ESIS extension / Egypt / Alternative Networks / Update Memo 6

The following report outlines new developments in the past three months and the state of on-going developments.

As mentioned in the previous reports, the current legislation does not allow the production and commercial exploitation of alternative telecommunications networks. As such, there is no law governing the operation of alternative telecommunications networks in Egypt.

The sections below describe, the interaction between business and regulatory constraints and an inventory of the major "public" utilities with a potential for use in I.S. applications.

Since the establishment of the newly formed ministry of telecommunications and information in September 1999, there is a prevailing trend towards telecommunications liberalization.

Telecom Egypt, the state-owned telecommunications service provider of the country still enjoys the monopoly as far as fixed line telecommunications (voice telephony and data transmission) are concerned. However, the markets for mobile telecommunications, pay phones, pre-paid international call cards, and Internet services have already been liberalized (towards this end, the government has privatized the state-owned GSM operator back in 1998 and opened the market for a second provider).

Furthermore, there is a growing trend towards the deregulation of telecommunications, which would consequently lead to the complete liberalization of the entire telecommunications sector. It is indicative to mention that one of the four working groups created by the ministry of telecommunications and information aims at drafting a new Telecommunications Act which in turn would suggest a stronger private sector participation in the Egyptian industry (for more details, see the Regulatory Developments report).

Specifically, regarding the process of privatisation, the Minister of Communication and Information Technology (CIT) has announced offering of up to 20 percent of Telecom Egypt during the fourth quarter of this year (2000). The process is currently on hold, owing to unfavorable local and international stock market conditions. No new date has been set for the privatization of Telecom Egypt, which had been scheduled to sell up to 20 percent of the company at the end of the November 2000.

The above-mentioned legislation poses a major legal barrier preventing the establishment and commercial exploitation of any alternative networks. In this respect, no organisation was yet found to have developed commercial alternative networks.

There is no law governing the operation of alternative telecommunications networks in Egypt.

2. Inventory of the major "public" utilities with a potential for use in I.S. applications

2.1 Types of companies offering networks : description, choice and strategies

Even though no public utility company currently offers alternative telecommunications networks, the prevailing trend towards telecommunications deregulation suggest that there are prospects for one of the utility providers of the country to embark on such a venture. With this rationale, the developments taking place within each of these providers (even though, not directly related to alternative networks) are listed below :

Currently, there are four state-owned public utility service providers in Egypt. Namely, these are the “Electricity Authority of Egypt” for power generation and distribution, the “Petrogas Company” for gas distribution, the “Water and Works Authority” for water supply, and the “Telecom Egypt” for telecommunications services.

There is on-going work on the linkage of Egypt's electricity network with other countries in the region, including a $239-million link with Jordan which was completed in October 1998. The final phase of the high-tension 500 MW cables project has already been completed. The cables were mounted across the Suez Canal on giant 220m high towers.This is the first phase of a five country interconnection of Egypt's system with those of Jordan, Syria, Turkey, and Iraq, and it is scheduled to be completed by 2002. Furthermore, Egypt also activated a link to Libya's electric network in December 1999.

A 500 MW, 330 km power transmission line between Suez and Taba has been completed at a cost of LE 150 million. A power transmission line from Alexandria to As-Salloum has been completed. Both national networks have been linked with a 420 km line. Four giant transformer plants have been set up at Al-Amereya, Al-Alamain, Marsa-Matrouh and As-Salloum. Final tests are underway to operate the electrical links of the 170 km line between As-Salloum and Tobrouq.

Egypt has a strategic importance because of its operation of the Suez Canal and SUMED (Suez-Mediterranean) Pipeline, these being two routes for export of Persian Gulf oil. The Suez Canal Authority (SCA) carries on with enhancement and enlargement projects on the canal. The canal has been deepened so that it can hold the world's largest bulk carriers. Deepening works are expected to continue.

The SUMED (Suez-Mediterranean) pipeline is an alternative to the Suez Canal for transporting oil from the Persian Gulf region to the Mediterranean. The 200-mile pipeline runs from Ain Sukhna on the Gulf of Suez to Sidi Kerir on the Mediterranean. The SUMED's original capacity was 1.6 million bbl/d, but with the completion of the Dashour pumping station, located south of Cairo, capacity has increased to 2.5 million bbl/d. The pipeline is owned by the Arab Petroleum Pipeline Company (APP), a joint venture between Egypt (50%), Saudi Arabia (15%), Kuwait (15%), the U.A.E. (15%), and Qatar (5%). The APP also has been increasing storage capacity at the Ain Sukhna and Sidi Kerir terminals.

The most ambitious idea for gas exports is a sub sea Mediterranean pipeline, which would connect Egypt with Israel and Gaza, with the possibility of eventual links to Lebanon, Syria and Turkey. On December 22, 1999, an agreement was announced on the gas exports from Egypt to Israel and Gaza. A pipeline is to be extended from El-Arish in Sinai to Israel and Gaza, initially supplying gas-fired power plants along the coast. Construction is due to be completed by early 2002.

Railways are operated by the state owned authority for railways under the auspices of the ministry of transportation. Railways covering 1,460 km were added and 4,580 km of the existing network were revamped.

Please note that this report has been prepared under the sole responsibility of the ESIS II contractors.
It does not necessarily reflect the views of the Commission, nor does the Commission accept responsibility for the accuracy or completeness of information contained herein.
The ESIS Team of contractors welcomes any additional information or corrections.