Abu Dhabi Ports Group in investing in three cruise terminals in Egypt in a move that is expected to boost the country's key tourism sector.
The $3 million investment is part of a 15-year concession agreement with the Red Sea Port Authority that covers the Safaga, Hurghada and Sharm El Sheikh ports.
A definitive agreement is expected to be finalised during the first quarter of 2024, AD Ports said on Friday.
As part of the collaboration, AD Ports and the RSPA will provide new services, improve access for cruise operators and add new itineraries in the three ports, in addition to renovating Sharm El Sheikh terminal.
The moves will be key in ramping up the Egyptian economy and AD Ports Group's cruise business in the Red Sea region, “supporting volumes of cruise passengers and elevating passenger and cruise experiences”, the company said.
“This agreement is a testament to our commitment to fostering tourism in the Red Sea region, as well as strengthening the existing ties between the UAE and Egypt,” said Ahmed Al Mutawa, regional chief executive of AD Ports.
“AD Ports Group is poised to boost cruise tourism in the Red Sea, bringing world-class services and facilities to these ports, while supporting economic growth for Egypt.”
The travel and tourism sector has been a vital source of income for Egypt, the Arab world's most populous nation, contributing about $32 billion to gross domestic product during 2022 and employing about 2.4 million people, data from Statista shows.
In the same year, international tourist spending exceeded domestic spending for the first time since 2020, when the Covid-19 pandemic stalled economic activity, it added.
In the 2023 fiscal year, which starts in July, tourism revenue on the balance of payments hit a record high of $14 billion, supported by Egypt's hosting of the Cop27 climate change summit in November 2022.
However, the sector is expected to remain highly sensitive to exchange rate and inflation trends, as well as to the fallout from the Israel-Gaza conflict, S&P Global said in a recent report.
Meanwhile, the Emirates is Egypt’s second-biggest trading partner in the region while the North African country is ranked as the UAE's fifth non-oil trade partner in the Arab region.
The new partnership between AD Ports and RSPA comes after their recent agreement to develop and operate a multi-purpose terminal at Safaga Sea Port in Egypt.
As part of the deal, AD Ports will invest $200 million over three years to develop advanced units and infrastructure at the terminal, including the superstructure, equipment, buildings and utilities.
AD Ports, listed on the Abu Dhabi Securities Exchange, has continued to make moves to expand its operations and portfolio globally.
This week, it said its Spanish operations division Noatum Terminals had fully acquired APM Terminals Castellon for €10 million ($11 million) in a move to strengthen operations in the western Mediterranean region.
In June, it signed a 50-year agreement with Pakistan’s federal agency, the Karachi Port Trust, to boost infrastructure at its eponymous port.
It also signed a 30-year concession agreement with the government of the Republic of Congo to manage and operate a multipurpose New East Mole Terminal in the city of Pointe-Noire.
Other deals announced last year include the acquisition of 10 offshore vessels for $200 million to meet growing demand from the energy sector, as well as an €81 million deal with Spain's Grupo Logistico Sese to buy its finished vehicles logistics business.
AD Ports inaugurated the Aqaba Cruise Terminal in Jordan last year, boosting the group’s Red Sea portfolio and cruise expansion strategy.
