Funds received from GCC member states are helping to raise Egypt’s net foreign reserves to $20.5 billion, spurring further investment and availability of governmental loans. Given the positive atmosphere, the Egyptian government is planning to expand the Suez Canal in order to raise further funds for investment within Egypt’s energy sector.
It is believed that digging a second channel alongside the Canal would double earnings to approximately $14 billion in 2015. The additional channel aims to reduce the travel time along the Canal to around 12 hours, down from the better part of a day, by allowing ships to pass in both directions at the same time. Companies using the Canal must pay in foreign currency, meaning that the Canal represents a major source of foreign currency for the Egyptian government. Additionally, the Egyptian government believes that expansion of the Canal would facilitate the creation of a vibrant business zone along the shores of the new cutting.
The Egyptian government will seek to bolster the country’s energy sector using the income and investment secured by the Suez development. During a recent investment summit the International Cooperation Minister Naglaa al-Ahawany was quoted as saying, “I would say half of them, half of the projects we’ll propose”, would be in the energy sector. The availability of foreign currency and the generally positive environment would appear to be driving further engagement, with Egypt closing major deals to import natural gas from Algeria to Russia and signing 15 new exploration initiatives in January alone, leading to the possibility of ending government subsidies by 2019.
The primacy of the Canal in the overall situation should not be underestimated, “Expanding the Suez canal is long overdue,” said Hisham Ezz Al-Arab, the chairman of Commercial International Bank Egypt, one of the country’s largest lenders. “It has been a lifeline, not just for Egypt but the entire world, but it only lets ships go one way”. It seems that expansion is set to offer Egypt a deep reserve of income and opportunity.