World Bank finds Red-Dead canal worthwhile

A new report on the feasibility of the project estimated the cost at $9.97 billion, with Jordan enjoying most of the benefit.

The final draft report on the feasibility of a canal joining the Red Sea and the Dead Sea reveals the huge financial and engineering scope of the project that has been talked of for decades, the cost of which is estimated at $9.97 billion. The draft was written last September by a group of large engineering and energy companies for the World Bank, which is leading the grandiose plan, at the center of which is a mostly underground pipeline from the north of the Jordanian city of Aqaba to the Dead Sea. The companies in question are Coyne et Bellier, Tractebel Engineering, and Kema.

The entire planned pipeline will run east of Israel, on Jordanian territory, and under the proposed plan it will include a huge water desalination plant and hydro-electric power stations that will supply power and water to Jordan, the Palestinian Authority and Israel. At its northern end, the pipeline will flow into the Dead Sea, and will make it possible to halt the natural drying up of the Northern Basin. Without a solution, the problem of the drying up of the Northern Basin will worsen in the coming decades.

The summary of the detailed report states that the plan is economically worthwhile and that the direct economic benefits outweigh the large cost of the venture.

A billion cubic meters of water for the Dead Sea

The draft report contains a detailed survey of the many aspects of the project, among them the topographical conditions along the route of the planned pipeline; possible environmental effects of a flow of water from the Aqaba area to the Dead Sea and their complexity; the danger of water leaking from the pipeline into aquifers; the amount of desalination required for solving the water shortage problem in Jordan, which will be the main consumer of the desalinated water; the amount of electricity required to run the powerful systems that will drive the venture; and the institutional framework for managing it, under the umbrella of a treaty between Israel, Jordan, and the Palestinian Authority.

The report states that the financial plan is in preparation, and will be finalized only after the completion of consultations with possible financing bodies. The ultimate aims of the Red Seas-Dead Sea Water Conveyance Project are to save the Dead Sea from environmental degradation; water desalination and electricity generation at affordable prices in Jordan, Israel, and the Palestinian Authority, and to build a symbol of peace in the Middle East.

Under the recommended plan, about a billion cubic meters of water annually will be discharged into the Northern Basin of the Dead Sea so as to halt the steady drop in the water level resulting from natural evaporation and the reduction in the flow of the River Jordan because of upstream diversion.

The draft report finds that the main beneficiary of this huge project will be Jordan. About 1,700 people, mostly from Jordan and possibly also from the West Bank, will be employed in constructing the canal, laying the pipeline, and constructing the various installations along the pipeline's length. The digging will be by special equipment, at twelve work-faces simultaneously.

$3 billion damage to tourism

If a project on these lines is not implemented, the report warns, the level of the Northern Basin of the Dead Sea will continue to fall over the next fifty years, even if the industrial concerns operating in the Dead Sea cease activity. The main activity is that of Dead Sea Works, of the Israel Chemicals Ltd. (TASE: ICL) group, controlled by the Ofer family, and Arab Potash Company on the Jordanian side. The report says that, even without industrial activity in the area, within 150 years the level of the Dead Sea will stabilize at 550 meters below sea level. The current level is 425 meters below sea level.

Without discharge of water from a pipeline into the Northern Basin of the Dead Sea, Israel Chemicals will have to continue to cope with the drop in the water level. The industrial plants draw water from the Northern Basin into the Southern Basin where evaporation pools for extracting potash are situated. Because of the constant drop in the water level, they have to chase the receding water line every few years. Israel Chemicals intends to construct a new pumping station in the next few years, north of Wadi Zeelim, because the water line is receding from the existing pumping station.

The report also mentions a substantial decline in recent years in tourist activity in the Dead Sea area. According to its calculations, the cost of the decline over the next 50 years will be $3 billion.

On finance for the project, the report states that the institutions that finance it are likely to lay down conditions before allocating money to it, among other things because of the political context. They will demand a broad range of commercial sureties, adoption of internationally recognized water laws and good practice, unilateral and even trilateral government guarantees to operate according to international standards. "The cost of conflict and hence the benefits of peace for the region are enormous," the reports states. "The project in itself cannot bring about peace, but, if structured properly, could have some impact on the peace and conflict process."

Published by Globes [online], Israel business news - - on January 16, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018