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.”
Governments across the Gulf Arab region are beefing up infrastructure
spending in an effort to create jobs and improve the lifestyles of a young and
growing population.
Saudi Arabia announced a $130bn economic package earlier
this year to curb popular unrest in the kingdom.
“I would expect to see not just people like the RTA in Dubai
but also others in the region look for more innovative ways to meet their
finance requirements,” Williams said.
“Trying to access long term funding at competitive prices is
difficult now, not just here in Dubai but across the globe.”
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