A major boost for the emirate

Dubai: The discovery of a "promising" oil field in Dubai is very good news for the emirate and the UAE as a whole. The expectation of new oil revenues for the government will substantially help to restore confidence in Dubai's economic strategy, which has been battered by the fall-out from the global recession.

The news of a substantial source of new government revenue will force a complete revision of the arithmetic in the Dubai government, greatly to its benefit. It might even change the way the government is going about sorting out the huge borrowings that some of the government-owned or government-backed developers have taken on.

Most of the publicity Dubai has attracted in the past few months has been about the debt rescheduling of Dubai World and Nakheel, and these companies have yet to announce their plans for restructuring. The Supreme Fiscal Committee is hard at work across the whole of the government portfolio, sorting out the values of assets and the requirements necessary to handle the debts. This process has to take some time, and as it progresses it is inevitable that there will be more bad news as well as good, and Dubai's reputation will continue to go up and down as these problems are aired and then sorted out.

So it is very cheering for Dubai to hear a piece of completely good news.

The Dubai government has worked hard to build an economy which does not rely on oil, and it has used the revenues from the economic boom of the last ten years to greatly expand its infrastructure, so that it will be able to handle the business and population growth that is being planned. While the global recession has put a halt to a lot of these plans for eventual growth, the expanded infrastructure will be there to support growth when it comes.

This is why the Dubai government announcement of the new oil field included a specific reference to the new revenues reinforcing infrastructure in the emirate. This important area has been the hidden jewel in the Dubai g overnment's spending plans, and has been overshadowed by the focus on the state-owned master developers and some of their massive debt restructuring.

The expanded road network and bridges over the Creek, the new Metro, the spread of the mains sewerage network, the communications networks of the two telecoms companies, and expanding airports in Dubai and Jebel Ali, all come together with the rest of the government's planning to create the underpinning of a substantial city. The new oil field and its revenues will allow that city to happen more quickly.