Q&A with EBRD on how Egypt’s first dry port addresses climate challenges

In 2021, the European Bank for Reconstruction and Development (EBRD) provided a EU25 million loan to the October Dry Port Company to support the development, construction, and operation of Egypt’s first dry port - the 6th of October Dry Port.

Located in the industrial and logistical zone of the new 6th of October City, it covers 100 acres and is Egypt’s first public-private partnership (PPP) project in the sector and the first under the EBRD’s Green Cities initiative. The project will reduce congestion in the seaports and create economies of scale by using intermodal rail services at the seaports. This will contribute to a reduction in road congestion, accidents, and carbon dioxide (CO2) emissions by transferring some of the container traffic from road to rail – it’s expected to save over 14 million litres of diesel per year (26.8% savings) and 40,000 tons of CO2 per year.

Today, EBRD’s Director of Sustainable Infrastructure Policy and Project Preparation Matthew Jordan-Tank joins us to share insights on how this project supports sustainable infrastructure development and addresses climate-related challenges.

What is the EBRD’s Green Cities programme? Can you provide some background on how it came about and what it hopes to achieve?

EBRD Green Cities is our main delivery tool to support cities to transition to a green, low carbon, and resilient future, through targeted investment, policy actions, and capacity building. Launched in 2016, in the wake of the 2015 Paris Agreement, and as part of the EBRD’s Green Economy Transition, it promotes ambitious climate action and supports investment in green and sustainable solutions. The programme effectively combines strategic planning in the form of a Green City Action Plan (GCAPs) with sustainable infrastructure investment projects in cities once a trigger investment has been identified.

Since 2016, EBRD Green Cities has financed 77 green and sustainable infrastructure projects totalling EU2.1 billion, across a diverse range of sectors including urban transport, green logistics, water and wastewater, renewables, and solid waste. With a growing network of over 50 cities, and Egypt being one of the countries of prominence, EBRD Green Cities seeks to continue building a better and more sustainable future for cities and most importantly improving the lives of all citizens.

What climate-related problem (s) will this project address, and how?

The growing freight and container traffic in Egypt increases congestion in commercial seaports, as well as on the roads. In the absence of other alternatives, shipping containers are transported on road by trucks in and out of the country’s seaports. This increases CO2 emissions and air pollution.

The 6^th of October Dry Port Project is facilitating an important modal shift by transferring part of the container traffic from road to the electrified rail network operated by Egyptian National Railway, creating significant environmental benefits like CO2 savings and reductions of air pollutants.

How do the dry ports PPPs in Egypt support sustainable infrastructure development, connectivity, and regional integration?

The development of a network of inland dry ports in Egypt will relieve pressure and operational bottlenecks on the existing port and logistics infrastructure. Seaports in Egypt are increasingly suffering from congestion, insufficient hinterland connections, and lack of space for expansion. The dry ports function as an extended gateway for seaports and serve as the final destination of cargo. The approach provides multiple benefits, including:

• efficient and digital customs inspections and clearance procedures
• reduced congestion in the seaports
• economies of scale for the emerging modern logistics sector, including intermodal rail services
• improvement to the overall reliability and cost-efficiency of the logistics processes.

What are the lessons learnt from the development of the 6th of October Dry Port that can help other emerging countries boost sustainable infrastructure development?

An important lesson was that project preparation was key to the success of the project’s development and ultimate delivery. The project preparation of the 6^th of October Dry Port project was supported by the EBRD’s Infrastructure Project Preparation Facility and provided the necessary support on project feasibility and structuring that was essential to making the project balanced and bankable.

Another lesson is that, as a pioneering project, the project required high-level Presidential Decrees to create the institutional and administrative adjustments needed for the various public sector entities to support this PPP. Subsequent dry port PPPs will become progressively easier to structure given the upfront work done for 6^th of October. The commitment of the different stakeholders, including project sponsors’, concessionaires, and different governmental authorities, is essential during the development of the project and mitigates the operational risks. For instance, one of the key factors in the success of the dry port is successful rail connectivity and the availability of trains to meet the increased amount of traffic demand for the new dry port.

Finally, in addition to the ability to replicate the structure developed for the first dry port PPP, the fact that there is a programme of dry port PPPs underway in Egypt (the second PPP is in advanced procurement for the 10^th of Ramadan area northeast of greater Cairo) is an important signal to investors that there is a strong public sector commitment to private sector participation in the country’s logistics market.

What impact will this project have on pushing forward the green agenda in Egypt?

The project is the first under a programme launched by the Government of Egypt for the development of dry ports, its success and consequent positive environmental effects will have a strong demonstration effect on the other pipeline projects. This first PPP is enabling the 6^th October City to develop its GCAP, prioritise its most pressing environmental challenges, and define the green investments and policy actions needed to address these challenges. Its impact will therefore be systemic and can be rolled out to other cities.