The Suez Canal Authority is currently in negotiations with local banks for a bridge loan of US$450 million, the privately owned newspaper Al-Mal reported on Monday.
A bridge loan is a short-term loan typically taken out for a period of two weeks to three years, depending on the arrangement of larger or longer-term financing.
Suez Canal Authority director Mohab Mamish told Al-Mal that the funds would be allocated to pay the firms that will dig the new extensions to the canal. The loan would be negotiated at 3.25 percent interest.
President Abdel Fattah al-Sisi unveiled the Suez Canal development project to great fanfare last August. He said a new 72 km-long canal would be dug parallel to the old one to allow two-way traffic through the passage. Sisi also surprised the Suez Canal Authority by setting a one-year deadline on the project, as opposed to the original three-year timeframe.
The government exhorted the Egyptian people to buy Suez Canal bonds to fund the project, and in less than two weeks, LE64 billion worth in bonds were sold — 82 percent of which was sold to ordinary citizens. Around LE27 billion came from the banking sector.
Last month, Al-Mal reported that Suez Canal Authority was considering applying for a foreign currency loan from domestic banking institutions to finance the foreign component of the project.
Sisi had originally promised exclusively Egyptian companies and the Egyptian military would be contracted for the project — an ambitious proposal, given the considerable amount of wet dredging to complete within a year.
Islam Mamdouh, an engineer with experience managing infrastructure projects throughout the Middle East, had previously said that all the dredgers in Egypt combined could not shift more than about 250,000 cubic meters of earth per day. As a result, Egypt has had to turn to foreign firms to meet the tight deadline, and will pay over US$2 billion to two foreign consortiums to assist with the dredging.
The first consortium, consisting of the National Marine Dredging Company of the United Arab Emirates, the Dutch firms Royal Boskalis Westminster and Van Oord, and the Belgian Jan de Nul group, was awarded a US$1.5 billion contract to help dig a 50 km-long channel parallel to the original canal.
The second consortium, including the Dutch firm Dredging International and the US-based Great Lakes Dredge & Dock Company, will be paid US$540 million to deepen and widen a 25 km stretch of the western branch of the Suez Canal at the Great Bitter Lake, Deversoir Reach and Kabreet Reach.
Officials claim the expansion and development plans will increase canal revenues to US$13.5 billion by 2023, compared to a record high of US$5.3 billion last year.