Sharm El-Sheikh Airport Project
- Reference: P-EG-DA0-001
- Approval date: 15/04/2015
- Start date: 29/05/2015
- Appraisal Date: 12/02/2015
- Status: ApprovedAPVD
- Implementing Agency: Egyptian Airports Company
- Location: Sharm El-Sheikh, Egypt
The project consists of a new terminal building (No. 3), with all its associated facilities (commercial outlets, parking areas, mosque, etc). The new terminal will have an annual capacity of 10 mpax.
The project also includes the development of airfield works, including a new 3.6 km long (ICAO-Code E) runway, taxiway system, aprons, as well as visual aids, service roads, fences, conduits and tunnels.
Other components of the project include the electrical systems and ancillary buildings (control buildings, distribution centres, etc). Mitigation measures to impacts on surrounding network are incorporated as part of the project and these include modification to the urban access networks and surrounding infrastructure.
The project aims at providing additional capacity to enable the airport handle the forecasted growth in traffic, which is expected to reach 18 million passengers annually (mpax) by 2025.
Quantified: Increased airport capacity in Sharm El-Sheikh by a minimum of 10 million passengers per year (mpax) and hence Contributing to GDP growth by supporting the tourism industry
The air transport sub-sector is highly strategic for Egypt's economic development and growth. It is key for the country's integration in the region and with the rest of the world. The sub-sector is exceptionally important for the tourism industry, which forms a major pillar in the Egyptian economy. Around 80% of Egypt's tourist traffics, which stood at around 11.5 million visitors in 2010, arrive through the country's airports.
Tourism accounts for over 5% of Egypt's GDP; with total revenues of about USD11.6 billion (in 2010). The industry employs about 12.6% of the labor force in Egypt. More importantly, the industry is an important source of foreign currency receipts for the Egyptian economy, ahead of the Suez Canal, and following expatriates remittances. Tourism is expected to remain one of the main drivers for the Egyptian economy.
Within Egypt's tourism scene, Sharm El-Sheikh plays a major role, where 35% of the country's tourists in 2010, arrived and stayed in the city. The Government of Egypt is, accordingly, exerting efforts to develop further the tourism activities in Sharm El-Sheikh, supported by growing patterns of tourist arrivals. To this effect, the current airport capacity was identified as one of the main obstacles to these sector development plans of the sector.
Sharm El-Sheikh airport has been Egypt's fastest growing airport, with an average of 21% annual growth rate in traffic over the past 12 years, compared to an average of around 7% in Cairo International Airport. The airport is the third busiest in Africa (2010), up one position from 2009 statistics. The total number of passengers using the airport has reached 8.2 million in 2010, which is above the design capacity of the airport. The original forecasts predicted that 2015 would be the year when the airport would reach full capacity.
The expansion of the Sharm El-Sheikh airport is one of several projects targeting the development of air transport capacities nationwide, a program that requires huge investments, with a large portion of these being in foreign exchange. In light of this, the Bank involvement will assist the country in securing the required resources for the development of its nationwide program. On the project level, the Bank added value is in helping avail the large size of funding in foreign currency required over short period of time and in leveraging on the Bank's niche area and experience in delivering large infrastructure projects to support the effective and smooth implementation of the project.
Strategically, the project is in line with the Bank's Medium Term Strategy (2008-2012), which calls for direct investments into infrastructure, especially for transport, power, and information and communication technology. The project is also in line with the Bank's 2007-2011 Country Strategy Paper (CSP) for Egypt, which includes the promotion of private sector development as a strategic pillar, with a sub objective of developing infrastructure, including transport infrastructure. These objectives are expected to feature in the Bank's new interim CSP (2012-2013) currently under preparation.
The economic evaluation of the airport project was carried out through the cost-benefit approach. The cost and benefits elements arising from the project are:
(i) investment costs & maintenance that correspond mainly to the construction costs of the new terminal, the new runway and other related areas, as well as those of the control tower and installation of radio navigation equipment and aeronautical telecommunications,
(ii) the benefits of the project are defined as economic gains to Egypt from tourism and especially those related to tourism spending in the country and the direct and indirect jobs created during the construction phase and after the operation of the new terminal.
The project will also generate other benefits typically associated with airport projects, such as savings in passenger processing time and plane waiting time, particularly for the share of passengers who currently use the existing facilities at lower levels of service, and who will be using the new terminal once commissioned. When calculated, these benefits were found to be low compared to benefits generated from tourism revenues and job creation, and were therefore not included in the analysis. Furthermore, and unlike a typical airport expansion project, these benefits do not represent a prime objective of the project (see Annex 6)
ALI Aymen Ahmed Osman - OITC2