Dubais Roads & Transport Authority (RTA) is planning to appoint an external adviser to explore its options for funding the extensions of the Red and Green lines of the citys metro.
The adviser will look at the possibility of raising funding from banks and other private sources to finance the project, and whether the extensions could be structured as a public-private partnership (PPP). It will also be asked to look at the possibility of using the PPP model to develop commercial space around three existing stations on the metro. Funds raised from this would then be used to help finance the metro line extensions.
In total, the extensions to the Red and Green lines are expected to cost about $700m.
The UKs Ernst & Young is already working on a PPP scheme for the RTA, which if successful will result in space around Union station being leased to the private sector for commercial development.
The role includes evaluating how much the extension will cost, how much can be made from developments around three other stations, and what options are available for any additional funding that may be needed, says one source close to the RTA.
The existing Dubai Metro was financed directly by the government, but as a result of the collapse of the emirates economy in 2009, it was left unable to pay contractors on the project. As a result, it reached a deal with the contractors to pay them in installments up to 2017.
The financial crisis also prompted the government to focus on reducing its budget deficit and curtailing direct spending on infrastructure.
At least eight firms are understood to have been invited to bid for the mandate to advise the RTA on financing the metro extensions, including:
- Ernst & Young (UK)
- KPMG (Netherlands)
- Deloitte (US)
- PwC (UK)
- Jones Lang LaSalle (US)
- Colliers International (US)
- CBRE (US)
- Booz & Co (US)
Consultants have been asked to bid for the role by 28 October. A pre-bid meeting is understood to have already taken place.
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