Dubai World, Aden Port Operator, Unable to Pay Debts
BBC: Assets (of Dubai World) include DP World, which caused a storm when trying to take over six US ports (and operates Aden Port.)
DPI corporate page here. Kuwait had a better bid than Dubai for Aden Port, but Dubai World got the contract, which was heavily weighed in their favor initially and even after the contract’s revision. But with DWI currently unable to pay its debts, development at Aden Port may stall. There is an the ongoing strike at Aden port for more than a year, prompted by DWI’s unfair labor practices. I have a copy of DWI’s employment contract and it allows for arbitrary dismissals among other discriminatory actions. DWI has called for the dismissal of union leaders. DWI took control of container operations in November 2008.
Yahoo: DUBAI, United Arab Emirates – A top Dubai finance official said the emirate fully expected fallout from its debt problems and assured foreign creditors that Dubai World’s request to postpone payment on some of its $60 billion in debt was “carefully planned.”
The comments by Sheik Ahmed bin Saeed Al-Maktoum, the chairman of Dubai’s Supreme Fiscal Committee, came as world markets reacted in shock to what some analysts indicated amounted to a default Dubai World, the city-state’s key engine of growth with interests ranging from ports to real estate.
Ahmed said the emirate’s leadership thought long and hard, weighing creditors’ interests, before announcing they were seeking a “standstill” on Dubai World’s debt until at least May.
It was such a dirty deal to start with. From my 2005 article.
In a stunningly blatant act of economic malfeasance, the Yemeni government recently entered into a 30 year contract for the port of Aden with its largest competitor, Dubai Ports International (DPI). World Bank documents state that Dubai is in direct competition for container transshipment business with Aden. The port of Aden is located along international shipping routes, giving it a strong advantage over ports in Dubai which are 1600 miles away.
The majority owners of DPI also are the managers of the Jabal Ali free zone in Dubai. DPI will pay 83.5 million US dollars as a rent over 30 years for the Aden free zone, an area of 32 million square meters, effectively paying less than one penny per square meter in monthly rent. A Kuwaiti firm’s substantially higher tender was rejected in favor of DPI.
Lutfi Shatara, head of a Yemeni group in the UK who believes the DPI award contravenes Yemeni national interest, wrote in a letter to the World Bank, “With Dubai now involved in Jebel Ali, Fujirah, Djibouti and Jeddah, and about to sign a concession to take over container operations in Aden, the question must be asked, which of these ports will Dubai favour when it comes to investment and marketing to maximize their business? If Dubai’s recent announcement that they will invest in new berths at Jebel Ali to reach a throughput capacity of 55 million TEU (twenty foot container) by 2030, while Aden is promised a capacity of 3.5 million TEU by 2035, the answer seems very clear.”
While DPI’s total investment in the port of Aden over 30 years is expected to be nearly 500 million US dollars, the company is permitted to sell 20% of its shares in the Yemeni market, raising $100 million dollars initially from Yemeni investors to pay the rent, buy equipment, and fund operations.
The deal was ultimately renegotiated with the terms slightly improved, but not much.
