Dubai: Four Dubai-based banks have been hired to raise $800 million (Dh2.93 billion) by selling Salik road toll receipts to fund existing infrastructure projects, the Government said yesterday.
The Department of Fin-ance launched the dual currency, six-year financing to support the Roads and Transport Authority's (RTA) developments across the city, which include the Al Sufouh Tram project and the upgrade to Interchange One on Shaikh Zayed Road.
Citibank, Commercial Bank of Dubai, Emirates NBD and Dubai Islamic Bank have been named book-runners for the financing, which is expected to be syndicated further to a select group of banks and incorporates a conventional and Islamic tranche.
"This is the first attempt between the government and the UAE's banking sector to come up with an instrument that allows the effective monetisation of cash flows for infrastructure projects," said Suresh Kumar, CEO of Emirates NBD Capital.
"It is an innovative structure that will prove a real filip for local capital markets. Cash flows generated from Salik will go into an escrow account located offshore, which will be used to amortise the credit facility. This is a good method of raising added resources for future capital expenditure purposes," he added.
Dubai became the first city in the region to launch a road toll system when Salik was introduced in July 2007. It is one of the RTA's major sources of income, generating more than Dh800 million last year and Dh1.6 billion in the first two and a half years since it was introduced.
There are currently four Salik gates across Dubai — at Al Barsha, Safa Park, Maktoum Bridge and Garhoud Bridge — with a further two planned for Al Ittihad Road and Al Ghusais in the near future.
Motorists are charged Dh4 each time they pass through a Salik gate with a maximum charge of Dh24 per day.
Mattar Al Tayer, Chairman of the Board and Executive Director of the RTA, said the funding operation would have a huge impact in accelerating the completion of transportation projects.
"The RTA will implement interior road construction projects in a number of residential areas in order to provide the best level of services possible," Al Tayer said. "The funding will help push forward the progress of key road and transportation projects currently being carried out," he added.
Al Tayer said the move was aimed at strengthening the emirate's competitiveness and supported its economic and urban development. "This is in line with the Dubai Government's approach to provide the highest level of living standards and services for the emirate's visitors and residents," he said.