First with Financial Comment from Arabia

Up to $76bn of project finance coming up in the UAE says GE

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The United Arab Emirates will be looking for an estimated $53 to $76 billion in project finance over the next five years, GE Energy Financial Services spokesman Suresh Vasan told an economics workshop held at the Dubai International Financial Centre this morning.

This tops the regional league table for financing opportunities, and includes $30 billion for aviation and $15-20 billion for power and water. Next in the table is Saudi Arabia at $39-55 billion, mainly for power and water generation projects, followed by $20-25 billion for Qatar, and just $10-20 billion for the rest of the GCC.

Regional agenda

GCC leaders are expected to discuss infrastructure at their summit in Kuwait City today. DIFC chief economist Dr. Nasser Al Saidi explained that infrastructure development is vital to meet the needs of a growing young population and to increase the productivity of labour.

MEED Projects estimates the total amount committed to regional infrastructure projects is now $2.6 trillion, more than five times the $500 billion that India has committed to its infrastructure development program.

Clearly there is going to be major business for the banks and professional firms in the DIFC over the next five years in arranging both UAE, GCC and regional funding for infrastructure, although as Dr. Al Saidi conceded most of this will remain in the public and not private sector.

In his opening remarks he revealed the announcement that Abu Dhabi has stepped in with $10 billion to bailout Dubai World, perhaps underlining the fact that the global reputation of the UAE as a finance centre is going to be more important going forward.

Chinese banks

Chinese banks and contractors have also been increasingly active in seeking participation in major infrastructure projects in the region, a trend that seems likely to develop with China now the largest export market for regional hydrocarbons.

Dr. Al Saidi was keen to stress the importance of making infrastructure investments commercially viable but there is a longer term view of the overall benefit to an economy in terms of increased productivity. For example, road transport in India is four times slower than in advanced countries due to underinvestment in roads.

Going forward infrastructure financing looks a boom sector for the DIFC as it can use its own UAE market as a test-bed for project expertise that can be then exported, and of course the availability of ample liquidity always helps, as the bailout of Dubai by Abu Dhabi today clearly demonstrates.


Written by Peter Cooper

December 14, 2009 at 12:33 pm

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