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Why have billion-dollar projects inaugurated by Al-Sisi been shut down?

May 18, 2023 at 2:20 pm

Egyptian President Abdel Fattah al-Sisi [İmtiyaz Khan/Anadolu Agency]

The President of the Egyptian regime has launched numerous projects to boost the country’s economy, but they have failed quickly and then been shut down, at a cost of billions of dollars to the country. This has led to an increasing national debt for Egypt due to borrowing the money for the majority of these projects.

In a Twitter thread, Egyptian journalist Hanan Khairy has looked at the details of a number of these projects that were inaugurated by President Abdel Fattah Al-Sisi and terminated later due to project management failures. On 25 December 2019, for example, he inaugurated a colossal complex for animal and dairy production in Youssef Al-Seddik City in the Faiyum Governorate. It covered more than 458 acres, with a capacity of 18,000 head of cattle. However, less than three years later, the complex was shut down, except for a small section which remained in operation for packaging purposes.

Al-Sisi has opened other similar complexes in Qibli Qarun, also in the Faiyum Governorate, as well as in Nubaria and Sadat City. The Qibli Qarun complex has been completely closed, with the Sadat and Nubaria complexes still functioning at a significantly lower capacity with substantial losses, just one year after their inauguration.

Back on 18 November 2017, President Al-Sisi inaugurated the first phase of the Barkat Ghalyoun fish farming project, at a cost of 14 billion Egyptian pounds and covering over four thousand acres. The project aimed to bridge the food gap in the fish supply chain, and it was managed by the National Company for Fisheries and Aquaculture affiliated with the National Service Projects Organisation (NSPO).

The project was supposed to be implemented in two stages by China’s Evergreen company, which specialises in fish farming. The first phase was expected to comprise 1,359 fish ponds, each with an annual capacity of nine thousand tonnes. However, after five years of operations, the production has not exceeded a thousand tonnes.

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In July 2020, Al-Sisi announced that he was seeking to restore the city of El-Mahalla El-Kubra to its deserved industrial status, by building the world’s largest spinning and weaving factory there. Construction started at a cost of 23bn Egyptian pounds on a site of 62,500 square metres. The target for the factory was to produce 30,000 tonnes of yarn daily.

The Egyptian government bought Swiss Rieter machines for the factory, but grave errors in the construction of the concrete structure prevented their installation and the start of operations was postponed. The construction work stopped entirely five months ago, with no solutions provided for the structural issues.

The factory was thus closed before it even opened due to hasty mistakes, leading to the loss of billions of Egyptian pounds in construction costs and the purchase of the machinery, which stand idle. The factory’s opening date, planned for earlier this year, has been postponed.

In 2014, a deficit in electricity production turned into a surplus. Despite this surplus, the government persisted in its policy of issuing contracts for massive power projects, while citizens shouldered the cost of investments in a surplus product that they did not require.

Al-Sisi hoped that the surplus production would position Egypt as a regional energy hub. In 2015, electricity capabilities of 3,636 megawatts were added at a cost of $2.7bn. In the following year, despite the end of the electricity crisis, the government contracted for the construction of power stations with capacities of 14,400 megawatts costing €6bn.

The president continued to add surplus capacities by establishing thermal and wind power stations, reaching an output of 60,000 megawatts by the end of 2022, although the maximum load in the same year was only 33,000 megawatts. The cost went up to more than $45bn, which was all borrowed.

In an attempt to manage the significant surplus, which has been a burden on the Egyptian people, the state signed a memorandum of understanding to establish a connection with Cyprus and, from there, to Europe. However, nothing has been implemented from this plan. Likewise, the electrical connection with Sudan has been postponed and no implemented.

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The state has failed unequivocally in marketing its surplus electricity production, resulting in significant losses for power stations operating below their maximum capacity, compared with the substantial investments made in their construction. The soaring electricity bills have become a nightmare for the people, who are burdened with the costs of these extensive investments and marketing failures by the regime.

When the price of gas soared following the Russian invasion of Ukraine, Al-Sisi turned towards preserving and exporting gas, as its price had reached $8 per cubic metre. The Ministry of Electricity converted major power stations to operate on solid fuel despite being designed for gas, resulting in a decrease in the efficiency of the stations and damage to the boilers and turbines.

Unfortunately, the price of gas has now dropped to two dollars, diminishing hopes of benefiting from gas savings. Due to the lack of project reviews and studies to calculate the expected growth rate of demand, over $45bn borrowed by Al-Sisi have been squandered without any economic return or added value to repay these debts.

In May 2017, works began on the Damietta Furniture City project, covering an area of 331 acres. Parts of Manzala Lake were drained and levelled for the construction of the project. The city contains 54 hangars housing 1,348 factories and workshops dedicated to furniture making, along with a centre for furniture technology. Moreover, it contains five service centres comprising central workshops to support small-scale industries, commercial facilities, administrative offices, a bank, a police station, a fire station and a medical clinic. This project was implemented under the supervision of the Armed Forces Engineering Authority at a cost estimated at 3.6bn Egyptian pounds.

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In December 2019, Al-Sisi inaugurated the city, describing it as a “national project that will move the Egyptian furniture industry to the global level.” However, a few months later, Damietta’s Governorate authorities revealed significant financial losses for the project after the sale of just 400 workshops out of the original 1,348.

The nature and lack of continuity of the projects initiated by Abdel Fattah Al-Sisi illustrate how he has managed Egypt over the past ten years, squandering billions of dollars in process. He has to explain to the people why billion-dollar projects inaugurated by him as President of the Republic have been shut down.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.