Major projects stalled by downturn

21 March 2003
The tendering schedule for a number of major government construction projects has been delayed by investor uncertainty over the short-term health of the local economy and the ongoing Iraq crisis.

The long-awaited tender for the $750 million third line of the Cairo metro is not expected to be issued for at least six months, say local contractors, and there is still little sign of progress on the planned expansion of Cairo Airport, for which bids were originally submitted in late 2001.

A new call for applications to prequalify for the contract to build a third terminal is expected by the end of April, but an award is not expected now until at least mid-2004, say contractors (MEED 17:1:03).

Private sector projects have also been affected by the downturn. The local/Kuwaiti Gulf Egypt for Hotels & Tourismhas extended the bid deadline for the contract to expand the Sheraton Heliopolis Hotel in Cairo by a further two months to 17 May. At least seven groups of international contractors are prequalified for the $50 million-55 million contract, which will involve construction of a new wing on the existing site (MEED 7:2:03).

'The competition in Egypt now is very aggressive, but there are few big projects on the table,' says one international contractor based in Cairo. 'Where projects used to be tendered in single packages, there is much more subcontracting and lots of little jobs now in the market, with huge lists of prequalifiers for each one. For a company like ours, which has a minimum threshold of about $10 million for a project, the market really is stagnant.'

Several international contracting companies are scaling back their presence in Cairo, and the US' Washington Groupis understood to be in the process of closing its local office. 'When things like the metro and the airport get going again, people will be back here at the drop of a hat,' says a US contractor working in Cairo. 'But until then, most foreign companies feel they are only throwing good money after bad. Until the currency situation sorts itself out and the economy begins to pick up, most of the work going will be for the small, local companies.'

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