After the departure of the spiritual father .. Did the Suez Canal branch achieved dreams Mamish?
Mohamed Seif Eldin-Cairo
Egyptian team Mohab Mamish did not have the confidence of President Abdel Fattah El Sisi to continue to head the Suez Canal Authority for a new year, where the latter decided to appoint General Osama Rabie as head of the Authority, and appointed Mamish adviser to the President for projects of the axis of the Suez Canal and ports and sea ports, according to a statement issued by the Presidency last Saturday.
The lack of confidence in Mamish to take over the Suez Canal this year, as usual since he took office in 2012, has led some to question the achievements of the former official of the canal, especially after the new branch opened on August 5, 2015.
Mamish is considered the spiritual father of the Suez Canal Branch project, which Sisi launched the beginning of his reign with "major" projects that sparked much controversy between supporters and opponents.
Mamish predicted at the time that the branch will increase the income of the canal the first two years after its operation to reach eight billion dollars, and then rise by 2023 to 13.4 billion. Experts warned that the expansion of the canal would be futile due to weak global trade, as well as the impact of hasty drilling on foreign exchange reserves.
In terms of numbers, the new branch did not achieve economic feasibility, in the fiscal year ending (2018-2019) revenues of the Suez Canal amounted to 5.9 billion dollars, according to the official page of the Council of Ministers to celebrate the fourth anniversary of the opening of the branch.
Contrary to Mamish's forecasts, the channel's revenues were only $ 300 million more than the previous year's ($ 5.6 billion) by 5.4%.
During the Egyptian-Canadian Business Council conference last April, Mamish predicted a $ 1 billion increase in channel revenue from the previous fiscal year.
In 2014 (before the franchise) revenues of the channel amounted to about $ 5.5 billion, and the year of expansion (2015) fell to 5.1 billion five billion in 2016, and then rebounded again in 2018 to reach 5.6 billion.
With the weak revenues, the government resorted to declare the channel's income in local currency (pound) instead of the dollar in order to suggest its increase, as the media center of the Authority stopped in early 2016 to publish the movement of ships in the shipping lane monthly as usual for decades.
In order for the channel's revenues to rise to $ 13.4 billion by 2023 (according to Mamish's prediction), international trade must increase annually by 9 percent, according to economist Mohamed Saad.
Saad said in his interview with Al Jazeera Net - that the government's expectations regarding international trade were based on fictitious assumptions, pointing out that the global trade rate under the current conditions will not exceed 3 or 4% per year at the latest.
This was acknowledged by Advisor to the Chairman of the Canal Authority, Major General Khaled Al-Azazi, during the meeting of the Plan and Budget Committee last May to discuss the state budget for the fiscal year 2019-2020 in the House of Representatives. The past, pointing out that the stagnation of global trade prevented the achievement of 30 or 40% increase in revenue after the establishment of the new branch.
Among the reasons behind the channel's failure to achieve high revenues despite the frustration, the negative economic effects experienced by Egypt at the time, including the shortage of foreign currency (dollar), which pressured the central and commercial banks severely and the cause of monetary trouble ended in floating the pound, and resort to borrowing from the IMF International, as explained by the economist d. Ahmed mentioned God in his talk to the island Net.
With the projected revenue shortfall, the Canal Authority failed to repay $ 450 million in three debt installments due in December 2017, June 2018 and December 2018, prompting the Ministry of Finance to conclude a protocol with creditor banks in May. In the past, the ministry had to pay the debts owed by the channel to the banks after two years.
The protocol, which was approved by the Canal Authority with the banks, is part of the state's plan to restructure the dollar debts owed by government agencies.
In 2015, the Canal Authority obtained a direct loan from four banks worth one billion dollars for the project of digging the new canal. The loan will be paid in semi-annual installments over five and a half years from December 2016 to June 2020 at 300 million per year. .
The total cost of the project and the related projects amount to more than 100 billion pounds, including 64 billion loans obtained by the government from savers through the issuance of investment certificates, and 38 billion cost of the burden of the loan of interest rates and others, according to economic journalist Mustafa Abdel Salam.
Four years after the opening of the branch, four local banks are preparing to reimburse the value of the Suez Canal certificates' benefits from September 4 to 11, amounting to about two billion pounds, said Hussein Al-Rifai, chairman and managing director of Suez Canal Bank. .
The five-year Suez Canal certificates to subscribe to dig the new Suez Canal branch and tunnels under the canal in Ismailia and Port Said expire in early September.
The banks of the National Bank of Egypt, Egypt, Cairo and Suez Canal have presented the certificates of the Suez Canal through three categories, were concluded and the exchange rate of the dollar does not exceed 7.5 pounds, but will be spent and the exchange rate exceeds 16.5 pounds per dollar, so all the benefits during the five years will not cover the result of the currency difference , As explained by economists of the island Net.
The interest rate was about 12.5% (then the highest in the banks), before rising to about 15.5% with the interest rate on the pound, to reach 20% annually after the decision to float the local currency.
Following the liberalization of its price, the pound lost 57% of its value, and bank workers fear pressure on foreign currency reserves in the coming period in the event of investors channel channel certificates to buy foreign currencies.
The amount of cash reserves in June was about 44.352 billion dollars.
Apart from the lack of economic viability of the project and the heavy losses incurred by the channel, there was a political dimension in the creation of the branch, according to previous statements by the President.
"The aim is to stabilize the state and raise the morale of the people, which is one of the main reasons for expediting the opening of the project, to prove that the Egyptians have a high ability to complete projects," Sisi said in a television interview with a local channel on June 3, 2016. Great in a short time. "
In addition to political reasons, there are developmental reasons, including shortening the sailing time by 50% from 22 hours to 11, and increasing the number of ships passing through the canal daily.
At the opening of the new branch in August 2015, the Washington Post came out with a headline saying "Egypt's gift to the world, no one needs it" wondering if the world really needed this project, noting that there was no government feasibility study for the project. Resulting from an order of the new president.