An Egyptian worker takes a rest as he watches bulldozers and trucks at the site of the upgrade project of the Suez Canal, in Ismailia, Egypt, Tuesday, Aug. 12, 2014 (Photo: AP)
Egypt’s new waterway in the Suez Canal will be funded through investment certificates and domestic debt, announced Prime Minister Ibrahim Mahlab in a conference Thursday.
Investment certificates will be issued to Egyptians only, in local currency for citizens working inside the country and in dollars for those working abroad. The certificates, which will be issued by the National Investment Bank (NIB), will have a lifetime of five years at a 12 percent interest rate to be paid quarterly.
The digging of the parallel waterway, which has already begun, is planned to be accomplished in a year at a cost of $4 billion. The project will also include the construction of six tunnels to link Sinai and the two Suez Canal-bordering governorates of Port Said and Ismailia, at a cost of $8.2 billion.
The announcement followed a meeting between the President Abdel-Fattah El-Sisi and Mahlab, the governor of the Central Bank of Egypt (CBE), and the ministers of international cooperation, finance and investment.
Certificates issued in local currency will be offered in three categories: LE10, LE100 and LE1,000 at a 12 percent interest rate. Those issued in US dollars will be offered at multiples of $1,000 at a three percent interest rate, reported privately owned daily newspaper Al-Youm Al-Sabea, citing Hisham Ramez, CBE governor.
Domestic debt will be gathered through a coalition of local Egyptian banks, private and state-run, added Ramez in interview with Al-Youm Al-Sabea.
El-Sisi had announced earlier this month that the project would be funded through an initial public offering (IPO) targeting Egyptians, where the value of the shares would be LE100 per share for those working inside the country and $100 per share for those working abroad.
However, the head of Egypt’s Financial Supervisory Authority (EFSA), Sherif Samy, told Ahram Online at the time that differentials in share pricing was unfeasible and that no company has been created yet for the project to issue shares in.
"Only companies can apply for an IPO, so the new project needs to establish a new company first," added Samy.
An investment certificate is a saving certificate that entitles its holder to receive interest, while a share is a financial instrument giving its holder ownership rights.
The new artificial waterway is planned to be 72 kilometres long and should raise the Suez Canal’s revenues by 259 percent.
The digging process is currently being executed by 33 specialised Egyptian civilian companies, and two army battalions.