Abu Dhabi to finance $10bn port

State-owned Abu Dhabi Ports Co. plans to spend about $10 billion building a port and a related industrial zone in the United Arab Emirates for which it will need financing, the firm's CEO said on Wednesday.

Abu Dhabi Ports may sell bonds, including sharia-compliant sukuk, to help finance the construction of the Khalifa Port & Industrial Zone, Chief Executive Officer Ahmed al-Calily told Reuters in a telephone interview.

The financing would also cover costs of a new residential district, he said.

"We are looking at a short-term and long-term financing," Calily said. The long-term debt could include conventional bonds or Islamic bonds, he said.

The company plans to arrange a short-term loan before the end of the year and then decide on long-term financing, he said.

The project, located at Taweelah, about 35 km (22 miles) northeast of Abu Dhabi, is set for completion in early 2010.

Calily said the long-term financing could include conventional or Islamic bonds. ADPC has appointed HSBC Holding Plc to define the financial strategies. "We will identify each of the components, which will have their own funding structures," he said.

Abu Dhabi is developing the project to encourage industrial expansion and reduce its reliance on oil. The industrial zone will allow foreign companies majority ownership, one of only two in the emirate. Non-Gulf Arab companies are otherwise entitled to a maximum 49 %.

The project will replace the existing Mina Zayed port in the UAE capital. The new port will have a first-phase capacity of two million 20-foot equivalent units (TEUs) rising ultimately to 8 million TEUs.

Four consortia have been shortlisted for the first phase construction package covering the dredging of 40 million cubic metres of material, Calily said, declining to name the groups. "The contract is in the order of $1 billion and will be awarded by the fourth quarter of this year."

Abu Dhabi government investment arm Mubadala owns 100 % of Abu Dhabi Terminals, the operating arm of the Abu Dhabi Ports Co. Dubai Ports World, the world's third largest port operator, will manage the Khalifa Port.

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