Suez Canal raises fees STARTING April, transit fees through the Suez Canal will increase by an average of 7.1 per cent, subject to the type of cargo on board. Transit fees for oil tankers will rise by 7.3 per cent, those for liquefied natural gas tankers will jump by 10.5 per cent, while container ships by 5.7 per cent. This is the third hike in transit fees since 2005, when Egypt started to capitalise on an escalation in the volume of trade between Asia and Europe. Also, rising shipping costs made Suez Canal transit cheaper than rounding Africa's Cape of Good Hope. The expansion works in the Panama Canal, which will continue until 2014, have also diverted many ships travelling between Asia and the East Coast of the US to the Suez Canal. Raising the fees is part of the Suez Canal Authority's (SCA) plan to maximise revenues at a time when shipping costs and levels of traffic are high. EFG- Hermes expects the SCA would reduce transit fees if international shipping rates fall or traffic levels decline. Suez Canal revenues accounted for 3.3 per cent of GDP in fiscal year 2006/ 2007, and it represented 11 per cent of government revenue. EFG forecast that annual canal revenue will increase 16 per cent, to $4.8 billion, in the current fiscal year. Rolling out steel licences THE INDUSTRIAL Development Authority (IDA) announced last week that licences were directly granted to four local steel companies without bidding. The four companies are Ezz Steel Rebars, Watania Steel, Beshai and Tiba for Steel. Meanwhile, IDA Chairman Amr Assal announced that the Ministry of Trade and Industry (MTI) will hold a tender for one more licence to be offered to international companies which are entering the market for the first time. The tender is slated for February. Five steel companies from Saudi Arabia, India and the Arab United Emirates are competing for the new licence, which permits a total production capacity of three million tonnes annually. The aim of granting licences directly to already operating local companies, explained Assal, is to strengthen the local production process and achieve industrial integration. This will help reduce the cost price of steel products by 20 to 30 per cent, which will eventually be felt by consumers in final prices. Moreover, the total investments of these factories are LE15 billion and they will provide 5,000 direct job opportunity and 15,000 indirect ones. MTI opened registration for steel operating companies which qualify for the new licences on 13 September 2007, and a technical committee was formed to ensure that applicants meet requirements to start new steel production lines. The ministry also set conditions to guarantee the most of the output of the new production lines will feed the local market. According to MTI figures, total production of steel is estimated at 5.4 million tonnes annually, of which one million tonnes is exported since local needs stand at 4.8 million tonnes. Local demand, however, is expected to rise to 12 million tonnes annually by 2013. In response, the government decided to build new factories to cover the gap between local production and consumption. EU cancels textiles quota ON THE FIRST day of this year, the European Union (EU) decided to stop applying the quota system on textile exports which began in June 2005. Egyptian textile exporters dislike the decision because they fear intense competition from Chinese products which have a very low price. Although Egyptian textile exports enjoy free customs duties according to the EU Partnership Agreement, they represent only two per cent of EU textile imports. According to Ministry of Trade and Industry figures, Egyptian exports to the EU between January and June 2007, were estimated at $202 million, compared to $198 million during the same period in 2006. Magdi Tolba, chairman of the Textiles Export Council, expected Egyptian textile exports to drop as a result of the removal of the quota system. Tolba suggested that textiles exporters should begin overhauling their factories or merging with other entities to be able to face competition from the Chinese.
