suez extension was announced by El-Sisi a year ago and billed as a major national accomplishment on a par with President Gamal Abdel Nasser’s nationalization of the Suez Canal in 1956 and the building of the Aswan Dam.
The estimated $8.2 billion project includes a 35-km parallel waterway flanking the existing 145-year-old waterway, the closest link by sea between Asia and Europe.
It also includes a deepening and widening of 37 km of the existing canal.
This will cut transit times for southbound ships by seven hours and allow larger vessels easier passage.
The Suez Canal Authority expects a windfall of additional revenue — $13.23 billion annually by 2023 compared with $5.3 billion in 2014, with the number of daily vessels rising from 49 to 97 over the same period.
For the project to reach its revenue targets, world trade would have to grow by 9 percent annually until 2023, said William Jackson of Capital Economics — higher than the 3 percent average seen over the past four years. Since 2011, Suez Canal revenue growth has failed to even keep pace with growth in world trade.
While global trade volumes rose by an average of 2.9 percent from 2011-2014, Suez Canal revenue rose by just 2 percent during the same period, Jackson said.
Authorities have been in overdrive to sell the project to Egyptians and the world. On the streets of Cairo, colorful flags flutter from lampposts around Tahrir Square and festive lights drape the city.
Authorities have declared Thursday a national holiday, suspended fees for public transport and posted a sermon to be delivered in mosques on Friday which declares that “all Egyptians, here and abroad, must support this giant project.”
But the canal’s largest client, Maersk Line, said that while the expansion would bring savings from fuel costs and by using larger vessels, it would not send more ships through the canal in 2015.
“Last year we put 1,400 ships through the canal. We will put roughly the same number through this year,” said Mohammad Shihab, managing director of Maersk Line Egypt.
The new canal “will not change much overnight,” said Nicholas Sartini, a senior vice president for the French CMA CGM Group, the world’s third-largest shipping group, which sends an average of two vessels per day through the canal.