First with Financial Comment from Arabia

DP World proceeds with $2.4bn UK port project

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What a difference a few weeks and a New Year can make. Back in mid-December Dubai World was the focus of the $22 billion ‘Dubai debt crisis’. Now a subsidiary of the same state-owned conglomerate, publicly quoted DP World, has announced a $2.4 billion investment in the London Gateway port project.

No lesser figure than the beleaguered UK prime minister Gordon Brown hailed the news as ‘a massive vote of confidence in the UK’s economic recovery’ or by implication himself!

Good investment

It is doubtful that this is exactly how the planners at DP World see it. This is a strategic investment in deep-sea shipping access to transform the movement of freight around the UK, and make a good return for the company.

Located on the northern bank of the River Thames in Essex, the London Gateway is on a 670-hectare site, and the DP World statement removed any doubts about the future of the new deep-sea port with plans to get on with the infrastructure enabling works.

Containers unloaded from the London Gateway will be transported in smaller vessels around the UK saving around 2,000 truck movements per day, according to the company.

The British Government is, of course, delighted by this foreign investment. But it also underlines the confusion and misunderstandings that surrounded the Dubai debt crisis last month.

Nasdaq Dubai listing

DP World is a separately quoted company listed on the Nasdaq Dubai, and not a part of the $22 billion debt rescheduling of its parent Dubai World. Indeed, presumably DP World will be looking to raise finance for its new project at some stage.

If nothing else this demonstrates that Dubai cannot be treated as a single entity, anymore than the bankruptcy of New York City might mean that its ports authority could not establish a new project in another city.

Indeed, in Dubai private sector business interests are at pains to point out to foreign observers that it is the over-extended public sector companies that are in the most trouble, and that they expect to take over the leadership of growth over the coming few years while the public sector companies sort out their substantial debts.


Written by Peter Cooper

January 6, 2010 at 11:03 am

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