3 Min Read
CAIRO, Feb 8 (Reuters) - A proposed $3 billion deal between Egypt and a Chinese state construction company to build government facilities at a planned new administrative capital has fallen through over price disagreements, Egypt's Housing Ministry said on Wednesday.
The failure marks the second time a foreign developer has pulled out of the project after a United Arab Emirates developer, originally meant to lead it, also quit.
Egypt's ambitious plan to construct a new metropolis 45 km (28 miles) east of Cairo was announced in March 2015 at a Sharm al-Sheikh summit held to lure back foreign investors who fled after the 2011 revolt.
The project, one of several announced by President Abdel Fattah al-Sisi to develop the economy and create jobs for a growing population of 91 million, appeared to stall when the Emirati developer pulled out.
Two Chinese state construction companies, China State Construction Engineering Corporation (CSCEC) and China Fortune Land Development Company (CFLD), then stepped in.
CSCEC had secured a $3 billion loan in order to build government facilities for the city but no final agreement was reached, the Egyptian Housing Ministry said in a statement.
Egyptian contractors will now take over building the government facilities, said Ayman Ismail, chairman of the company developing the new city, which is joint owned by the Housing Ministry and the military's Engineering Authority.
"No agreement that satisfies both parties in terms of price per square metre was reached. The company has received lower prices from Egyptian contractors," Ismail said.
As such, representatives from the new capital company met with officials from the Housing Ministry and Armed Forces Engineering Authority ahead of preparing the site, which will be "built by Egyptian hands," he added.
A memorandum of understanding (MoU) worth $20 billion with CFLD was meant to be signed in December but has not yet materialised, Hisham Sheta, chairman of Income, a local partner in the project, told Reuters. He expects the deal to be signed within six months.
Built to escape Cairo's overcrowding and pollution, the new administrative capital was initially expected to cost $300 billion and feature an airport larger than London's Heathrow and a building taller than Paris's Eiffel Tower.
But Cairo residents have questioned the logic of replacing their 1,000 year-old capital on the Nile with an alternative that could uproot thousands of government workers to what is now a desert. (Writing by Ahmed Aboulenein; Editing by Elaine Hardcastle)