Transport

Kuwait: Building cargo culture

Kuwait is stepping up efforts to position itself as one of the main transport and logistics hubs in the Gulf and the Middle East, investing heavily in new infrastructure to meet the country's own needs but also those of the wider region. The country already has an extensive port network, with six maritime cargo facilities - three for the export of hydrocarbons and the remaining three serving other trade requirements. Though there are road links with other Gulf States, and airfreight services connecting Kuwait to the rest of the world, seaborne trade remains the country's main means of cargo transport. With this in mind, the government, in conjunction with the private sector, is developing a massive new port and logistics facility, to be built on Boubyan Island in the northwest of Kuwait. The first stage of the US$3.4 billion Boubyan project is nearing completion, with most of the initial infrastructure in place, including bridge links to the island. Late last year, officials announced a change to the original project - new plans that more than double the number of jetties from the initially proposed 24. The expansion takes the total to 60. (Source: OBG)

Bahrain plans to privatize Gulf Air, other services

Bahrain plans to privatize the country's loss making carrier Gulf Air within about a year, after its turnaround program bears fruit, said the chief executive of the top economic planning body in the Gulf Arab state. Bahrain also plans to privatize other public services, from hospitals to waste management, as it seeks to diversify its economy from oil and build up a viable private sector and a tax-based economy. Gulf Air, which said in November it expected making an operating loss of about US$500 million in 2009, plans to return to profits by focusing on regional routes and cutting costs.

Citadel Capital acquires stake in Kenya and Uganda's Rift Valley Railway

Citadel Capital, the leading private equity firm in Africa and the Middle East with US$8.3 billion in investments under control, confirmed today that has acquired a 49 per cent stake in Sheltam Railways Company, the largest single shareholder and lead investor in Rift Valley Railways of Kenya and Uganda. Sheltam owns 35 per cent of Rift Valley Railways (RVR), which has a 25-year concession to operate a century-old rail line with some 2,000 kilometers of track linking the Indian Ocean port of Mombasa in Kenya with the interiors of both Kenya and Uganda, including the capital city of Kampla. The transaction gives Citadel Capital an effective ownership of 17.5 per cent of RVR. "Citadel Capital will look to inject more than US$150 million in Kenya Uganda Railways over the coming five years. This is the first of several investments we are exploring in East Africa and is a natural extension of our proven interest in the continent's transportation and logistics sector," said Citadel Capital Managing Director Karim Sadek. "Kenya Uganda Railways is a storied line with immense potential waiting to be unlocked by the smart deployment of capital and management talent, two things Citadel Capital would bring to the table," added Sadek. "Going forward, it is our intention to acquire 100 per cent of Sheltam at the same time as we continue exploring other investments in Africa's promising transport sector." Across its core African footprint, Citadel Capital sees transport costs being a major impediment to economic growth: High costs and systemic inefficiency greatly reduce the competitiveness of African businesses, as East African Community reports clearly underline.

Dubai Metro pay dispute settled, work restarted

Construction of the Dubai Metro has restarted after a settlement was reached with the Japanese-led consortium behind the project over about US$2-3 billion in disputed payments, the Financial Times reported in mid-February. Construction of 18 unfinished stations on the system's main line and another 18 on an unopened line started again on Feb. 7. The Japanese consortium members are Japan's Obayashi Corp, Kajima Corp, Mitsubishi Heavy Industries Ltd and trading house Mitsubishi Corp. The consortium also includes Turkey's Yapi Merkezi Insaat Ve Sanat AS. The fully automated metro network is now expected to be finished at the end of this year, pushed back from an original target of this spring. The world's longest automated rail system will probably cost US$7.6 billion, or 80 per cent more than originally planned, Dubai government officials said last year.

Qatar Aviation Leasing launches US$650m loan

Qatar Aviation Leasing, set up to purchase aircraft and lease them to Qatar Airways, has launched syndication of a US$650 million loan via Deutsche Bank and Standard Chartered Bank, banking sources said. The deal is the first Gulf loan to launch this year and the first since Dubai shocked world markets on November 25 when it requested a standstill on US$26 billion worth of debt owed by state-owned conglomerate Dubai World. The three-year loan is fully underwritten and pre-funded, and includes a sovereign guarantee, the sources said. It carries a margin of 250 basis points (bps) over Libor, which is seen as generous given that Qatar five-year credit default swaps are priced at 115 bps, they added. 'The pricing is way above what a State of Qatar guarantee should be priced at,' one of the bankers said.

Mubadala Aerospace launches component and engine financing company

Responding to the evolving landscape of the airline industry, where economic conditions are putting increased pressure on liquidity, Abu Dhabi's Mubadala Development Company launched a new venture to provide component and engine financing solutions to the aerospace sector. Sanad Aero Solutions (Sanad) was unveiled to the industry at the biannual Singapore Airshow, aiming to deliver new capital for airlines and Original Equipment Manufacturers (OEM) alongside a growing number of services from Mubadala's maintenance, repair and overhaul (MRO) companies, SR Technics and Abu Dhabi Aircraft Technologies (ADAT). Sanad has already signed a deal for twelve spare engines valued at US$100 million with German carrier Air Berlin. This agreement includes engine maintenance work for a major part of the carrier's fleet to be completed by SR Technics as part of a ten-year contract. Sanad is providing financing valued in excess of US$30 million over a 10-year period as part of a total component solution contract between SR Technics and Etihad for the airline's entire Airbus fleet, under this contract ADAT provides onsite technical and logistical support.