NACOof the Netherlands first started work on designs for a third terminal in 1993, but the project was repeatedly postponed due to political wrangling over the use of public funds for the scheme. But rapid progress has been made since the government entered into negotiations with the World Bank in early May over financing for the project. Beirut-based Dar al-Handasahhas been appointed project manager and the financial advisory contract was signed with BNP Paribasin mid-July.

The World Bank has made an initial commitment of $173 million on the basis of project costs of $381 million, to be re-evaluated when NACO and the local Egyptian Consulting Groupcomplete their assessment of changes to the scope of works. The World Bank indicated in May that it could meet as much as $300 million of the total possible costs of $400 million or more. The deadline for negotiations is 10 November and final approval is due from the bank on 16 March. Early estimations are that the composition of project expenses will be 70 per cent in foreign currency and 30 per cent in local currency.

'The project is moving ahead much faster than any I've seen before, and we've been in intensive talks with all the parties involved,' says a World Bank official. 'We are supporting the government share in the project, and the amount we agree on could be more than $173 million, as they are also talking about private participation. But it hasn't yet materialised what sort of role the private sector will take.'

The proposed terminal will increase capacity by a further 11 million passengers a year - 5 million domestic and 6 million international - and increase annual cargo capacity by 135,000 tonnes. Rising levels of passenger and cargo traffic have already put severe pressure on the airport. Ongoing rehabilitation of terminal 1 will slightly increase capacity to 9 million passengers a year, but by comparison traffic in 2000 peaked at 8,943,000 passengers. Air cargo traffic, which reached a height of 203,000 tonnes in 1999, has now saturated the airport's existing storage facilities (MEED 17:1:03; 28:6:02).

The initial scope of works includes construction of a new terminal, including a concourse and three skyways, and a second 22,000-square-metre cargo storage complex. The first enabling package, expected to take nine months to complete, will be tendered locally. The main contract, for construction and equipment supply, is expected to take up to 32 months to complete. Under a presidential decree, an additional 22 million square metres of land have been allocated to the Cairo Airport Authority for the project.

As part of an ongoing restructuring programme, the expansion of Cairo airport will also lay the groundwork for future upgrades of some of the nine other international airports in Egypt. Project specifications also call for the provision of technical assistance, including the preparation of a national airport masterplan, the introduction of a regulatory framework for the aviation sector and the establishment of an independent regulatory authority.

The Egyptian aviation sector has undergone major changes since June last year, when the Civil Aviation Ministry ended the separate status of the Cairo Airport Authority and placed it under the management of the Holding Company for Airports and Air Traffic. Besides Cairo airport, the holding company is also responsible for the management of 23 domestic and international airports as well as air traffic control.

As part of the initial liberalisation of the sector, EgyptAirwas reorganised into a holding company with six affiliates, with the stated aim of limiting the influence of the carrier on airport management decisions. The airline is now in the process of restructuring its fleet (see below).