Emam Hussien’s barge in front of the run-down Athar El-Naby port. Close Up Rethinking Higher Education Notorious for producing graduates ill-equipped for the job market, universities are coming under greater scrutiny. The government will need to reach deep in the tool box to fix education. Is the free ride under threat Growing Pains Bickering aside, complaints surfacing at the German University in Cairo reveal some of the difficulties of importing foreign standards of education RethinkingHigher Education Notorious for producing graduates ill-equipped for the job market, universities are coming under greater scrutiny. The government will need to reach deep in the tool box to fix education. Is the free ride under threat? By Ali Elbahnasawy Emam Hussien’s barge in front of the run-down Athar El-Naby port. By Illustration By Ahmed Zaater Goods transported by a combination of road and river can be cheaper than road transport alone, found a study by Professor Abdelkhalek. By Courtesy NRTC NRTC’s new river barges. By Mohsen Allam Professor Saaid Abdelkhalek, retired navy general and professor of sea transport. By Mohsen Allam The new Zefta barrage. By Mohsen Allam Karim Abu El-Khair, chairman of the RTA. By Mohsen Allam By Mohsen Allam By Mohsen Allam By Mohsen Allam By Ali Elbahnasawy Egypt Aluminum Port in Helwan. By Khaled Habib Yasser Areeda, NRTC managing director.

By Ali El-Bahnasawy

Shouting orders to his crew in a heavy Upper Egyptian accent, barge captain Emam Hussien supervises 300 tons of stone as they are illegally dumped into the Nile. His rusty old barge is resting in a small canal that feeds into what used to be a busy river port called Athar El-Naby near the intersection of the Maadi Corniche and the Ring Road.

The dark-skinned, strongly built Hussien brought the stones to Cairo from Beni Suief, a two-hour trip upriver. He had not worked in two weeks, so when a building owner offered him the job, he did not hesitate.

“Who knows when I will work again,” says Hussien, who comes from a small village.

After years of struggling to make a living on the Nile, he is thinking of selling the barge — his family’s prized possession — and finding a new profession. While Hussien learned to sail from his uncle, his two sons know nothing but captaining a vessel, an art that has been in decline across Egypt.

Three decades ago the Nile was cluttered with barges like Hussien’s, which hauled around 10% of Egypt’s commodities. State-owned companies built ports along the Nile and river transport blossomed, stoking industrial production and providing jobs for legions of workers.

But this golden era did not last long. Traders soon turned to land transport, embracing the speed of trucks and trains while the Nile filled with silt and channel markers were picked off by scavengers.

Sailing the river became a risky and unprofitable business and shipping became a relic of history.

But that could soon change. The Egyptian government and several private companies are preparing to invest hundreds of millions of pounds in an ambitious effort to revive shipping along the Nile. Their plans call for at least a half dozen new ports, a series of barrages and extensive dredging. Advocates say the work will help relieve pressure on Egypt’s congested highways and lower transport costs for industry. But rivermen like Hussien who have watched the Nile wither aren’t convinced the promises will be fulfilled.

The 6,695-kilometer Nile, the longest river on earth, provides for millions of people who live along its banks. In Egypt, it stretches for nearly 1,500 kilometers, from Halfa in the south, to the Mediterranean in the north. For millennia, Egyptians have relied on the Nile for everything from drinking water to agriculture to transportation.

So dependent is Egypt on the river that since the time of Pharaohs, rulers have fought to control the countries that lie upstream, looking to guarantee that Egypt would not run dry.

The British, during their occupation of Egypt, understood the importance of the Nile as a cheap and relatively hassle-free thoroughfare. To oversee the river, they established the Inland Water Transportation Agency, later to become the River Transportation Authority (RTA).

Following independence, budget-conscious state-owned enterprises such as Al-Hawamdyya Sugar in Giza and Egypt Aluminum in Qena built river ports to transfer goods from Upper Egypt to Lower Egypt and vice-versa.

The climate changed during the 1970s as custom tariffs dropped and the country opened its doors to imported goods. Merchants demanded faster transportation to cope with intensifying competition. Trucks became an attractive option and the Nile began to decline as a trade route.

The government too began to lose interest, and the idea of developing the river as a modern channel of transportation sunk into the depths. In turn, tourist and commercial boats began to suffer from navigation difficulties due to low water levels, a lack of channel markers and unreliable barrages.

Much of the river traffic ended up on the country’s highways. In 2008, there were nearly 515 million tons of goods transferred by land in Egypt. Trucks carried 93% of this amount — nearly 500 million tons — while rail transport’s share was only 6%. Less than 1% was transported by other means, including river ships. The number of trucks has skyrocketed: There are over 1 million on Egypt’s roads, including 600,000 that are considered heavyweight vehicles (those over 30 tons).

“We don’t have a model to split commodities between different means of transportation,” says Dr. Saaid Abdelkhalek, a retired navy general and professor of sea transport. Abdelkhalek, former head of the River Training Institution, which licenses boat operators, witnessed the rise and fall of river transportation. “Everything now is in the hands of the customer, and the customer wants it fast. So they prefer trucks,” he says.

Not all goods can be transferred by river, mainly due to the slow speed of barges. (They max out at 14–16 kilometers per hour). A barge will travel from Cairo to Alexandria in three days, while a truck can make the trip in few hours. While slow, barges create their value in economies of scale. They can carry large quantities of heavy goods such as steel, cement, fertilizer, stone, marble, phosphates and petroleum for much less than a truck.

The smallest barge can carry 450 tons, a standard-sized barge around 900 tons and a few mega barges are capable of carrying 8,000 tons. In a single journey a standard barge will haul as much as 30 heavy trucks.

Barges are usually built at dry docks in Alexandria or Helwan. A 900-ton barge will cost between LE 6–10 million and is made from 75% local components. The barge is expected to operate for at least 40 years. An imported heavy truck costs about LE 800,000 and is expected to operate for 10–15 years. This means 30 trucks cost approximately LE 24 million, around four times the minimum cost of a 900-ton barge, but each with a quarter of its longevity.

Barge running costs are also less than those of trucks. While both are heavy consumers of diesel fuel, oil and lubricants, barges use nearly 45% less petroleum products and around two-thirds less fuel than trucks to transfer the same amount of goods on a similar length trip.

Another economic advantage of barges is infrastructure. Building a 1,500-kilometer road would cost around LE 3 billion, the same stretch of rail would be nearly double that, while preparing 1,500 kilometers of river for sailing costs only LE 800 million. Unfortunately, maintenance figures for Egypt are unavailable.

A 2007 study by professor Abdelkhalek found that integration between river and road transportation is the most efficient way to ship goods. Taking the Red Sea Governorate, which has no direct connection to the Nile, Abdelkhalek calculated the cost of exporting the governorate’s commodities to the rest of Egypt using only trucks to be LE 107 million.

In a different scenario, he calculated the cost of transferring by truck the same commodities to Qena Governorate, which lies on the Nile. Taking into account the cost of unloading trucks and loading barges, as well as the cost of distribution to the rest of Egypt, the total cost of transportation went down by 67.3% to LE 35 million.

Abdelkhalek performed the same exercise for imports, finding that costs dropped 68.6%, from LE 7 million to LE 2.2 million.

Despite the cost benefits, from the 1990s onwards, river maintenance was not a priority — dredging and preparing the Nile for navigation halted almost altogether. This is beginning to change as the RTA, whose main objective is to make the Nile sailable, works to revive river shipping.

Egypt has four main river routes connecting the country from north to south. Three of these connect Cairo with Damietta, Alexandria, and Aswan. The fourth route connects Aswan to Halfa on the Egypt-Sudan border through Lake Nasser.

Three years ago, the RTA started dredging the first three routes. The dredging efforts ended in May this year at a total cost of LE 800 million. (A 450-ton barge needs water at least 2.5 meters deep. But in many areas the water drops to less than 2 meters in the winter.)

Karim Abu El-Khair, chairman of the RTA, says that the four routes are ready for sailing, each boasting a 100-meter-wide channel.

With dredging complete, the RTA has moved onto the next phase of its plan: building new barrages and upgrading old ones. (These locks are vital for allowing barges to navigate the Nile, where the water level can vary significantly.)

A new barrage at Zefta on the Damietta route opened in April 2007, while another is now under construction on the same channel. On the Alexandria route, two new barrages are under construction at a total cost of LE 411 million and are expected to be operational in spring 2010.

Older barrages are being modernized through the replacement of the opening/closing mechanism for the barrage’s gates. Previously performed mechanically and requiring significant power, the barrages are being upgraded to include a central supervision room, which contains modern equipment to control the flow of traffic.

The river, though, faces other problems. A lack of illuminated buoys means that boats without sophisticated navigation systems cannot travel at night due to the risk of running aground. The RTA had tried to remedy this, installing 393 buoys in Upper Egypt, from Cairo to Assiut. But when many buoys were stolen, their hefty cost — LE 60,000 each — forced the RTA to hold off on installing replacements.

The RTA is working to address navigation issues through a new River Information System, based on the Global Positioning System, which will replace the expensive buoys. The project includes two control rooms; one in Luxor and the other one at RTA headquarters in Al-Malek Al-Saleh in Cairo. Implementation of this project was scheduled to begin in June and it is expected to be finished in 24 months. Boats will be able to use GPS devices — but without assisted guidance from the RTA — as early as December this year.

Abdelkhalek was one of the experts who participated in a recent study of Egypt’s inland water transportation, carried out by the Arab Academy for Science, Technology and Maritime Transport. Mandated by Egypt’s cabinet, the objective of the study was to investigate the state of river transportation and opportunities for new commercial ports on the Nile.

“Our first recommendation was to give the lead to the private sector to invest and operate its facilities,” says Abdelkhalek. Currently, while there are private companies operating barges, there are no private ports. Officials are hoping that will change, in part because of the poor performance of state-owned enterprises in managing ports.

In a different study, Abdelkhalek criticized the state-owned General Nile Company for River Transportation. According to the study, the company’s 407 barges are old and in need of maintenance, and only 13%–15% of the fleet is being utilized.

“You won’t see that in private sector,” says Abdelkhalek. “The moment one unit breaks, it will be fixed immediately. But in the public sector, you have to wait for the next fiscal year.”

Public sector neglect extends to the system of river ports as well, where docks remain under-utilized or are used as storage facilities for the port’s owner. Policymakers realized this and in June 2008, Presidential Decree No. 117 allowed the RTA to issue operating permission for private companies to own and operate ports and barges throughout the Nile.

On the heels of the presidential decree and Arab Academy study, the Ministry of Transportation, which is responsible for river transport, and the RTA, announced that it would offer six locations on the Nile for investors to rent and operate. The new ports will be in Qena, Sohag, Assiut, Minya, Alexandria and Cairo.

However, one year later —the announcement was made in June 2008 — the government has accomplished little. Abu El-Khair, the head of the RTA, says private tenders will happen soon, but he did not provide details of when, or of what caused the delay.

Faced with the delays, two companies have jumped in to fill the void: the National River Port Management Company (NRPMC) and National River Transportation Company (NRTC), both platform companies of Cairo-based private equity firm Citadel Capital. NRPMC will operate ports, while NRTC will operate barges.

NRPMC purchased around 55,000 square meters of land for its first port in Helwan, south of Cairo. The company then rented two other plots: 27,500 square meters in Imbaba and 81,000 square meters on the Nubariya Canal close to the busy Alexandria Port.

“We are planning to have three other ports from the ones that the government will offer — one in Qena and possibly another two in the Delta. So we will reach six ports,” says General Maged Farag, chairman of NRPMC.

Building and operating ports is a capital-intensive investment. Each one of the three ports NRPMC is talking about will cost at least LE 250 million–300 million, according to Farag. The land the ports are located on will cost LE 193 million, as the government is selling it for an average of LE 1,000 per square-meter. Farag believes that the land price is high, a complaint often made by investors in Egypt.

The initial target of the three ports will be to transfer 10 million tons of goods annually. And while this goal will not be achieved overnight given the current unpopularity of river transport, Farag expects that his company will begin facilitating 4 million to 5 million tons per year and business will pick up quickly. “These ports will help any importer or exporter who wants to get the benefit of end-to-end service,” says Farag.

To hasten the flow of exports and imports, the ports will be the first on Egypt’s rivers to handle containers.

From Farag’s perspective, the only problem is red tape. The whole idea of a private company buying a piece of land to build and operate a port is completely new. Farag says that government employees’ first reaction on being approached by NRPMC was to check the books to see what was written about private port ownership. It took them so long that NRPMC executives decided to take the initiative and explain the concept themselves in a presentation. Finally the wheels began to turn.

“We will provide a door-to-door solution and NRTC is committed to costing 10-15% less than trucks,” promises Yasser Areeda, NRTC managing director. He is banking that the pledge will attract customers to river transport.

It seems to be working. NRTC is contracted to transport 750,000 tons of coal and coke on the Nile between Cairo and Alexandria for Al-Nasr Company for Coke & Chemicals. According to Areeda, his company will receive approximately LE 24 million over the life on the contract. And this is not NRTC’s only deal: the company will be transporting cement and sugar for customers as well.

To test the market appeal for river transportation, the company started with seven used barges each last year, with a capacity of 350-400 tons, bought for LE 750,000 each. Another 24 used barges were then added to fleet. The barges were in terrible condition, with a 50-meter used barge costing around LE 2 million to refurbish. With increasing demand for the company’s services, the fleet will expand through the construction of 62 new barges over the next three years, each with a capacity of 1,600 tons. With nearly four times the capacity of the old barges, one new barge can accommodate 92 twenty-foot containers and will cost around LE 18 million.

Unstable water levels during the winter season have proven to be one of NRTC’s largest operational challenges, threatening the company’s investment, reducing capacity and even damaging barges. “The water level should not change during the year, but it happens more frequently than we would like it to,” says Areeda.

According to the RTA, Nile water levels are controlled by the Ministry of Water Resources, which gives drinking and agricultural water higher priority than transport. Abu El-Khair says that while the Ministry of Water Resources is more cooperative and responsive than before, it seems that the relationship between the two ministries is not all smooth sailing.

The absence of a central agency to supervise commercial and agricultural activities in the Nile is another concern. The supervision of barrages is divided between the Ministry of Transportation and the Ministry of Water Resources, which operate separate barrages. And while the first has upgraded many of its barrages and staffs them 24 hours a day, the latter has not.

Barrages operated by the Ministry of Transportation are sometimes run like private fiefdoms — things happen at the whim of the barrage manager. During a visit, bt saw barges that were held at a barrage for more than a day for no apparent reason.

The Nile has the potential to be part of a future integrated transportation system in Egypt, but only if the government plays it right. Dredging the channel, building barrages and installing navigation systems are all efforts that will attract investors to the Nile. While millions can be spent on building and maintaining the infrastructure, haphazard or uncoordinated management between ministries or the actions of careless employees could cost shipping companies hundreds of thousands in damages or delayed delivery. bt