Egypt stepping beyond its promises

07 April 2016

Cairo Metro expansion proceeding quickly

by Jennifer Aguinaldo

Egypt’s National Authority for Tunnels (NAT) is set to formally award within weeks the main civil works contract for the third phase of Cairo Metro’s Line 3 to France’s Vinci. The contract is valued at $1bn.

The electromechanical and telecoms package for this phase was awarded much earlier – in November 2015 – to a consortium comprising local firms Orascom and Arab Contractors, France’s Alstom and the UK’s Colas Rail.

A significantly smaller contract was awarded in mid-March for the 1.2 kilometre extension of Line 1 between El-Marg Station, where the existing line terminates, to the New El-Marg Station.

In December, the NAT also obtained a $100m loan from the European Bank for Reconstruction and Development (EBRD) for the acquisition of 13 train sets for Line 2.

Nothing beats a deadline in 2016

Large events with fixed dates mean projects have to move ahead

Reduced government spending in 2016 has dramatically reduced the opportunities available for contractors looking for new work in the region.

The problem that construction companies face is that, unlike the previous downturn that began in late 2008, this time few projects are being cancelled. In 2008, private sector developers were clearly unable to move ahead and cancelled projects as property prices fell by 40 per cent.

In 2016, the situation may still be frustrating, but it is quite different. This time around, most of the projects being targeted by firms are state-backed and while government budgets have been cut, the fundamental need for the vast majority of government projects remains.

The result is that although projects may not proceed this year, they are expected to be executed either when the oil price recovers, or an alternative source of funding is found

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