Competition tarnishes luster of Egyptian jewel
August 14, 1996
Web posted at: 4:35 a.m. EDT (0835 GMT)
From Correspondent Gayle Young
CAIRO, Egypt (CNN) -- Responding to market pressures with better service and lower prices, a once-complacent Egyptian bureaucracy is again making big money from the Suez Canal.
Each day, about 70 ships navigate the 200-kilometer strip of water running from the Mediterranean Sea through the parched sands of the Sinai Peninsula to the Red Sea -- trips that earn Egypt about $2 billion per year.
"The canal is one of the main sectors bringing money to the national fund. It is very important," acknowledged Suez Canal Director Ahmed Ali Fadel.
For years Egypt raised canal fees, secure in the knowledge ships either had to pay up or take a costly detour around the African continent. Officials ignored grumblings that the 127-year-old Suez was overpriced and badly serviced.
Then the unthinkable happened. Traffic started to dry up. Last year 30 percent fewer oil tankers used the waterway. Oil pipelines being constructed throughout the region are the chief culprit.
Millions of dollars worth of oil is now pumped through the Sumed pipeline that snakes across Egypt to the Mediterranean, bypassing the canal.
But the government-run canal is fighting back. It drastically cut fees for this year, by up to 35 percent for some types of ships. And a massive dredging operation has made the canal deeper so it can accommodate larger oil tankers. Shippers are taking notice.
"The reduction of the cost, plus improving the capacity of the Suez canal by dredging all the time, makes now the Suez attractive again to a ship owner," said shipping agent George Christofidis.
It's too early to tell if the cut-rate prices will completely return the Suez's business to its former glory. But shippers say the canal is becoming more user friendly as it sails into the next century.
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