Export credit agencies teaming up for Dubai airport funding

21 May 2015

UK offered $2bn of export credit guarantees in 2014

  • Export credit agencies from Europe and the Far East have been in talks with Dubai authorities
  • The $33bn expansion of Al-Maktoum International airport is considered to large for a single government to fund
  • Enabling works package on the project is expected to start this year

Foreign export credit agencies have been meeting to discuss the possibility of teaming up to provide funding guarantees for construction work on the expansion of Al-Maktoum International airport.

The $33bn project is the largest planned project in Dubai and securing funding remains one of the schemes biggest challenges, and is considered too large for a single export credit agency to underwrite.

The prospect of foreign agencies joining forces creates the opportunity for multi-national consortiums competing for design construction work at the airport.

It is understood that this year representatives from European and Far Eastern export credit agencies have met with authorities in Dubai to discuss how the airport project will be funded.

The UK government has been the most active so far. In 2014 it offered of up to $2bn of export credit guarantees for work on airport projects in the emirate. The offer has been made by UK Export Finance to Dubai Airports Engineering Projects (DAEP), and is available for upcoming airport schemes.

According to sources close to the offer at least one bank with UK-based operations has agreed to make funding available based on the UK’s guarantee.

The offer is understood to include a certain percentage of goods or services being supplied by UK-based companies. For previous export credit deals offered by the UK in Dubai, this figure has been about 25 per cent, but for this deal the percentage is understood to be higher, given the specialist equipment and services that are required on airport projects, such as loading machines and scanners.

UK construction companies such as Kier, Carillion and Balfour Beatty, together with UK consultants such as Atkins and Arup, have been positioning themselves to take part in the project using the UK funding guarantees.

The $32bn development of Al-Maktoum International airport was endorsed by the emirate’s ruler, Sheikh Mohammed bin Rashid al-Maktoum in late 2014.

It will be built in two phases. The first phase includes two satellite buildings with a collective capacity of 120 million passengers a year, and capable of accommodating 100 A380 aircraft at any one time. It will take between six and eight years to complete. The entire development will cover an area of 56 square kilometres. The concept for the new terminal has been completed by a team of Lebanon’s Dar al-Handasah and France’s ADPI.

The first part of the project is the enabling works contract, for which DAEP is preparing to issue updated tender documents for the enabling works contract for the expansion of Al-Maktoum International airport.

The move comes after MEED reported in January that Dubai Airports Engineering Projects (DAEP) had been expected to award an enabling works contract by the end of last year. The contract covers enabling works for five new runways that involves about 70 million cubic metres of earth-moving.

When completed, the airport will be able to handle 200 million passengers a year, making it the largest airport in the world. The development will provide the necessary facilities to accommodate passenger and cargo growth, and will also allow Emirates to relocate its intercontinental hub operations to the new airport by the mid-2020s.

Al-Maktoum International will further develop Dubai’s status as a global aviation hub, as growth opportunities at Dubai International airport are becoming limited due to its location in the city. That airport is already one of the busiest in the world.

Dubai International dealt with about 71 million passengers in 2014, surpassing London Heathrow as the world’s busiest airport by international passenger traffic.

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