Financing its generational plan for managing water resources is one of the biggest challenges currently facing the Egyptian government. It is well aware that spending on that level won’t be available out of the general budget and is therefore looking for international partners, our correspondent in Cairo writes.
When it presented its strategic water plan, Egypt estimated that the investment needed to implement plan amounted to $50 billion. Spread out over fifteen years through 2037, the bulk of the funding would come from the state’s general budget. However, it was equally clear that government funding alone wouldn’t suffice. Hence, the issue of securing the necessary funds for this key program in the economic development of the country has become a focal point for Egypt.
With the increasing water scarcity, managing these funds and investing in the water sector, becomes a top priority as Egypt desperately needs to economize its use of water both in terms of quantity and quality. This includes agriculture, which is the main user of water, households and industry.
Investments Planned in Water Infrastructure
The Ministry of Water Resources and Irrigation developed the plan based on an integrated approach, aimed at enhancing the planning cycle and developing a unified system for investment planning and follow-up. This will ensure that lenders can better evaluate potential investments in terms of their merits and value for money, which in turn should lead to more investments in the national plan. Here are the most important projects included in the plan:
– Mixing stations: aims to improve the efficiency of water use and irrigation condition at the end of canals, reusing drainage water. The establishment of 250 stations has been completed, in addition to the implementation of 116 agricultural drainage water-mixing stations on the canals at a cost of about EGP 500 million.
– Wastewater treatment: the government plans to construct 52 wastewater treatment plants. In mid-2019, the government had completed 26 stations in Upper Egypt, with a further 26 in the implementation phase. Once completed, these stations will have a total capacity of 418 million cubic meters per year, sufficient for 8 million people. The total cost of these stations is estimated at EGP 8.1 billion.
– Seawater desalination plants: The seawater desalination plan foresees spending of EGP 134.2 billion until 2050 in coastal regions, providing 6.4 million cubic meters per day. The plan consists of six phases, starting with the construction of 47 stations by 2025 at a cost of EGP 45 billion. In August 2018, the government announced its intention to build 39 desalination plants with a capacity of 1.4 million cubic meters per day. These stations cost about EGP 29.3 billion, and are being built in the governorates of Marsa Matrouh, the Red Sea, South and North Sinai, Port Said, Dakahlia and Suez. Among these plants, 16 were implemented in 2019.
– Irrigation projects: aims to transform agriculture from floodwater irrigation systems to modern irrigation systems in the old lands of the valley and delta. Modern irrigation systems include sprinklers, drips, or subsurface irrigation. About EGP 40 billion have been allocated to develop irrigation.
– Rehabilitation and development of canals: aims to develop the main canals and drains to reduce loss from leakage. The total length of canals and drains in Egypt is 30,000 km. The total cost of the project is EGP 80 billion. The government is currently implementing the first phase of it, which takes two years to rehabilitate and line 7,000 km of major canals and drains at a cost of EGP 18 billion. The rehabilitation of 3’200 kilometers has already been completed in March 2021. The Ministry of Water Resources and Irrigation has spent about EGP 8.4 billion pounds to develop 383 canals in 19 regions, and EGP 12 billion have been allocated to lining the canals.
Egypt to Spend 300 Billion Pounds on Water Treatment Plants within 5 Years
Egypt aims to take a lead in how to use water more economically and it is determined to spend billions of pounds on sewage and agricultural drainage stations throughout the country.
Egyptian Minister of Irrigation Mohamed Abdel-Aty indicated that Egypt allocates investments of about EGP 700 million each year to implement water projects, including a project for the rehabilitation and lining of canals. Abdel-Aty said «the national project is very important, as the visual and environmental pollution has been removed, and it leads to improving the water in the canals, and creating roads and corridors for people, and we have reached 3,500 km. At the end of this year, we will reach 7,000 km, and in 2025 we will be finished with 20,000 km.»
Eman Sayed, Head of the Planning Sector at the Ministry of Irrigation, stressed the importance of choosing priority projects for implementation, given that funding will be provided from the state’s general budget at the beginning, and if it is not available, resort to other government agencies to search for external loans.
She added that the Ministry of Irrigation and Water Resources is currently reviewing the National Water Plan 2017-2037, with regard to the financial cost.
Local, Regional and Global Corporates Interests in the Construction of Projects
PERI Egypt, a subsidiary of German-based Berry International, implemented the Nile River Barrages project in the city of Naga Hammadi in southern Egypt. The project consists of 330 meters long barrages with a hydropower station with a capacity of 64 megawatts.
Metito Company has participated in the implementation of a number of projects in light of the expansion of urban communities that need water, especially the new cities built by the sea. Among the most prominent projects that the Egyptian government is currently implementing is the Al-Hamam plant for treating agricultural wastewater, which is the largest of its kind so far in the world. Metito is participating in the implementation of this project through a consortium of companies that includes Orascom, Arab Contractors and Hassan Allam.
The American companies Diplomatic and BG Titan intend to inject investments in the Egyptian market estimated at $5 billion, including in the production of green hydrogen. Hanan Taher, the economic advisor to the two companies, said that Diplomatic Corporation submitted a request to the government to invest in Egypt in the field of green hydrogen production as well as a project to desalinate and treat seawater. She indicated that the investments in these two projects were estimated at $3 billion.
International Financial Institutions Implicated in the Planning
Participants from global financial institutions discussed the most important challenges that impede the implementation of water desalination projects in Egypt during a seminar called Opportunities and Challenges within the framework of Cairo Water Week. The seminar was organized by the European Investment Bank and backed up by the EU Embassy, the German Development Bank, and the French Development Agency.
Mamdouh Raslan, head of the Holding Company for Water and Wastewater said that the holding company and its subsidiaries are working on implementing water desalination projects, with financing exceeding $3 billion.
Alfredo Abad, head of the European Investment Bank’s regional office in Egypt, said that the bank is the largest lender to global water sector projects so far, with more than 66 billion euros for more than 1,400 projects.
Looking for More Partners
The Egyptian Sovereign Fund is looking for partners to invest in a $2.5 billion initiative to build more than ten desalination plants powered by renewable energy. Officials are planning 17 new plants powered by solar energy and other green sources, each of which will be built, owned and operated by the Egyptian Sovereign Wealth Fund in partnership with a group of local and foreign investors, according to the fund’s CEO, Ayman Soliman.