By Elizabeth Broomhall
The construction consortium says it has been paid and is now working at full speed
Dubai’s long awaited Al Sufouh tram will meet its deadline of November 2014, according to the main contractor.
The consortium of firms working on the project said they have now received outstanding payments from 2009, after the government secured a $675m financing deal for the project’s first phase.
The group, which includes French conglomerate Alstom and Belgium’s Besix, said it previously scaled back the pace of construction on the state-backed tram amid discussions over refinancing.
“Works have resumed at normal speed now, and the completion date is set for November 2014,” a source close to the project told Arabian Business.
“Some payments were pending since 2009, but these have now have been solved. The project is back on track.”
The Dubai tram project was originally scheduled to be completed in 2011, but has been plagued by cash concerns in the wake of the global financial crisis.
Burdened by funding demands, the emirate’s roads and transport authority (RTA) saw work slow on a number of big-ticket projects such as the Dubai Metro’s Green Line, as it struggled to pay trade creditors.
On Wednesday, the government announced it had finally secured a $675m financing deal for the first phase of the tram, which will see the construction of a 10km track extending from Dubai Marina to the Knowledge Village.
The transaction comprises a 13-year $401m loan which will amortize over 10 years starting 2015, and is guaranteed by the official government export credit agencies of Belgium (ONDD) and France (COFACE).
The second portion of the transaction is a 6-year $274m Islamic Ijara facility, split equally in US dollars and dirhams, and amortizing over three years, also starting 2015, according to a statement issued by Government of Dubai's Media Office.
Citibank, Deutsche Bank, and HSBC acted as mandated lead arrangers and underwriters for the financing, according to the statement.
"We have seen a very encouraging response to this financing, which is a testament to the strong confidence that the international banks have in Dubai's economy,” said Abdulrahman Al Saleh, director general of the Dubai Department of Finance.
He added that the Dubai Government was continually examining ways to "optimise its funding strategy".
This is consistent with the RTA’s announcement in January 2011, when it said it would seek private funding and support for nearly a third of its infrastructure schemes over the next five years in a bid to spread the risk and cost of large projects.
Designed to stretch 14km along Al Sufouh Road, the Dubai tram is set to be the world’s first to run with ground power feeding the entire line, eliminating the need for overhead wires.
On completion, the tram will link with the Dubai Metro at three stations along Sheikh Zayed Road and will also tie-up with the monorail on the Palm Jumeirah. Authorities say the line will include 25 vehicles each capable of carrying 400 passengers.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.