Key fact

The total cost of the Upper Egypt-Red Sea road is estimated at £E3bn ($545m)

Source: MEED

If Mohamed Hosny gets his way, the Upper Egypt region will experience a construction boom in the next few years. Hosny is chairman and chief executive officer of Upper Egypt-Red Sea for Investment and Development (UERSID), the government body set up in November 2008 to oversee the development of the southeastern Egyptian region.

“This region has been neglected by successive governments over the years [but] it is the heart of Upper Egypt”

Mohamed Hosny, UERSID

UERSID has a mandate to construct, operate and maintain a new 412-kilometre motorway, connecting the provinces of Assiut, Sohag and Qena on the Nile with Safaga on the Red Sea. It has also been allocated 200,000 feddans (840 square kilometres) of land to develop, including 150 metres either side of the Upper Egypt-Red Sea highway.

Road links

“This region has been neglected by successive governments over the years and it is the heart of Upper Egypt, where the bulk of the population resides,” says Hosny. “If you look at the geography of Egypt you find that the Nile and Red Sea are linked by lateral roads in the north and lateral roads in the south, but the heart of Upper Egypt is not served by such a road.”

The first phase of the Upper Egypt-Red Sea road, which entailed construction of a dual-lane highway, was inaugurated by President Hosni Mubarak in February 2010. The second phase involves doubling the road and its links before converting it into a motorway. This is scheduled for completion in 2014, although construction has yet to start.

The total cost of the road is estimated at £E3bn ($545m). Financing for the first phase was provided by the country’s privatisation fund in the form of a bridging loan. The second phase will use a public-private partnership (PPP) arrangement or another funding source; all options are currently being studied.

UERSID has been told it can embark on agricultural, industrial, commercial or tourism projects to ensure it achieves its objectives. Initial opportunities being considered include a new urban community, two cement plants, three dry ports and renewable energy projects.

“I give priority to local components on all levels, down to the smallest pebble, as long as there is a source”

Mohamed Hosny, UERSID

The new community would be built over 18 square kilometres on the outskirts of Sohag city. It would house up to 140,000 people in 30,000 flats, town houses and villas. The development would include schools, hospitals, retail outlets, hotels and other amenities. Local consultants Egyptian Consulting Group and Eco-Plan International have been appointed to masterplan the project. The two firms were awarded the contract at the beginning of October and have 4-6 months to complete the designs.

After the masterplan has been completed, companies will be invited to bid for the main consulting and construction contracts. The consultants will also perform a socio-economic impact study for the project, which is intended to help alleviate the housing shortage in Sohag.

Export potential

The proposed cement plants would each have a capacity of 1.2 million tonnes a year, and would be built at Gabel El-Geer in Qena province, and/or at El-Matahir in Sohag. The plants would use locally available reserves of clay and limestone and output would be used to supply the domestic construction sector, as well as being exported.

Three plots of land have been earmarked for the dry ports, in Assiut, Sohag and the Red Sea governorates. UERSID is currently in negotiations with the new maritime port planned to be built south of the existing port of Hurghada over the viability of the dry ports, which it hopes would attract storage and refrigeration firms, shipping companies, packaging and container repair facilities, as well as customs control and clearance centres.

On the renewable energy side, the schemes being considered by UERSID include a concentrated solar power (CSP) plant, biofuel schemes, using algae and bagasse, and waste-to-energy facilities.

UERSID recently signed an agreement with a Kuwaiti-Egyptian joint venture Tri-Ocean for a prefeasibility study to assess the potential for CSP projects in the region. Its report is expected by the end of the year. Once the studies for all the schemes are complete, UERSID will look for potential investors to fund them.

“The projects can either be totally funded by a private sector company or they can enter with us as government body into a PPP arrangement,” says Hosny. “We enter into the equity with land and they enter with know-how and funds.”

The projects detailed to date are just the beginning. Other industrial schemes and tourism and agricultural projects are expected to follow. “The sky’s the limit,” says Hosny.

The construction of the road and the other projects proposed by UERSID will have a huge economic impact in Upper Egypt, creating jobs and opening up vast areas of land that were previously inaccessible.

At present, agriculture is the main source of employment in the region. The development of land along either side of the highway for shops, maintenance centres, hypermarkets and service stations will generate hundreds of new jobs for the region, which has high
levels of unemployment.

“These are poor provinces; with Sohag you are talking about almost the poorest province in the whole of Egypt,” says Hosny. “Sohag is the central province; it has a population of about 4 million and they occupy just 15 per cent of the governorate. The rest of the land is beyond the mountainous area. So, by creating access, you enable the population, which is rapidly increasing, to start moving eastwards into the desert area.”

The construction work for the various projects will also create jobs. UERSID has committed to sourcing materials and labour locally where possible.
“As a strategic directive, I give priority to local components on all levels, starting from human beings all the way down to the smallest pebble, as long as there is a source for that item in the province,” says Hosny.

Development corridor

The road is seen as an investment development corridor for the Upper Egypt governorate, and it is hoped that it and UERSID’s other schemes will act as a catalyst for further investment. The potential benefits extend beyond the region to the country as a whole.

The development of Upper Egypt was an electoral pledge of President Mubarak in 2005. In the past, it has been a sensitive region politically, and, by investing in the area, the state hopes to avert any further social unrest or challenges to its authority.

“If this project succeeds, it will be the best thing to happen to Upper Egypt in hundreds of years,” says Hosny. “It is a very ambitious project. How much we will be able to achieve in reality, who knows? We are hoping most of it will happen.”