• Thursday, February 22, 2024
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BusinessDay

Egypt building new capital in the desert in lavish spending

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Egypt is preparing to spend billions doubling the size of a lavish new capital it is building in the desert 45km east of Cairo, where the first residents are trickling in, says the head of the company overseeing the project.

The city is the biggest of a series of mega-projects that President Abdel Fattah el-Sisi says are needed for economic development and to accommodate a rising population of 105-million. Critics say it divert resources and increases Egypt’s debt burden.

Government workers transferred in July to ministries and offices built in the new city’s first phase, eight years after the launch of the New Administrative Capital (NAC) project.
“We have almost 48,000 employees coming every day,” said Khaled Abbas, chair of the Administrative Capital for Urban Development (ACUD).

Built on virgin land, the city is designed to serve as a hi-tech model for Egypt’s future away from the clutter and chaos of Cairo. The government wants it to absorb part of Egypt’s population, growing at an estimated 1.6% a year.

Though the pace of works appears to have slowed recently, phase one of the city already includes a 70-storey tower — said to be the tallest in Africa — an opera house with five halls, a mega mosque and the Middle East’s biggest cathedral.

An electric train from eastern Cairo began operating last spring, and an elevated monorail is due to start from this year’s second quarter, said Abbas.

Up to 100,000 housing units have been finished and 1,200 families moved in, he said.
Major banks and other businesses will move their headquarters by the first quarter of 2024.

ACUD is about to appoint a consultant to draw up a master plan for the capital’s second, third and fourth phases, said Abbas.
Phases one and two will each have a projected 1.5-million residents, and each will cover 40,000 feddans (168km²). Work on phase two should run from later this year until 2027.
“We have lots of demand now,” said Abbas. “That’s why we have to start immediately on phase two. If there is the demand, then after a year or something like that we can work on phase three.”

Landscaping has begun on the irrigated, 10km-long Green River park.

A plant near the Cairo suburb of Maadi will send 800,000m³of scarce Nile water a day, starting in two years. A second, 700,000m³ plant is planned. The two will consume about 1% of Egypt’s share of the Nile’s water.

ACUD hopes to inaugurate a giant sports area, the Olympic City, with a 93,000-seat stadium, by the second quarter, said Abbas.
ACUD, owned 51% by the military and 49% by the housing ministry, spent 500-billion Egyptian pounds on phase one infrastructure and buildings, he  said.

That works out at about $16bn at the current exchange rate, or $32bn before Egypt began a series of devaluations in March 2022.

Second phase infrastructure will cost another 250-300-billion pounds, said Abbas.

In 2019, the president’s predecessor put the price tag for the new capital at $58bn.
Egypt’s finances have come under strain from an overvalued currency, a decline in remittances and surging debt repayment costs after heavy overseas borrowing.

To help with costs, ACUD plans to float 5%-10% of its shares on the stock exchange by the end of 2024 in a sale that could raise 150-billion to 200-billion pounds, Abbas said.

“In six months we will be ready to take the decision to go to the stock market,” he said.