Egypt's Toshka Project

Two U.S. & Foreign Commercial Service (FCS) representatives visited Abu Simbel near the Sudanese border January 20-21, 2003 in order to remain current on the status of Egypt's Toshka land development megaproject. The Toshka project (also known as the "Southern Valley" or "New Southern Valley Project") plans to reclaim more than half a million acres of empty desert and create a new population center of as many as three to six million Egyptians where nothing previously existed but wind and sand. Due to the magnitude of the project, many observers concluded long ago that it was predestined for failure. At the start of 2003, however, it is unclear how much of this pessimism is warranted. That the project has swallowed phenomenal resources (particularly precious hard currency) is undeniable, but several key success requirements, far from being stalled, appear to be complete. The question that used to be "Will it ever get off the ground?" may now have shifted to "How high will it go?"

1. The Toshka project is located in a Delaware-sized portion of Egypt's Western Desert known as the Toshka Depression. Situated to the west of Lake Nasser between the Upper (southern) Egyptian cities of Aswan and Abu Simbel, the project owes its existence to a geological fluke. There are about 2000 square miles of land lower in elevation than Lake Nasser – and lower even than the River Nile prior to the creation of Lake Nasser in 1974 (the consequence of the construction of the Aswan High Dam). From ancient times, it was noted that when the annual Nile floods reached unusually high levels, the river would not only rise but overflow westward into the fertile Toshka Depression. The basic concept of the Toshka Project is simple: using the natural Nile overflow phenomenon as the model, pump water out of Lake Nasser and, taking advantage of gravity, convey the water hundreds of kilometers into the desert via a canal or pipeline on a permanent basis. Any water that flowed into the parallel dry lakebed/ riverbed to the south from time to time due to unusually high monsoons in Ethiopia would be a bonus that might be utilized by farmers nearby instead of simply going unused, as is the case at present.

2. The Toshka project may be broadly divided into three elements: public infrastructure, private infrastructure, and private agricultural business development. The Government of Egypt (GOE) infrastructure includes not only traditional components such as roads, housing, and electricity, but also the colossal Mubarak water pumping station on Lake Nasser – the largest water pumping facility in the world. The privately (note: United Arab Emirates) funded Sheikh Zayed canal will carry fresh Nile water from Lake Nasser (behind/south of the Aswan High Dam) to the million acre Toshka Depression area to the west of the Nile. Thirdly, privately-financed (and to some extent U.S.-affiliated) agricultural projects will take the water and grow crops, which will be sold both in the domestic Egyptian market as well as exported to high-end European, Middle Eastern, and possibly Asian markets. As of January 2003, the critical elements of the first two parts are essentially complete, allowing the third component to begin commercial operations.

3. Government infrastructure. The centerpiece of the GOE's contribution to the Toshka Project is the giant Mubarak Pumping Station, which completion total cost is estimated at $320 million. The pump facility is a concrete structure 30 meters wide, 140 meters long, and 60 meters (twenty stories) high: 330,000 cubic yards. It was constructed in a pit roughly 15 stories deep and ten times the size of a major U.S. football stadium, dug immediately adjacent to Lake Nasser approximately 60 km north of Abu Simbel. It contains 24 warehouse-size vertical pumps, of which 18 of 21 will be running continuously, with 3 offline at any one time for rolling maintenance and another 3 held in reserve for future use. Pumping capacity is 25 million cubic meters per day. In a previous field visit in May 2001, the pump complex, which was under construction 24 hours a day by 3000 workers, appeared only about one-quarter complete. At present, about 1,200 engineers and workers run the pump and associated infrastructure, but soon this number will be reduced to a permanent level of about 900 workers. Construction began on January 9, 1997, when President Mubarak inaugurated the project. Almost exactly six years later, on January 12, 2003, he attended the ceremonial start of pumping station operations, although the water was only turned on briefly as a test as some sections of the canal were still undergoing final treatment. On February 15, 2003, the pumping station is scheduled to become fully operational and begin filling the canal.

4. Private infrastructure. The Sheikh Zayed Canal is the second key element of the project. It takes its name from the President of the United Arab Emirates who reportedly donated $100 million to Egypt for its construction. The main canal stretches 50 km westward into the desert from the Mubarak Pumping Station, with an additional 22 km branching out in four north-south side branches to convey irrigation water from the main canal to four distinct areas of cultivation. The canal is 30 meters wide at the bottom, 54 meters wide from each bank, and 8 meters deep. The first branch of the canal is expected to cultivate 120,000 feddans (one feddan essentially equals one acre; in Toshka, for the sake of international investors, the terms are used interchangeably), the second 120,000, the third 200,000, and the fourth 100,000. Despite the evaporation loss, especially in the summers, a canal was deemed more appropriate than a pipeline, presumably due to the volume of water involved. To prevent seepage, the canal is lined with a cement/sand mixture, plain concrete, and polyethylene sheets, and finally a protective paint. (A digital photograph of FCS staff standing in a portion of the canal on January 20, 2003 that was later flooded can be seen at http://www.buyusa.gov/egypt/en/toshkaproject). Today, Branch 1 is fully complete, Branch 2 is an estimated six months from completion, and Branches 3 and 4 will be ready in about eighteen months, allegedly in line with original plans to develop different sections on a gradual basis and not all at once.

5. The third key element of the Toshka Project is private agricultural investment. The main player in this category to date is the Saudi Prince Walid Bin Talal Bin Abdul-Aziz Al-Saud. Prince Talal was allocated 120,000 feddans to establish a large scale, export-oriented, fresh horticultural produce operation. In 1997, he established the Kingdom Agricultural Development Company (KADCO), an Egyptian joint-stock company with capitalization of $216 million. KADCO's investment in the next ten years is expected to reach $500 million. The company set up a 300-feddans research station (using well water) in 1998 and currently employs 100 workers. As a result of several years of experiments, in technical partnership with an American firm, KADCO determined the production parameters of dozens of crops. In December 2002, KADCO exported its first production of cantaloupe to Belgium under its own brand name, having determined that the most profitable cash crop appears to be fruits, especially table grapes and cantaloupe. Initial plans are to sell to the local market using land transportation (trucks) with distribution to foreign markets via trucks to Cairo and air shipment from Cairo Airport.

6. Comment. So far, the project appears to have exceeded expectations. Most of the canal (indeed, more than can actually be utilized by the available prepared land at this point) and the pumping station are on line, and the land quality has exceeded expectations. Those involved firmly believe in it and are dedicated to making it succeed. They have high motivation, good morale, and they are all tremendously focused on cost, competition, and the future. Should the program ramp up as hoped, over the next decade the potential for sales of agribusiness, construction, transportation, materials handling, and food processing goods and services will be enormous, providing opportunities for millions, or perhaps hundreds of millions of dollars, worth of sales for U.S. exporters.

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