Public transport projects in Egypt: Huge spending and continuous losses

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“Enormous spending and continuous losses” is the reality of transport projects in Egypt, which the government declares it has spent billions on developing and maintaining despite the fact that they continue to make the biggest economic losses.

Transportation projects in Egypt, represented by the Railways, Metro, and Public Transport Authority, and roads and bridges, have become the most significant drain on the Egyptian economy. Despite the increase in railway and metro ticket prices and the high transit fees collected on different roads from citizens, all transportation sectors make staggering losses. The massive losses came although the billions of cars and tractors that are imported, loans to build roads and bridges, and money spent on building subway lines.

Spending and losses

Egyptian Prime Minister Mostafa Madbouly said that his government had spent more than EGP 424 billion ($26.62 billion) during the last six years on transport projects. Madbouly added, during the inauguration of the fourth phase of the third line of the metro, “we have invested a great deal in roads and bridges over six years, and there are projects under implementation and others that we will start implementing within the next few days.” This statement coincides with the rise in losses of the National Authority for Egyptian Railways during the last fiscal year to EGP 12.3 billion ($772.5 million), compared to EGP 10.4 billion ($653.2 million) during the previous year, an increase of 14.6 per cent.

Deputy Fathi al-Sharqawi, a member of the Plan and Budget Committee in the House of Representatives, said that the Railway Authority’s accumulated losses rose during the past year to reach EGP 76 billion ($4.8 billion).

The House of Representatives Transport and Communications Committee approved a credit facility agreement for the supply of 1,300 new railway cars between the National Authority for Egypt Railways, the Hungarian Bank for Export and Import, and the Russian Import and Export Bank, with a value of 1.016 billion euros ($1.2 billion). She explained that the loan would be repaid within 12 years at an annual interest rate of two per cent, equivalent to $61 million. For his part, Minister of Finance Mohamed Maait said in a press statement last May that the losses of economic bodies amounted to about EGP 20.9 billion ($1.3 billion). He pointed out that these losses are limited to the Egyptian Railways Authority, and the National Media Authority, with losses amounting to about EGP 16 billion ($1 billion).

Subway

Continuous losses in transportation projects, including the metro, prompted the government in June 2019 to raise the price of subway tickets after the opening of the third line. The Ministry of Transport announced the new tariff for users of the third line, dividing it into three regions, the first nine stations. The corresponding ticket value was estimated at EGP 5 ($0.31). In comparison, EGP 7 ($0.44) was determined for the second zone ticket, which includes 16 stations, and finally, more than 16 stations were estimated at EGP 10 ($0.63) per ticket. Concurrently, Minister of Transport Kamel al-Wazir said, on the sidelines of an inspection tour of the new line, that “the third metro line incurs losses of EGP 9 million every month [$535,000].”

In another statement, the minister returned to clarify that the ticket price would not be raised except after careful evaluation, after returning to the prime minister and with the president’s approval. He added that despite the loss of metro revenues by more than 50 per cent, it is not a loss for the people, and this is their right as citizens, he said.

Public transport

Last April, sources at the Ministry of Transport said in press statements that the railway and metro facilities are among the most affected sectors by the coronavirus. The metro company incurred losses amounting to EGP 100 million ($6.3 million) during March and EGP 200 million ($12.6 million) to the railway authority, resulting in the retreat of passengers and the full operational capacity of the two facilities. She added that the Public Transport Authority incurred nearly EGP 50 million ($3.1 million) in losses during March due to the decline in the number of passengers while remaining on full operational capacity.

Many public transport companies operating in Egypt are facing a potential business interruption after successive losses. The companies said that the losses came as a result of the Public Transport Authority’s intransigence in considering their demands. They indicated that there was also a failure to provide a set of tools that facilitate the companies’ conditions.