The government of Dubai is reluctant to sell international assets in the short term as it moves to get debt at state-owned companies under control, but is considering selling off assets when global markets recover, according to government officials.

Dubai is rich in good quality assets and we are being chased by bankers telling us to do something with these assets

Mohammed Ibrahim al-Shaibani, Dubai Ruler’s Court

Sheikh Ahmad bin Saeed al-Maktoum, chairman of the Dubai Supreme Fiscal Committee, said on 28 November, “We are reluctant to sell assets at this time as we would not be receiving the value we are looking for. That is why we are asking for five to eight years from our creditors to realise value before we go through with this.”

However, the government may move faster on plans to privatise some of its state-owned companies, including Emirates airline. Mohammed Ibrahim al-Shaibani, the director general of the Dubai Ruler’s Court, said the emirate is reviewing its strategy for state-owned companies.

“The possibility of offering a stake in Emirates airline to the public is always there and is being studied and considered,” said Al-Shaibani. “There may be a privatisation plan. Dubai is rich in good quality assets and we are being chased by bankers telling us to do something with these assets. So that may be used as a mechanism of reducing some of our debts in the future,” he added.

“We are planning on opening the capital of some of our leading companies to the public.”

Shaibani said the sovereign debt of Dubai was around $30bn, although this does not include the debts on companies such as Dubai World and Dubai Holding, which are owned either by the Dubai government, or the emirate’s ruler, Sheikh Mohammed bin Rashid al-Maktoum. “I would like to see the government debt down to zero, and this is something we are aiming for. But there is different reality on the ground. I think it is premature to speculate about what level we can bring it down to,” says Al-Shaibani.

Including the debts on Dubai’s state-owned companies like Dubai World and Dubai Holding, the figure is thought to be closer to $110bn. Government officials frequently try and distance themselves from the debts not directly linked to the sovereign.

Speaking at a press conference to discuss the restructuring of Dubai’s debt obligations, Sheikh Ahmed said that Dubai World “is now on a very sound financial footing and is fully refocused on its core business.”

Ahmad Humaid al-Tayer, also a member of the Supreme Fiscal Committee, added Dubai would not need further financial support from Abu Dhabi to help fulfill its debt obligations in 2011. Analysts put the figure for debt maturing in 2011 at Dubai government-owned companies at more than $15bn.

“I do not see the need more support,” said al-Tayer. “There is nothing to worry about in terms of our ability to fulfil obligations in 2011.”

Al-Tayer also said that between now and 2012 some projects would be restarted as contractors start to receive payments for work already completed. “Projects with no feasibility will be stopped until there is a recovery in the real-estate sector,” says Al-Tayer. He did not specify which projects these were.

After the completion of the $24bn Dubai World restructuring, the Supreme Fiscal Committee is now concentrating on finishing off the restructuring of Nakheel’s more than $10bn debt and is expecting to issue a sukuk to repay trade creditors in the first quarter of 2011. Around 90 per cent of trade creditors have now accepted the debt restructuring proposal, but the sukuk will not be issued until the acceptance level reaches 95 per cent.

Dubai World at its subsidiaries had debts of more than $40bn at the end of 2009, plus significant trade liabilities.

Dubai Holding is now also being restructured, although the government has not confirmed how much debt on the company will need to be effected. The restructuring will be run along the same lines as the Dubai World restructuring.

Al-Shaibani said he did not know how long it would take for Dubai to complete its various debt restructuring exercises.

At the press conference Sheikh Ahmad also said, “Dubai is now more competitive than ever. The slowdown that took place over the past two years gave us in Dubai the opportunity to rethink, regroup and return to basics in order to leverage our core, tried and tested competitive edge.”