A disagreement over construction costs has caused Chinese state-owned firm CSCEC to pull out of a $3bn agreement to fund and build government offices in Egypt’s planned new capital city east of Cairo.
The ambitious scheme will instead be "built by Egyptian hands", Egypt’s Housing Ministry said in a statement on 8 February, Reuters and local media reported.
China State Construction Engineering Corporation (CSCEC) had secured a $3bn loan to build government facilities for the planned new city, said Reuters.
It signed a memorandum of understanding (MoU) with the Egyptian government in 2015 to study financing and building the administrative part of the estimated $45bn new capital city (rendered above).
But that collaboration appeared to be at an end last week when Ayman Ismail, chairman of the company developing the new city, which is jointly owned by the Housing Ministry and the Egyptian military’s Engineering Authority, said price disagreements could not be overcome.
"No agreement that satisfies both parties in terms of price per square metre was reached," Ismail said, reported Reuters, adding: "The company has received lower prices from Egyptian contractors."
The site will be "built by Egyptian hands," Ismail said.
Construction costs have soared in Egypt after its pound lost nearly half its value against the dollar when the government agreed to float the currency in return for a $12bn bail-out from the IMF in November 2016.
Attention will now be on an agreement between the Egyptian government and another Chinese firm, China Fortune Land Development (CFLD), to invest $20bn in a later phase of the new capital.
An MoU with CFLD was meant to be signed by the parties in December 2016, but that has not happened yet, Hisham Sheta, chairman of Income, a local partner in the project, told Reuters. He expects the deal to be signed within six months.
Intended to escape Cairo’s traffic and pollution, the new capital was billed as featuring 10,000km of streets served by an airport larger than London’s Heathrow, a park double the size of Central Park in New York, a building taller than the Eiffel Tower.
Image: In March 2015, US architecture giant Skidmore, Owings & Merrill (SOM) produced an "initial framework and core principles" for the new capital project (SOM)
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