EGYPT-ECONOMY: Suez Canal Braces Itself for Pipeline Competition

• by IPS Correspondents (ismaliya, egypt)
• Thursday, November 17, 1994
• Inter Press Service

ISMALIYA, EGYPT, Nov 17 (IPS) - Egypt's Suez Canal Authority, desperate to compete with new oil and gas pipeline projects in the Middle East, is launching a fresh marketing campaign to attract customers away from less expensive alternative routes.

Worried that the outbreak of peace in the Middle East will open oil pipelines closed since the 1967 Arab-Israeli war, the Authority, headed by Mohammed Ezzat Adel, is widening and deepening the canal to take bigger ships.

"The Suez Canal is strong and will remain strong," Adel told reporters in the canal town of Ismaliya.

Around 13 percent of the canal's revenue of two billion dollars a year is generated by transiting ships carrying oil. The Authority is anxious the re-opening of a trans-Arabian pipeline from the Gulf to Israel and Lebanon will attract carriers away from the canal.

Adel, celebrating the canal's 125th birthday on Thursday, said the Authority would discount toll fees to attract new clients.

"All these pipelines represent competition to the Suez Canal," he said at a press conference. "But only revenue from oil will be affected by this."

The canal, which allows ships to avoid sailing around Africa, is vital to the Egyptian economy. After remittances from expatriate workers and oil exports, the Anglo-French built waterway is the country's third largest source of foreign currency.

More than 17,000 ships used the canal last year saving ships sailing from the Black Sea to the Gulf more than 80 percent in travelling distance.

However, income from the canal fell up to four percent this year compared to last to just under two billion dollars. Adel said he hoped 1995 would be a better with losses made up for.

He said the canal would be widened to allow ships with a draught of 59 feet as opposed to the current 56 feet. The changes would be in place by 1996, he added.

He said the canal was trying to break into the gas-carrying market, part of a Gulf effort to supply a growing European market. The Authority had struck a provisional deal with the gas-rich Gulf emirate of Abu Dhabi with 40 ships transiting the canal over the next year.

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