Dubai ruler attends opening of Suez Canal expansion
Vice President and Prime Minister and Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, travelled to Egypt on Thursday (today) to attend the inauguration ceremony and the launch of new Suez Canal, reports news agency WAM.
The expansion to the Suez Canal – the centrepiece of President Abdel Fattah Al Sisi's plans to revitalise Egypt's economy – cost an estimated $8.2 billion.
The project includes a 35-km parallel waterway flanking the existing 145-year old waterway, which links Asia and Europe, and a deepening and widening of 37 km of the existing canal to cut transit times for southbound ships by seven hours while also allowing larger vessels easier passage.
The Suez Canal Authority expects a windfall of additional revenue – $13.23 billion in annual revenue by 2023 from $5.3 billion in 2014.
Some analysts have expressed skeptism, suggesting that sluggish world trade makes it unlikely the project can deliver immediately on its promise.
Ahmed Kamaly, an economist with the American University in Cairo, called the projections "wishful thinking", commenting that "there was no viability study done, or known of, to assess the viability of the project".
William Jackson of Capital Economics said world trade would have to grow by 9% annually until 2023 for the project to reach its revenue targets, whereas it has only been averaging 3% growth 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% from 2011-2014, Suez Canal revenue rose by just 2% during the same period, Jackson said.
A Panama Canal expansion, set to be completed in 2016, could steal traffic from the Asia-North America route the two canals compete for, asserted Michael Frodl, of US-based consultancy C-Level Global Risks.
Meanwhile, Egyptian authorities declared Thursday a national holiday, suspended fees for public transport and posted a sermon to be delivered in mosques on Friday stating that "all Egyptians, here and abroad, must support this giant project".
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, reports Reuters.
"Last year we put 1,400 ships through the canal. We will put roughly the same number through this year," revealed 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.