Abu Dhabi cuts transport spending plans

30 May 2011

Surface transport masterplan under review as projects downsized

Abu Dhabi’s Department of Transport (DoT) is slashing the spending plans associated with its Surface Transport Masterplan (STMP), which was originally expected to cost $68bn to deliver.

The scaling back of DoT’s spending plans is being done on a project-by-project basis, with each of the schemes included in the STMP being reviewed and most being decreased in size.

The review is a sign that the recent decision to explore other methods of developing the nearly $3bn Mafraq-Ghweifat road after effectively dropping the project as a public-private partnership (PPP), is part of a wider strategy to scale back the ambitions of the DoT.

The STMP consists of a variety of schemes including a regional rail project to connect Abu Dhabi with Dubai, Al-Ain and Al-Gharbia, the Abu Dhabi Metro that will connect the metropolitan areas, a tram system that will connect densely populated areas, and a bus network. All of these schemes are now being reviewed.

“The DoT is reconsidering all projects and that will reduce the investment in public transport, but it is not yet decided if any projects will be cancelled,” says one Abu Dhabi-based consultant.

Another source in Abu Dhabi says, “The DoT is going through a process of ‘right-sizing’ all its projects at the moment and that means the STMP itself will have to be resized.”

Germany’s Deutsche Bank is understood to be playing a significant role in helping the DoT assess the budget of its of its projects in the STMP and potential funding options for them. The bank was appointed as an adviser to the DoT in late 2010 to help with strategic planning for the organisations masterplan.

A key driver of the review of the STMP is a review of the population assumptions contained in the Plan Abu Dhabi 2030, which was the basis for the development of the STMP. The 2030 plan assumes that Abu Dhabi’s population will rise to 3.1 million in the next 19 years and that without a comprehensive transport strategy the city will face gridlock.

It is still unclear exactly how significant the review of the STMP will be and there is also no clarity on how much lower the new plan will be below the original $68bn announced by the DoT in November 2009 at the MEED Abu Dhabi Conference (MEED 11:11:09).

“There are always adjustments in long-term plans like these and the interdependence of a lot of these projects mean that if you change the scale of one, you then have to start revising all the others,” says one adviser working with the DoT.

Sources involved in the review process say that the decision to no longer develop the Mafraq-Ghweifat road as a PPP because of concerns in the Abu Dhabi Executive Council, which approves all infrastructure spending in the emirate, has also been a factor in prompting the reassessment of the DoT’s plans. “There is a lot going on at the DoT in the aftermath of the Mafraq decision,” says one adviser. “The process under way now is reevaluating how they want to go forward. The STMP covers a long period of time and if the underlying assumptions change, i.e. population growth in Abu Dhabi, then it has a knock-on effect.

“There is still a lot of time to stop and reassess when they want to deliver these project, and what scale they need to be,” he adds.

The review is expected to result in delays in the delivery of key transport projects as questions about procurement methods will also need to answered. Mafraq-Ghweifat was intended to also serve as a pilot scheme for the DoT’s plans to raise around a third of its $68bn spending plan from the private sector. The collapse of that project as a PPP has left many firms cautious of getting involved in future Abu Dhabi transport projects planned by the DoT.

The DoT did not respond to requests to comment.

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