Dubai: India’s Infrastructure Leasing & Financial Services Limited (IL&FS) and UAE-based Prime Terminal are pumping in Dh477 million ($130 million) in an oil storage terminal at Fujairah, Gulf News has learnt.
IL&FS Prime Terminals, a joint venture formed between IL&FS Maritime Infrastructure Company Limited (IMICL) and PTF, reached an agreement on the first phase of the 632,678 cubic metres project.
This will help boost the fuel storage capacity to increase from 5.08 million cubic metres to 7.95 million cubic metres.
Shahzaad Dalal, Chairman and CEO of IL&FS Investment Advisors, told Gulf News, that construction of the project has already started with ANC carrying out earthworks for 14 storage tanks.
“The main construction package is currently in tendering phase. Three consortia have placed bids for the project,” Dalal said.
The land has been obtained from the Fujairah government on a 50 years lease. Dalal expects full return on investment in eight to 10 years.
Four local and Indian banks led by Bank of Baroda will provide project finance to the tune of $91 million for the project for a tenor of seven years. National Bank of Fujairah, EXIM Bank of India and ICICI Bank are the other lenders. IL&FS Global Financial Services (ME) Limited acted as financial advisors for the project.
The Port of Fujairah is the second largest bunkering facility in the world with an annual throughput of 24 million tonnes. Commissioning of the 424km pipeline from Habshan to Fujairah gives Abu Dhabi a very vital alternative to export oil without having to pass the volatile Strait of Hormuz. This is in turn is expected to boost demand for oil storage facilities in Fujairah.
Promoted by the IL&FS Group, this is IMICL’s first foray in the Middle East.
The IL&FS Group, widely regarded as the pioneer of public-private partnership (PPP) projects in India, is seeking to leverage on its expertise and experience of over two decades to develop infrastructure projects in the Middle East and Africa.
Owned 80 per cent by IMICL and 20 per cent by PTF, the oil storage tank terminal project at Fujairah will have a total capacity of 632,678 cubic meters, of which 333,088 cubic meters will be implemented in the first phase. Construction is currently underway and this phase would be completed in 24 months. The project is located within the Fujairah Zone for petroleum industry, adjacent to the Port of Fujairah. The project will have 14 storage tanks and support facilities and will be operated by IMICL.
“This project marks an important step for IL&FS which seeks to expand its expertise in developing, executing and managing BOT infrastructure projects in the fast growing Middle Eastern and African markets. As there is a great need to develop infrastructure in these regions, many Governments are turning to experienced private sector players, who can efficiently implement projects.” Dalal said.
Fujairah is growing as a major centre for bunkering of fuel mainly due to its superior location and incentives provided by the government of Fujairah. The establishment of storage facilities is being facilitated through favourable tax incentives by the establishment of the Fujairah Free Zone for the petroleum industry, pricing crude oil at the Dubai Mercantile Exchange and the development of the Fujairah refinery by the Abu Dhabi-based IPIC.
The Fujairah bunkering industry is well developed. Bunker sales are estimated to be in the range of 12-14 million tonnes per year.
The Middle East as a whole is currently balanced in fuel oil, but will continue its increasing dependence on imports. With the continued requirements of fuel oil imports there will be necessary storage of fuel oil in the Arabian Gulf and particularly Fujairah.
