Boston, MA -- (ReleaseWire) -- 05/02/2014 -- We believe water scarcity in North Africa will continue to pose serious challenges to agricultural production as water management programmes implemented in the region will only have a marginal impact. Political and security risks will also add to these challenges in the region, and changes to current repartition of water resources will put Egypt at a disadvantage, particularly with regards to its agricultural water demand.
The government faces a looming threat with the Ethiopian Renaissance Dam project, and, if completed, Egypt will suffer serious cuts in water resources (18bn m3 annually). Regardless of the outcome of this specific project it is clear Egypt faces future battles over these resources. The economic development and increased resource needs of many of the African nations along the Nile means Egypt will need to plan for a potential future where their Nile share is significantly reduced. The government recognises the threat of this future and is focusing on improving water conservation and efficiency projects in the water market.
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Overall we adopted an increasingly positive outlook for the Egyptian water sector. Although the country has been plagued by economic uncertainty and political upheaval which has stalled domestically funded projects, there has been a substantial influx of foreign funding, particularly over the past quarter, with financing coming in the form of aid, loans, and private company investment via PPPs.
The government is still some way from introducing much-needed new tariffs, which remains a highly sensitive issue for an administration that is wary of imposing a greater financial burden on the public. In light of the need to placate public opinion - with many agitated by rising prices - there may well be moves over the forecast period to lighten the pricing burden on consumers of water. No explicit moves to reduce water prices have been announced, but BMI expects little appetite among policy makers to raise water usage prices.
However, September saw a tide of anti-foreign aid sentiment as ministers asserted Egypt could support the expansion and modernisation of its water sector without outside funds, such as the announcement made by Irrigation and Water Resources Minister, Mohamed Abdel-Motalib.
- The expansion of the Gabal As Asfar wastewater treatment plant in eastern Cairo was awarded in November 2013 and is expected to be completed in 2017. Degremont will operate and maintain the plant, while Acciona Agua won a US$148mn contract expansion itself.
- Egypt launched a national water campaign to reduce water usage.
- USAID has agreed to fund US$42mn worth of water infrastructure projects in northern Sinai in early 2014.
- An additional US$2.6bn has been earmarked by the government for sanitation projects. These will be predominantly in rural areas of southern Egypt.
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