Patrick Werr: Port Said’s new channel could put clear blue water between itself and rivals

The new port is being developed to exploit the vast amount of world trade that passes through the Suez Canal.

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For steamships in the late 19th century, which port had the reputation of being the world’s fastest for refuelling? Port Said, with its thousands of stout Upper Egyptian labourers “swarming like ants” up gangways and tipping coal in the bunkers, the long-serving British civil servant Russell Pasha wrote in his memoirs.

What happened that caused productivity to plummet? The opening of the first dam in Aswan in 1902. The year-round channels of water it helped to create for irrigation allowed the liver parasite that caused bilharzia to spread throughout Upper Egypt. Within a few years labour productivity had fallen almost by half.

As it once again turns itself into a world-class port, Port Said has all the potential for success – provided it navigates skilfully.

On Wednesday, Egypt’s prime minister was due to inaugurate a key 8.5-kilometre channel offshore in the Mediterranean that leads to the vast new complex of East Port Said, across the Suez Canal from the old port. The new port is being developed to exploit the vast amount of world trade that passes through the Suez Canal, a project that is a major bright spot in an economy otherwise beset by disaster after disaster.

Until now, ships wanting to enter or leave the new port by sea have had to use the same channel used by vessels transiting the Suez Canal, meaning they could not enter or leave the port while convoys of ships were transiting. The window of opportunity for accessing the port was only six to eight hours a day – making it far less attractive for vessels wanting to load or unload cargo or use other services.

The channel’s construction, which took three months and cost about $40 million, involved dredging down to 18 metres. Egypt saved money by using equipment already at hand from the Suez Canal expansion project inaugurated by the president Abdel Fattah El Sisi in August.

There is a certain urgency for East Port Said to establish itself quickly as a regional transit hub. Competition among Egypt’s rivals in the Eastern Mediterranean is heating up, with major port expansions also under way in Izmir in Turkey, Pir­aeus in Greece and Haifa in Israel. Moreover, the advantage of sitting directly on the Suez Canal has been diminished by the recent plunge in fuel prices – a lengthy detour to another port does not cost a ship as much as it did two years ago.

East Port Said won’t work unless it is connected to the other side of the canal. Lorries seeking to get their containers from the port across the canal are now forced to queue for four or five days to board ferries.

Container traffic at East Port Said’s Suez Canal Container Terminal (SCCT) is running at about 60 per cent of capacity, mainly because vessels seek out other ports inside and outside Egypt to load and unload, says terminal manager Jan Buijze. Refrigerated cargo has been hurt worst because it can’t tolerate the wait.

Four months ago, the government began building three tunnels under the Suez Canal 19.5km south of Port Said, two for vehicles and the third for trains. The tunnels are to cost 10 billion Egyptian pounds (Dh4.7bn) and are scheduled to open in 18 months, Al Borsa newspaper reported .

The government in the meantime plans to erect a floating bridge which can open to allow convoys transiting the canal to pass. This means it will be available for surface vehicles only a few hours each day. The bridge should be on site in a month, Ahmed Gad Elbarbary of the government’s Port Said shipyard design section told a conference on Tuesday.

The other issue is the 8 per cent surcharge that vessels entering the side canal must pay above and beyond the regular Suez Canal toll. The surcharge may seem like a clever way to earn extra dollars for a government suffering from a currency crisis, but it risks chasing away prospective customers just when the port is trying to establish itself.

At the moment, the SCCT operated by the Netherlands’ APM Terminals, is the sole operator at East Port Said, but the Egyptian government, spearheaded by the army, is building several more terminals alongside it. Behind the port itself, the government plans a giant industrial city and housing development.

Once the various issues are resolved, the port will be sitting pretty in one of the best locations in the entire world. Aside from location, one of its big advantages is that it has a lot of space for expansion, not only for its ports, but also for supporting infrastructure and industry.

Patrick Werr has worked as a financial writer in Egypt for 25 years