Egypt will build a new channel alongside the Suez Canal to expand trade along the fastest shipping route between Europe and Asia.
The 145-year-old historic waterway earns Egypt about $5bn (£3bn) a year in revenues, a vital source of hard currency for a country that has suffered a slump in tourism and foreign investment since its 2011 uprising.
The new channel, part of a larger project to expand Suez port and shipping facilities revealed yesterday, aims to raise Egypt's international profile and establish it as a major trade hub.
"This giant project will be the creation of a new Suez Canal parallel to the current channel of a total length of 72 kilometres (45 miles)," Mohab Mamish, chairman of the Suez Canal Authority, told a conference in Ismailia, a port town on the Canal in comments broadcast by state television.
He said the total estimated cost of drilling the new channel would be about $4bn and would be completed in five years, though Egypt will strive to finish it within a more ambitious three-year deadline.
Egyptian President Adel Fattah al-Sisi, a former army chief, said the armed forces would be in charge of the new project for security reasons. Up to 20 Egyptian firms could be involved in the project but would work under military supervision, he said.
Since the military coup of President Mohamed Mursi and his Muslim Brotherhood party orchestrated by Sisi last year the government has been fighting Islamist militants based in the Sinai Peninsula, which has stoked concern about the security of the nearby Suez Canal as any disruption to shipping along the canal tends to have a serious impact on trade and oil prices.
"Sinai to a large degree has a sensitive status. The army is responsible to Egypt for this," said Sisi, who has previously said he would not hesitate to award major projects to help revive Egypt's battered economy to the army.
Egypt has planned for years to develop 76,000 square kilometres (29,000 square miles) around the canal to attract more ships and generate more income and Reuters reported on Sunday that Egypt had chosen a consortium including global engineering firm Dar al-Handasah, as well as the Egyptian army, to develop the area.
Sisi said the new canal was an unannounced part of that project, which Egypt invited 14 consortia to bid for in January. A promotional video played at the launch event suggested the project would cut waiting times for vessels and allow ships to pass each other on the canal.
Mamish, the chairman, said the project would involve 35 kilometres (22 miles) of "dry digging" and 37 kilometres (23 miles) would be "expansion and deepening", indicating the current Suez Canal, which is 163 km (101 miles) long, could be widened as part of the project.