Egypt plans Suez Canal expansion to boost shipping capacity

Container ships on Suez Canal.
Egypt is considering expanding the Suez Canal to enhance traffic flow and prevent blockages. Revenue has dropped due to attacks in the Red Sea. Initial studies for the expansion will take 16 months and could boost competitiveness. Funding will come from the Suez Canal Authority's budget to reduce state burden.
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Egypt is considering expanding the Suez Canal to widen and complete a second channel in order to allow higher volumes of shipping and prevent traffic blockages. This comes as the canal’s revenue is falling due to shipping companies avoiding the route because of attacks by Houthi militants in Yemen. Ongoing work to extend the second canal by 10 kilometers and deepen and widen a section of the canal has been accelerated after the Ever Given container ship got stuck in March 2021, halting traffic for six days.

The canal is a vital source of foreign currency for Egypt, which spent $8.2 billion expanding the canal in 2015. Canal revenue rose gradually but dropped by at least 40% earlier this year due to Houthi attacks. Any further expansion would require state approvals and be financed from the Suez Canal Authority’s investment budget to not burden the state’s overall budget. The project aims to increase the canal’s competitiveness and accommodate more and larger ships.

President Abdel Fattah al-Sisi’s megaprojects, including the 2015 canal expansion, have been criticized for contributing to a foreign exchange crisis and rising debt burdens in Egypt. Officials have announced plans to cut spending on non-essential projects due to foreign exchange shortages worsening over the past two years. Initial studies on further expansion of the canal would take about 16 months and include feasibility, environmental and engineering studies, as well as soil and dredging research.

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