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Suez Canal boss explains expansion plan, defends pricing

Suez Canal boss explains expansion plan, defends pricing
Admiral Mohab Mameesh, chairman and managing director of the Suez Canal Authority (SCA), proved a star turn on the opening day of the Seatrade Middle East Maritime conference, providing further details of the Canal’s recently unveiled expansion plans and launching a robust defence of its pricing policy.

The previous night, the former Commander of the Egyptian Navy – appointed to his SCA role two years ago - pledged the Canal’s ongoing commitment to providing “secure and safe” passage for shipping despite the political turbulence and economic hardship that his country and region had been going through.

The remarks came in an emotional acceptance speech as Personality of the Year at the Seatrade Maritime Awards for the Middle East, Indian Subcontinent and Africa. “The Suez Canal is being improved not just for (the benefit of) Egypt but for all peace-loving nations,” he said.

At the conference he elaborated that the massive $9bn dredging effort and construction of a second channel 72 km long would cut transit time from 20 hours to 11 hours, with works due to be completed by next August. Expansion was needed to cater for the new generation of bigger container ships, as well as to allow laden VLCCs to transit the Canal, he said.

Doubling of capacity would also allow an increase in revenues for the Canal, “the most important element of the Egyptian economy,” he added, with the extra income being used to fund reconstruction of the country after the political turmoil of recent years.

Questioned by Seatrade Global as to what effect this would have on Canal tolls - which have already risen sharply in recent years - and whether the industry would be consulted over any further increases as the Panama Canal had done, Adm. Mameesh provided a detailed rationale of the Canal’s pricing policies.

Firstly, like Panama the SCA had the right to charge the prices it wanted, he pointed out. In the case of the Suez Canal, a special Pricing Committee each year made “detailed calculations” as to what the “suitable pricing” should be – a reference to the SCA pitching its price competitively with the all-in cost of that vessel rounding Africa instead. 

“No navigation company has complained about prices in the past two years,” he stated, pointing to the fact that the Suez Canal earned a record $5.2bn last year, compared to the Panama Canal’s $1.8bn, proving its popularity.

“This does not mean we take money from customers,” he continued, denying that price rises were inevitable but saying would depend on the evolution of world trade.

The International Chamber of Shipping (ICS) and Asian Shipowners’ Forum (ASF) both hit out in February last year at toll increases from 1 May 2013, as was reported on Seatrade Global.

Finally, service to customers would also be improved, he emphasised, not just through reduced transit times but also by providing more anchorage spaces, which like the waterway itself would be dredged to 66ft draught.