Al Ahram, P.26 (7-8-2007)

The phosphate complex…the dream of Upper Egyptians

Report by: Muafak Abu El Nil

    The residents of Upper Egypt have always dreamt of the day in which
a giant industrial project is implemented in their area to improve life conditions and generate more job opportunities for youth. When the dream was about to come true with the implementation of a complex for producing iron and steel in the eastern desert of Aswan, the project stopped and the investors were arrested. Afterwards, the Egyptian just judiciary proved that those investors did nothing wrong and they were released, but the project was not completed.

    Then, another dream emerged with a proposal to build a complex for producing phosphate in Al Sobaya desert, north of Aswan, with total investments of US$ 526 million. This Indo-Egyptian joint venture, which is
in line with the developmental schemes of Upper Egyptian governorates and the programme of President Mubarak, is expected to generate 1350 job opportunities. However, the project, which got all required approvals and licenses, was blocked by a junior employee sticking to bureaucratic measures. The story of this joint venture started when a leading Indian fertilizers company, which has plants in India, Senegal and Jordan, reached an agreement with Al Nasr Mining Company to establish a complex for producing phosphate from the mines of the later in Al Sobaya. The total investments of this project, which will offer 1350 job opportunities, are estimated at US$ 526 million (75% of the shares to be owned by the Indian company and 25% by the Egyptian company).

    On December 7, 2005, the new Egyptian-Indian Company was established and got the approval from the Egyptian Authority for Investments and Free Zones so that the newly-established company would enjoy the same privileges given to the companies of the special free zones. The reference number of the letter of approval is 1168.

    The company submitted a request to the Governor of Aswan to allocate an area in the desert of Al Sobaya so that this major project can established. The Governor requested the new company to present a study on the assessment environmental impact of the project. Accordingly, the company requested Engineering Sciences' Studies and Research Centre at the Faculty of Engineering, Cairo University to make the required study. When the study was completed, the Governor organized a conference, which was attended by the representatives of the local councils in Al Sobaya and officials from the Egyptian Environmental Affairs Agency in the Governorate, to listen to the recommendations of the study on assessment of the environmental impact of the project and discuss any point with the professors, who prepared this study.  According to the study, the project would annually produce 1 million tonnes of phosphoric acid and 1.3 million tonnes of sulphuric acid.  The feasibility study of the project revealed that the plant would use the-state-of-the-art technology, which would control gas emissions, help recycling of water, save electricity and fuel, generate six megawatt of electricity and reduce wasting of raw materials. The engineering professors and experts of Cairo University registered their approval for this proposed venture, which will be established away from the housing area and two kilometers away from the east bank of the Nile. The study came up with the conclusion that the project and its location meet the economic, environmental and technical requirements, which should be available for the establishment of ventures using clean technology.

    Accordingly, Mr. Samir Youssif, Governor of Aswan issued order number 14 for allocating 7.5 km² in the Sobaya desert for the construction of the plant. The Egyptian-Indian company requested a loan from the International Financing Agency which granted the company $ 240 million and the International Commercial Bank in Egypt provided it with another loan of $ 76 million.

    The establishment of the Egyptian-Indian company had a strong impact on the international industrial circles; the Economic Cooperation and Development Organization in Paris considered the project of the Sobayea the best project world wide for the year 2006.

    A team of Indian experts and geologists came to Egypt and were received by the governor to give the actual signal of the beginning of the establishment of the complex. Suddenly, the General Authority for Industrial Development discovered that this major project is being established in Aswan and that it did not know anything about it. The chairmen of the authority sent a letter to the company to stop any works immediately.   He sent another letter to the governor of Aswan to cancel the allocation of the land for the project.

    The company sent a complaint to the Prime Minister who stressed the importance of being committed to any contractual obligations or previous approvals.

    The Chairman of the General Authority of Industrial Development discovered another violation by the Egyptian-Indian fertilizers company: there is a decision dated 15/10/2006 by the Higher Council of Energy presided over by the Prime Minister to the effect that no aluminum or fertilizers companies should be established to rationalize the subsidy directed towards industries that consumes a lot of energy.

    Dr. Samir Youssif, Governor of Aswan, said that when it starts operation, the Complex would not need to consume electrical energy from the national grid but it will produce energy surplus amounting to 6 megawatt that will be used locally.

    The Governor of Aswan said that as a governor, he did his best as he allocated the land for the project, made sure of the seriousness of the company and the environmental safety of the project but to his surprise after one year and a half the project was suspended. This is a major mistake against the state and the government as we should maintain all the state's commitments towards investors. The Prime Minister issued a decree cancelling the free zones but we should maintain and respect signed agreements. He added that he is not sure whether there is a lobby with vested interests behind impeding the establishment of this project or not?

    Engineer Abdel Malik Farah, Chairman of the Nasr Mining Company, said that sulphuric acid projects failed in the past as they needed huge investments and the revenue is less than that coming from other industries which are not considered strategic industries.