By Niveen Wahish Six months ago, Tarek Ghaleb, 24, was out of a job. Ghaleb, a graduate of the Higher Institute for Tourism and Hotels, had hoped for employment in one of Egypt's many hotels. But with the slump in tourism resulting from the Luxor terrorist attack last November, his expectations remained just that. But Ghaleb's luck seems to have taken a turn for the better lately. He learned from one of his relatives that labour was needed in Toshka, where the digging of the huge Sheikh Zayed Canal is under way. Working in Toshka gave Ghaleb the opportunity to practise many trades. For some time he worked in the kitchen of a contracting company, and then found a job as a tiler, a skill he had learned from his father. Ghaleb is only one of hundreds who have been able to find jobs, thanks to the South Valley Development project initiated by President Hosni Mubarak in 1997. The massive reclamation project aims at cultivating approximately one million feddans in the New Valley Governorate, namely Toshka, East Oweinat and the New Valley oases. Toshka and East Oweinat, which together account for more than 750,000 feddans of the total targeted area, are considered to be the most important phases of the ambitious project, to which the Egyptian government has made a significant commitment by undertaking the construction of the Sheikh Zayed Canal, a concrete-lined structure connected to Lake Nasser. Regarded by the government as the "project of the new millennium," Toshka aims at reclaiming some 540,000 feddans west of Lake Nasser, behind the High Dam at Aswan. Some six million people are expected to relocate to the area within the next two decades. The government plan's first step is to provide the water which will enable communities to form. According to a study conducted by the American Chamber of Commerce in Cairo (AmCham) on the Toshka project, construction costs for the 70km canal and the main pumping station are estimated at LE6 billion. This cost will be assumed by the government alone. The canal is expected to be ready and the pump operative by the year 2001. The pumping station will be installed at the outlet of the canal to pump an average of five billion cubic meters per annum at a rate of 300 cubic meters per second. Ten consortia competed to win the tender for building the pumping station. A consortium comprising international and domestic construction companies and consultants -- Hitachi (Japan), Kverner (Norway) the Arabian International Construction (Egypt), Lahmeyer International (German) and the local Hamza Associates -- has been selected by the tender committee to undertake installation activities at a cost of $422 million. The AmCham study estimates that LE300 billion will be needed over the next 20 years to develop the Toshka region. The government is expected to finance 20 to 25 per cent of the total cost of the required infrastructure. The remaining 80 per cent will be financed by local and foreign direct investment in infrastructure, agriculture, industry, tourism and construction. Three side-branches sprouting from the main channel, and totalling a length of 170km, are to convey irrigation water from the main canal to four areas of cultivation. In an attempt to lure investors, the government has offered a number of attractive incentives. For example, investors will receive a 20-year tax exemption. In addition, companies operating in the region will be exempted from tariffs or other regulatory duties on imports of capital equipment and machinery. Moreover, the price per feddan in Toshka is a token LE50, compared to a feddan in the delta which can fetch over LE20,000. However, investors will be getting virgin land with no infrastructure whatsoever. The role of the government will be limited to building the main canal, and its four offshoots, ensuring the flow of water, building the main roads and setting up the main electricity network. "Investors are well aware that they will be starting from scratch," said Fayek Abdel-Sayed, general supervisor of the Toshka project at the Ministry of Public Works. According to Abdel-Sayed, they will have to dig their own subsidiary canals to allow the water to reach their land. They will also have to build their own irrigation system, roads, houses, power stations and anything else they require. According to Sayed, the investors should be large companies capable of bearing the investment cost and of waiting a couple of years before achieving any turnover. "If an investor is not capable of financing his project he will not be able to cultivate the land," he said, stressing that "the government has to make sure the land is cultivated otherwise the billions being spent to provide the land with water will go to waste." However, despite the expected hardship, a large number of investors have come forward clamouring for land in Toshka. "Demand for the land is almost three times the available area of 540,000 feddans," said Abdel-Sayed. Applications for land are being looked into currently by the Cabinet Committee for Mega-Projects. The committee is the authority which decides all the matters that concern the area. Although the government has not yet announced its plan for the allocation of the land, one investor has already got his piece of the cake. Saudi Prince Al-Walid Bin Talal Bin Abdul-Aziz Al-Saud has been allocated 430,000 feddans where he plans to establish a large-scale, export-oriented fresh horticultural produce operation. Prince Al-Walid has established the Kingdom Agricultural Development Company (KADCO), an Egyptian joint-stock company, to undertake the project. Before deciding to pour his resources into the Toshka area, prince Al-Walid commissioned Arthur Andersen, a leading international consultancy company to assess the scheme's viability. Their findings proved that large-scale, integrated and irrigated agricultural development at the chosen site could be commercially attractive under certain conditions. Fiona Elgin of Arthur Andersen said that the prince "loves the project and is very passionate about it." Al-Walid's company plans to develop its holdings at a cost of some LE600 million (including processing and export costs). Seen on the map, the site is located mid-way between Aswan and Abu Simbel. Of the whole site 100,000 to 150,000 will be irrigated. The whole area cannot be reclaimed because not all the land is good enough. In the areas unsuitable for cultivation, communities will be established. "We estimate that we are going to have a population of about 30,000 here, including spouses and families of those employed," said Elgin. Commenting on the feasibility of the Toshka development, Elgin said, "It is our opinion that the South Valley is worth looking at." However, she added a caveat: "Any small investor getting involved there would probably find it daunting." However, she said that it is comforting for small investors to know there is someone like Al-Walid involved, with the resources he brings with him. She praised the government for its foresight in securing a commitment from a key-stone investor like Al-Walid. "Now the government can invite investment from others because they will benefit from the infrastructure that comes with having a big investor. Our project will require petrol stations, mechanical service facilities, machinery suppliers. Those people will not come for five or ten feddans." While optimistic about the prospects for the future, Elgin stressed that nothing would be achieved overnight. Until 2001, when the water starts flowing, all that can be done is to carry out tests on the site and prepare the infrastructure, whether that be living quarters for employees or irrigation networks. KADCO has a 500-feddan research demonstration and training farm at Abu Simbel, where soil composition is virtually identical to that of the Toshka area. According to Elgin, the research site will help pinpoint what the cropping problems are, the harvest times and enable optimal use of the irrigation system. Initial testing of the soil has proven that "for desert soils they are of very good quality and the costs of reclaiming them are not prohibitive." Studies have also identified potential crops, including cotton, wheat, alfalfa as well as a wide range of horticultural crops such as tomatoes, bell peppers, melons, potatoes, asparagus, dates, table grapes and citrus fruits. Al-Walid's company does not foresee net profits until several years after full development is completed. "We want to reinvest any profits in further development," said Elgin. They plan to cultivate 10,000 feddans during the first three years and 20,000 feddans over the following three years. According to Elgin, KADCO's project is mainly export-oriented. However, she added, "Where there are domestic markets offering reasonable prices for our crops, of course we will market domestically." The government is hoping that most of the investment in Toshka will be of the export-oriented and processing varieties. In the words of Fayek Abdel-Sayed, "Investors will not be going to Toshka just to cultivate. In the long-term, to make a profit investors will have to establish factories to manufacture and process their crops and then market and export them." To facilitate the task of exportation the government is preparing to build a huge road network and at least one further airport. (There are already international airports at Aswan and Abu Simbel and another is being developed in East Ewainat. Also there are highways connecting Aswan and Abu Simbel, Toshka and East Oweinat.) While the government is doing its best to make investors' lives easier, the American Chamber of Commerce in Cairo is attempting to promote investment in new areas like Toshka. Hamed Fahmi, co-chair of the new development zones committee of AmCham, said that the aim of his committee is to raise awareness of the new projects among members of the business community, identify trade and investment opportunities and understand the regulatory framework. He believes that the most important by-product of mega-projects is a practical revision of Egypt's regulatory framework based on the requirements of businessmen. "At the national level, the government is amending the laws according to the needs of each project. This way they are not only dealing with the project, but are making a significant change. Referring to specific projects enables the government to pinpoint the laws that need modification or amendment to facilitate investment," said Fahmi.
