Abu Dhabi Ports May Raise Funds Next Year as Khalifa Grows

Abu Dhabi Ports Co. may raise funds next year to meet the growth potential of its Khalifa Port as the Persian Gulf emirate boosts the development of industries that will reduce its reliance on oil exports.

Khalifa Port, which began commercial operations last month, will handle 1.2 million TEUs, or 20-foot standard containers, by 2014, Tony Douglas, the port company’s chief executive officer, said in an interview. Abu Dhabi Ports will need to order six more cranes to utilize the port’s current 2.5 million TEU capacity, he said.

“There is no shortage of opportunities” to get financing “for any debt that’s required,” Douglas said. “There’s every chance that next year we may look at syndicated financing. We have no plans to go the bonds or sukuk route.”

The United Arab Emirates’s capital and largest city is diversifying its economy by developing industries such as aluminum, steel and petrochemicals. Non-oil industries accounted for about 48 percent of the emirate’s economy in 2011, rising 4.1 percent to 288.8 billion dirhams ($78.6 billion), the Statistics Centre in Abu Dhabi said on Oct. 14.

The new port is next to Khalifa Industrial Zone, or Kizad. By 2030, the zone should contribute about 15 percent of Abu Dhabi’s non-oil gross domestic product, and as much as 80 percent of the goods manufactured there will be exported, according to its website. Khalifa Port expects to need to double capacity within the next five years to 5 million TEUs, Martijn Van de Linde, CEO of operator Abu Dhabi Terminals, said last month.

Major Tenants

Within the 51 square kilometer first phase, 75 percent of Kizad’s leasable area is available, Douglas said. Tenants include Emirates Aluminium Co., which is building the world’s largest smelter, and Dubai-based construction company Al Braik Investments LLC. Kizad, open almost two years, plans to expand to two-thirds the size of Singapore once the entire area is developed.

“Power costs an eighth of what it does in Germany,” Douglas said of the Abu Dhabi zone’s competitive advantage. “It’s tax free, you can access global markets, there’s good infrastructure and it’s easy to do business here.”

Khalifa Port was built to replace Port Zayed, located downtown, which will be redeveloped to serve cruise ships as the city boosts tourist offerings with beach resorts and museums including branches of the Louvre and Guggenheim. The first phase of the Khalifa Port complex, built on a manmade island outside Abu Dhabi city, has cost 26.6 billion dirhams and is just 25 miles south of Dubai’s Jebel Ali (DPW), the world’s ninth-biggest container port.

Government Pays

Abu Dhabi Ports will be reimbursed after transferring some assets it built to various government departments, such as roads and power networks, Douglas said. The additional cranes needed will each cost less than $10 million.

The migration of container ships from 40-year-old Port Zayed to Port Khalifa will be completed by the end of the year, three months earlier than planned and just as the old port reaches full capacity of 800,000 TEUs, Douglas said.

“Grains, rail, refinery equipment -- it all comes into Port Zayed,” said Douglas, speaking at his Abu Dhabi office. “If we’re getting full, it means something’s happening in Abu Dhabi.”

To contact the reporter on this story: Ayesha Daya in Dubai at adaya1@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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