UAE steps up sugar refining capacity

Abu Dhabi: According to some accounts, the UAE is the world's largest re-exporter of sugar, and the sixth producer, while most estimates forecast an increase as high as 40 per cent in international sugar prices within the coming three years.

Such developments will inevitably affect the sugar retail prices in the UAE, hurting the consumer who is already suffering from the soaring inflation due to unprecedented increase in commodity prices worldwide, especially in relation to food stuffs.

The federal government has been exerting extensive efforts to curb this escalating crisis by developing new refining facilities, and increasing the capacity of the existing ones through providing the necessary facilities and incentives for investors to tap such lucrative and promising industry.

"Last year, total production of sugar in the UAE amounted to 1.1 metric tonnes, at a daily rate of 4500 tonnes, and by the end of 2008 we expect the total production to reach 2 million tonnes," commented Reda Al Mousawi, chairman of the National Company for Sugar Refineries.

New project

"Zonescorp has finally allocated a plot for us to establish our new project at the Industrial City of Abu Dhabi (ICAD), which will be in the form of a joint venture between UAE and Gulf nationals, and we expect the first phase of production to be about 600,000 tonnes annually, going up to 850,000 tonnes within five years," he added.

Speculations in the international commodities market has been blamed for the unprecedented increase in the prices of sugar, in addition to the massive shift towards the production of bio-fuels in countries like Brazil, limiting the supply for domestic consumption, as a reaction to the soaring international oil prices.

"With the exception of the UAE and the Kingdom of Saudi Arabia, the production of sugar in the Arab World is seriously lagging behind, that the UAE now ranks as the top world re-exporter of sugar, after re-exporting 95 per cent of its production in 2007, generating about Dh1.5 billion in revenues," Al Mousawi said.

Most of the local industries are now resorting to international financial institution to make up for the shortage in industrial project finance, where most banks in the UAE are focusing on the lucrative real estate investments, while international banks provide local businessmen with their financial needs in this respect, though through unfair terms and conditions," he complained.

The UAE Industrial Bank's funding is only limited to those establishments who successfully acquire the approval of the industrial official authorities in the country, receiving the required financial facilities at a very competitive interest rates.

"Other commercial banks in the UAE offer funding as well for industrial projects, but that happens only occasionally and in accordance to much higher interest rates," commented Saeed Al Rokn, director of Industrial Development at the Ministry of Economy's Industrial Sector.

Foreign partners

"To illustrate; the turnover of industrial projects is usually spread across a relative period of time for a project to break-even, yet we find international banks offering grace periods that do not exceed three months in many cases. How can an industry develop under such terms," he said, attributing the resort to foreign partners in forming joint-ventures to overcome such difficulty.

"In Saudi Arabia, for instance, the interest rates offered to finance industrial projects are by far lower than what is offered by banks here, not to mention the limited number of industrial banks and the funds at their disposal," he added.

Industrialists are calling for the government to pay more attention for the financial aspects of this promising sector, given the strategic target of diversifying the economy away from relying on hydrocarbon products, and taking into consideration the soaring prices of commodities that is estimated in the sugar industry alone to shoot up by 27 to 48 per cent by the year 2011.