By ASC Staf www.arabiansupplychain.com
Dubai’s Road and Transport Authority is eyeing investment from the world’s largest economy to help fund a slew of massive infrastructure projects in the Gulf emirate.
The state agency said Wednesday it held meetings with 15 US firms to outline funding opportunities for billions-of-dirhams worth of rail, road and marine projects.
“These projects open up new windows for companies to bid for RTA tenders,” said chairman Mattar Al Tayer, adding that the agency is in talks to introduce a model for public private partnerships (PPP.)
“[They] prompt the private sector to take the initiative in bearing the costs of constructing such projects against… their revenues during the validity of the contract.”
The RTA is tasked with ensuring Dubai’s infrastructure keeps pace with the emirate’s rapid growth. The state-backed agency saw a number of projects slow after the financial crisis, as funding dried up and it struggled to pay trade creditors.
Work stalled on big-ticket projects including Dubai Metro’s Green Line and the Al Sufouh Tram, over complaints of non-payment from contractors.
The RTA said in January it would seek funding for nearly a third of its infrastructure schemes over the next five years in a bid to spread the risk and cost of large projects.
“It’s an international trend that you the get private sector more involved,” said the agency’s CEO for strategy and corporate governance, Abdul Younes, on Wednesday.
“It [allows us] to continue with our future projects and provides funding to deliver those projects. But funding is not the only part.”
Dubai has been in the spotlight over its debt woes since late-2009, as it has struggled to rebuild investor confidence after state-owned Dubai World announced a $26bn restructuring.
The emirate’s government-related entities can pay down or refinance nearly $14bn in debt maturing next year with relative ease, JP Morgan said in a research note earlier in the month.
Economic zone Jebel Ali Free Zone (JAFZA) and Dubai International Financial Centre Investments (DIFCI) have $1.25bn and $2bn respectively in debts maturing next year.
Simon Williams, chief economist at HSBC in the MENA region, said Arab governments were looking further afield for project financing as Europe’s debt crisis curtails lending in the region.
“I would be surprised if it was just American companies, I imagine [the RTA] will be looking more broadly,” he said.
“It will be about drawing in expertise but also accessing long term funding in a global environment like this, where accessing finance, even for core infrastructure projects is difficult.” More info