Egypt: A draft law to establish an investment fund for the Suez Canal raises widespread controversy..and the government responds

Dubai, United Arab Emirates (CNN) – A project to amend the Suez Canal Authority law sparked controversy over what it included in establishing an investment fund with a capital of 10 billion pounds ($404.9 million), as some deputies objected to it during the plenary session to discuss it. There were also concerns on social media about the assets of the canal and the return from the establishment of the fund, while Parliament Speaker Hanafi al-Jabali replied that the law does not include any provisions affecting the Suez Canal.

In a statement issued on Tuesday, the government denied what had been raised about its intention to “establish the Suez Canal Authority Fund as a back door for the sale of the canal,” saying that “the Suez Canal and its management will remain wholly owned by the Egyptian state and subject to its sovereignty, and the entire staff, technicians and administrators of the Canal Authority will remain Egyptian citizens.” “.

The House of Representatives approved in principle the amendment of Law No. 30 of 1975 regarding the Suez Canal Authority’s system, submitted by the government, in order to allow the authority to establish an investment fund owned by it with the aim of contributing to the sustainable economic development of the Suez Canal Authority facility and its development.

Maha Abdel Nasser, a member of the House of Representatives for the Egyptian Social Democratic Party, was among the parliamentarians who rejected the draft law when it was discussed in the House of Representatives, on Monday.

Abdel Nasser attributed her refusal to not supporting the establishment of private funds by government agencies. Because it is not subject to Parliament’s oversight, it also negatively affects the proceeds of the general budget’s revenues, in addition to the lack of oversight over the appointments of positions responsible for the fund.

The Ministry of Finance works to limit funds, special accounts, and units of a special nature at the state level; To start legalizing its conditions as of next January, and to establish unified regulations for similar activities, to ensure quality and rational management of public money, according to an official statement by Dr. Mohamed Maait, Minister of Finance.

Abdel Nasser added, in exclusive statements to CNN in Arabic, that the Suez Canal is one of the economic bodies that are allowed to invest in projects to improve its revenues, with it being the second most important income for the public budget, at a value of $4 billion annually.

According to Suez Canal Authority data, the authority’s total revenues amounted to $7 billion during the fiscal year 2021/2022, with a total net tonnage of 1.32 billion tons, for the authority to achieve the highest revenues in its history, as well as the highest annual net tonnage for a fiscal year.

Abdel Nasser indicated, in exclusive statements to CNN in Arabic, that the draft amendment to the Suez Canal Authority law did not specify a percentage of the surplus of the investment fund that would be collected for the state’s general budget, nor did it specify the aspects of the fund’s disbursement or returns from it, which affects budget revenues. Thus, it negatively affects state expenditures.

Article 15 bis “d” of the Suez Canal Authority draft law specified the fund’s resources in several sources, namely: the fund’s capital, a percentage of the Suez Canal Authority’s revenues, or the allocation of part of the surplus funds of the Suez Canal Authority for the benefit of the fund after agreement with the Minister of Finance. Returns and investment revenues of the Fund’s money, in addition to other resources that achieve the Fund’s objectives, are approved by the Board of Directors, and accepted by the Prime Minister.

Regarding the impact of the law on the assets of the Suez Canal, Representative Maha Abdel Nasser said that the draft law did not address the assets of the authority from near or far, and all that it included was to enable the investment fund to establish companies, invest in securities, buy, sell, rent, rent and exploit the fund’s assets. immovable and movable and its use, adding that the draft law was initially approved during the plenary session, and the final approval was postponed to another plenary session.

For his part, the head of the Economic Committee in the House of Representatives, Mohamed Suleiman, said that there is confusion about the draft law as a result of the lack of distinction between the three entities, namely: the Suez Canal Facility, which is public property of the state and its protection is guaranteed under the constitution, and the Suez Canal Authority, which manages the facility but does not own it. which will establish an investment fund; To meet the risks of future cash flows, while at the same time providing resources for the sustainable development of the canal facility.

Dr. Hanafi Al-Jabali, Speaker of the House of Representatives, previously confirmed, during his speech at the opening of the plenary session, on Tuesday, that the draft law does not include any provisions affecting the Suez Canal; Because it is one of the public funds of the state, and it is not permissible to dispose of or sell it. In addition, the state is obligated – according to Article 43 of the Constitution – to protect, develop, and preserve it as an international waterway owned by it.

Suleiman added, in exclusive statements to CNN in Arabic, that the investment fund to be established will be wholly owned by the Suez Canal Authority, and there are no other partners in the fund until there is talk of squandering assets, indicating that the authority’s law gives it the right to establish investments in the first place, and the fund One of these investment mechanisms to achieve returns is reflected in the development of the canal facility.

The memorandum for the draft amendment to the Suez Canal Authority law included the reasons for the amendment as being related to “the current conditions the world is witnessing and facing the Suez Canal facility, as a result of poor global economic performance, the decline in global trade rates as an impact of the repercussions of the Corona virus, and the fluctuation of crude oil prices and its repercussions on the costs of shipping various commodities.” And goods, in addition to the endeavor of some countries to have a pivotal role in transporting trade through them, and accordingly it has become important to develop and develop the Suez Canal facility, in a way that contributes to achieving the goals of the Egyptian government in economic development.

On the other hand, the economist, Medhat Nafie, believes that the establishment of an investment fund for the Suez Canal Authority would achieve returns that contribute to the development of the canal and maximize its returns, indicating that fears of monitoring the fund’s performance can be dispelled through the application of governance rules, in a way that contributes to the rationalization of expenditures. And at the same time benefit from the fund’s flexibility in diversifying investments.

Nafeh commented, in exclusive statements to CNN in Arabic, on the impact of the establishment of the fund on the revenues of the general budget, saying that the fund’s resources will be made through part of the surplus funds of the Suez Canal Authority and after agreement with the Minister of Finance, and therefore there is no impact on state revenues. At the same time, the assets will be used to generate revenue and not be sold, he said.

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