ABU DHABI OVERHAULS TRANSPORTATION SECTOR

UNCLAS ABU DHABI 001199

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: EAIR EWWT PREL ECON AE
SUBJECT: ABU DHABI OVERHAULS TRANSPORTATION SECTOR



1. (U) The Abu Dhabi Government Restructuring Committee
recently announced the establishment of an Abu Dhabi
Department of Transport (DOT),headed by Khalfan Ghaith Al
Muhaibi. Sheikh Mohammad bin Zayed Al Nahyan, Abu Dhabi Crown
Prince and Chairman of the Abu Dhabi Executive Council chairs
the restructuring committee, which was formed in February
2005 to lead government changes. Law Number 4 for 2006
establishes the DOT to regulate civil aviation and the sea
port sectors. The consolidation of the Department of Civil
Aviation and the Sea Ports Authority under the newly formed
DOT will enhance integration across transportation sectors
and improve internal efficiency.


2. (U) Although the DOT has regulatory authority over the Abu
Dhabi seaports and airports, two new corporations have been
created to handle the day to day operations of these sectors.
Laws Five and Six for 2006 create the Abu Dhabi Ports
Company (ADPC) and the Abu Dhabi Airports Company (ADAC),
respectively. The two corporations will handle day to day
operations at Abu Dhabi seaports and airports. The creation
of separate entities to run the sea port and airport
operations will allow the Abu Dhabi government to focus on
sector planning and regulation while moving in the direction
of privatization. This change may pave the way for Abu Dhabi
to award seaport and airport contracts to private companies
on a build, own, operate and transfer (BOOT) basis.


3. (U) The ADPC will manage and develop all seaports in the
Emirate of Abu Dhabi. It will supervise services handled by
private companies such as shipping, unloading and providing
supplies to ships and warehouses. The ADPC will also impose
and collect fees on services from beneficiaries. The company
will be exempted from all local taxes and fees on its
imported materials, equipment, machineries and spare parts.
It will also establish and manage free zones on ADPC's land
and impose and collect taxes from companies in these free
zones. A Board of Directors will be appointed by the Abu
Dhabi Executive Council. The board will be able to contract
with foreign and local companies, both public and private,
for business related to the operating, managing and
maintaining the Abu Dhabi seaports.


4. (SBU) Abu Dhabi is planning on developing a new port and
industrial area, which will be called the Khalifa Port and
Industrial Zone. Mubadala, an Abu Dhabi governmental
investment business operating as a public joint stock
company, is developing this project. The new port will
include a container handling terminal and piers for receiving
raw and bulk cargo as well as large ships. ADPC may consider
a BOOT option for this development, which will allow the
private sector to take part in owning and operating critical
port infrastructure.


5. (U) Abu Dhabi Airports Company will operate and maintain
airport facilities, communications, emergency and rescue
equipment, runways, aircraft hangars, ramps, radios,
meteorology and control towers. It will also plan the
development of aviation infrastructure in Abu Dhabi, namely a
new airport terminal, runway, and control tower, which are
currently under design. The DOT will regulate air space,
landing and departures, air transport rules and baggage.


6. (U) Both ADPC and ADAC will be public joint stock
companies with paid up capitals of Dhs. 500 million (USD $136
million),divided into 50 million shares, each with a nominal
value of Dhs. 10 (USD $2.72).
SISON