Capital restarts shelved projects

Abu Dhabi is taking advantage of its surging petrodollars and massive overseas assets to restart some of the shelved projects that were estimated at nearly $30 billion last year, according to Saudi Arabia’s largest bank.

A large part of the projects involve construction, roads and the planned metro, which is believed to have received around Dh26 billion, National Commercial Bank (NCB) said in its latest GCC economic review.

“The increased spending will be supported by rising revenues. Abu Dhabi oil production rose to an average of 2.5 mbd in 2011, up from 2.2 mbd in 2009 and 2.34 mbd in 2010,” the report said.

Citing official data, it showed Abu Dhabi earned a whopping Dh278bn from its hydrocarbon exports in 2010, up on Dh188.8bn in 2009. It gage no figures for 2011 but the emirate’s income is expected to have sharply grown as oil prices soared by at least 50 per cent over their 2010 level.

“In general, the government’s fiscal position is likely to remain strong. The Abu Dhabi Investment Authority has an estimated $627bn in assets and the government boasts substantial reserves,” NCB said.

“Nonetheless, the recent Dh16.8bn bail-out of Aldar Properties highlights the risk still posed by contingent liabilities. The total debts of government-related entities in the UAE were recently estimated at 54% per cent of GDP.”

The report noted that although authorities in Abu Dhabi and other UAE emirates began to reverse some of “largesse” in their fiscal plans for last year, the onset of the Arab Spring led to a partial reversal, effectively delaying the consolidation agenda to this year. It said the consolidated UAE budget is now estimated to require a fairly high break-even price of some $85/barrel.

It recalled that the Abu Dhabi Executive Council in January unveiled a plan marked by a great deal of continuity in government spending as well as a general commitment to the strategic objectives of Abu Dhabi’s Vision 2030.

An estimated $30bn worth of projects were on hold last year but a number of them now received the green light, NCB said.

Among key transport projects, the government reiterated its commitment to the Abu Dhabi metro venture while also allocating funds to a new Dh25bn Midfield Terminal for the Abu Dhabi airport and the Khalifa Port and Industrial Zone.

The government also revived the Dh10bn Mafraq- Ghuweifat Road project which had been originally conceived as a public-private partnership.

The report said the execution of the metro project should in turn boost plans for the Reem Island development, which has almost been completed and is expected  to accommodate more than 100,000 people.

“In general, the plans to build 50,000 homes over the coming 20 years appear to be on track. The government allocated funds to the North Wathba project which will have more than 13,000 resident plots, while the government hopes to deliver more than 7,600 villas this year. Beyond this, the Louvre, National Museum, and Guggenheim museum projects for Saadiyat Island were funded.”

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