Cablegate: Application for Opic Finance: Damietta

VZCZCXYZ0031
RR RUEHWEB

DE RUEHEG #6373 2890704
ZNR UUUUU ZZH
R 160704Z OCT 06
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 2002
INFO RUEHKU/AMEMBASSY KUWAIT 0264

UNCLAS CAIRO 006373

SIPDIS

SENSITIVE
SIPDIS

OPIC FOR SENIOR INVESTMENT OFFICER GEOFFREY TAN

E.O. 12958: N/A
TAGS: EINV EG
SUBJECT: APPLICATION FOR OPIC FINANCE: DAMIETTA
INTERNATIONAL PORTS

REF: SECSTATE 146574

1. (SBU) Post supports OPIC's plan to provide an investment
guaranty of up to $150 million for the Damietta Port Project.
OPIC's re-entry into Egypt's economy will be an important
signal to the GOE and investors that OPIC is confident of
Egypt's commitment to economic reform. Moreover, OPIC
participation in private-sector development projects like the
Damietta terminal complements U.S. economic policy in Egypt,
which seeks to promote private-sector led growth and trade
facilitation. The Damietta terminal also complements the
GOE's transportation modernization strategy, which aims to
promote private investment and operation in transportation
infrastructure. Post does not possess any derogatory
information on the project, or the Egyptian partners, RAFIMAR
and Damietta Port Authority.

2. (SBU) In depth information and statistics on Egypt's
maritime port operations can be found by visiting the
Egyptian Maritime Data Bank website at www.emdb.gov.eg. The
GOE has embarked on an aggressive trade and customs reform
program, recognizing the need for modernization and increased
efficiency in its container ports to make better use of its
excellent location adjacent to the Suez Canal and bordering
the Mediterranean. The GOE has secured, or is pursuing,
private sector investment and operators in other key ports
such as Alexandria/Dekheila, Port Said, and Ain Sokhna.
Regarding regulatory structures, the Customs
Authority, under the Ministry of Finance, has responsibility
for customs procedures at all ports. The port authorities of
each port, under the Ministry of Transport, have overall
management responsibility for port operations and regulation.
The Ministry of Investment is invoved in the ports only to
the extent of facilitatng investment in new facilities
through provisio of land and management of investment
proceduresregulations regarding specific projects.
Coordintion between the ministries of Finance, Transport and
Investment is good, as all lead by reform-minded ministers.
In the case of the Ministry of Transport, Minister Mansour
comes directly from the private sector and is a past
president of the American Chamber of Commerce in Egypt.

3. (SBU) Econoff spoke with a RAFIMAR representative, who
explained that the first phase of the Damietta project is
slated to begin within two years. Once completed the port is
expected to move 4 million TEUs per year. Post believes this
goal is realistic, as Damietta is well positioned to serve as
a major transhipment hub for the eastern Mediterranean,
handling shipments to/from Europe and Asia. A key feature of
the Damietta project is that no public funds will be sought
to finance construction or operations. The RAFIMAR rep told
econoff that 70 percent of the start-up capital will come
from the Kuwaiti partners. While the final balance of equity
shareholders has not been determined, it isour understanding
that 35 percent will be reserved for private shipping lines,
35 percent for the Kuwaiti partners, and 30 percent for the
Egyptian partners.
JONES

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