EconSource: Egypt Opening Suez Canal Expansion to High Hopes and Some Doubts

Egypt opens an expansion to the Suez Canal today, the centerpiece of President Abdel Fattah al-Sisi’s plan to revitalize the country’s economy. However, some analysts and economists say that the mega-project may fail to meet the great expectations. The estimated $8.2 billion expansion includes a 35 km parallel waterway flanking the existing waterway. It also includes a deepening and widening of 37 km of the existing canal. This will cut transit times for southbound ships and allow larger vessels easier passage. The Suez Canal Authority expects a windfall of additional revenue – $13.23 billion annually by 2023 compared with $5.3 billion in 2014. But some are skeptical of the official numbers and suggest that sluggish world trade makes it unlikely the project can deliver immediately on its promise. Economists say the promised rewards of the canal’s expansion depend on the same issues that are holding back the rest of Egypt’s economy. The hype about the canal project does little to ease the doubts of investors. [Reuters, NYT, Washington Post, Ahram Online, 8/6/2015]

Libya to get electricity from Egypt, Tunisia to ease blackouts
Libya will import electricity from Egypt and Tunisia and rent generators as it struggles with power outages that have plunged its main cities into darkness, the Tripoli government said. Outages in Tripoli lasting up to eighteen hours a day have forced Libya’s biggest steelmaker in the western city of Misrata to shut down. Libya will get 250 megawatts (MW) of electricity from Tunisia and 75 MW from Egypt, according to Khalifa al-Ghwell, Prime Minister of Libya’s Tripoli-based government, which is not internationally recognized. Al-Ghwell said his government had also rented generators with a capacity of 240 MW, adding that the closure of steel firm will would save 100 MW, which will be fed into the Tripoli grid. He did not say how the deliveries from Egypt and Tunisia would be funded. [Reuters, 8/5/2015]

Saudi Arabia plans $5.3 billion bond sale next week
Saudi Arabia plans to sell as much as 20 billion riyals ($5.3 billion) of debt on Monday as it seeks to plug its budget deficit following the plunge of oil prices plunged. The bonds will have tenors of five, seven, and ten years and will be placed with local banks. Saudi Arabia plans to raise $27 billion by the end of the year, in the starkest sign yet of the strain lower oil prices are putting on the finances of the world’s largest oil exporter. Governor of the Saudi Arabian Monetary Agency Fahad al-Mubarak said in July that Riyadh had already issued its first $4 billion in local bonds, the first sovereign issuance since 2007. The kingdom has drained $65bn of its fiscal reserves to maintain government spending since the oil price plunge began. [Bloomberg, FT, 8/6/2015]

Syria’s oil industry largely destroyed
Syria’s oil industry, like most of its industries, is in a state of collapse. According to analysts, even recent gains will not come close to reviving the industry. As long as the war drags on, no sector of the Syrian economy will recover fully, said Damascus-based political analyst Afif Dalla. Since the onset of the war, government oil production has nearly stopped, with current production estimated at less than 3 percent of pre-war levels.  Some local authorities have reopened one of the country’s largest oil fields, more than doubling the country’s small output. But the move will not come close to rescuing the failed industry and will mainly serve surrounding villages, according to Mustafa Alani of the Gulf Research Center in Dubai. [VOA, 8/5/2015]

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