Abu Dhabi puts $1.36bn football stadium on hold

Abu Dhabi has put on hold a AED5bn ($1.36bn) football stadium being developed by the government-owned investment firm Mubadala Development Company.

Mubadala sent letters to contractors bidding for the deal on 12 October informing them that the tender is cancelled. According to sources close to the project the letters say that the scheme has been put on hold by the government of Abu Dhabi.

The cancellation of the tender comes just a few days ahead of the expiry of the tender bonds on the development. Tender bonds for the project were due to expire on 17 October after the deadline for bid submissions for the design and build contract of 21 June.

Mubadala has confirmed that the project has been put on hold. “As the development manager for the stadium project, Mubadala Real Estate & Hospitality (MREH) can confirm that a decision has been made by the Government to put the development on hold until further notice,” says a spokesman for the company.  

The spokesman added, “As a result, MREH will not be awarding the contract at this time.”

Mubadala had received five bids for the development of the 65,000 capacity stadium in June. It was due to be built as part of the new Capital City District next to Khalifa City, between Mussafah and Abu Dhabi International airport (MEED 12:2:10).

The five bidders were:

• China’s Sinohydro Corporation
• France’s Bouygues with the local/Lebanese Arabian Construction Company (ACC)
• South Korea’s Samsung Corporation/Germany’s Ed Zueblin
• Japan’s Taisei Corporation/Beijing-based China State Construction Engineering Corporation (CSCEC)
• France’s Vinci Grands Projects/Athens-based Consolidated Contractors Company (CCC)

Meanwhile, development work on another Mubadala project, the New York University Abu Dhabi (NYUAD) is due to start soon. This is despite the lack of progress made on seeking project finance for the development, which was originally intended to be structured as a public-private partnership (PPP). It is now expected that Mubadala will directly fund the whole project, and drop plans to structure it as a PPP.

Several bankers in Abu Dhabi say the project will no longer be funded through project finance. However, a sources close to Mubadala says, “Clearly the financing timetable was never going to match the construction schedule. It is still possible to go out and raise project finance at a later date.”

Commenting on the status of the university scheme, the firm’s spokesman says, “Mubadala remains committed to the development NYUAD and is evaluating all financing options for this project.”

The local/UK Al-Futtaim Carillion was awarded the contract to develop the project in April (MEED 28:04:10).

The Abu Dhabi state-owned firm has had a difficult few months. In late September, it was revealed that John Thomas, executive director at MREH, had left the firm. His replacement, Peter Wilding, has started a review of several MREH schemes and as a result the MGM development planned for the Mina Zayed area of Abu Dhabi island is now suspended (MEED 24:09:10).

However, Mubadala said at the time, “The MGM project is still under way. We are assessing certain aspects of the design and further announcements will be made in due course.”

Also in late September, the company announced it had made a AED5.4bn loss in first half of 2010 after the value of its investments fell. The company will receive $3.5bn from the Abu Dhabi government in 2010, up from $2.4bn last year.

In the prospectus for Abu Dhabi’s recent sovereign bond issue, the emirate said it was reviewing some projects in light of the financial crisis. “While the long-term strategy remains in place, the government is focusing on ensuring that financial discipline is maintained and identifying specific projects which, in light of changed circumstances, may be deferred or adapted to reflect those circumstances.”

According to figures in the bond prospectus, Abu Dhabi had a budget deficit of AED126.5bn in 2009, and is expecting a deficit of AED84.8bn in 2010. These were funded through the transfer of cash from sovereign wealth funds Abu Dhabi Investment Authority and the Abu Dhabi Investment Council.