CAIRO Feb 8 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
(Writing by Ahmed Aboulenein; Editing by Elaine Hardcastle)