Al Jaber ties up with Denel

The UAE Offsets Group (UOG) has facilitated the creation of a Dh 20.2 million ($5.5 million) joint venture between the Abu Dhabi-based Al Jaber Group and Denel, the South African defence equipment manufacturer.

The new venture, Denel-Al Jaber Maintenance and Technology Co L.L.C. (Damtec), has been set up as a partnership between Abu Dhabi-based Al Jaber Transport and General Contracting Establishment (AJE), part of the Al Jaber Group, and Denel.

The project, which is owned 51 per cent by AJE and 49 per cent by Denel, will provide maintenance, operation and fleet management services as well as product system management services to owners of commercial and military fleets.

With this joint venture, Denel is seeking to fulfil part of its offset obligation emanating from defence equipment supply contracts with the UAE Armed Forces.

"This is a new concept being introduced to the UAE and we are very pleased to be a part of it," said Obeid Al Jaber, chairman of the Al Jaber Group. "The launch of this project under the UAE Offsets Programme signifies the role being played by UOG to diversify and expand the role of the private sector through participation in new, innovative initiatives at different levels."

Damtec will offer comprehensive outsourced vehicle maintenance using Denel's proven systems, based on the company's Maintenance Management Information System (MMIS) package, which includes managing preventive maintenance, minimising costs of spare parts through effective supply chain management and optimising vehicle fleet use.

Marketing studies conducted for Damtec by Chescor Capital Middle East have shown that there are about 750,000 vehicles in the UAE.

The company aims to capture 10 per cent of that market. Immediate opportunities come from AJE's 5,000 vehicles, plus potential contracts with the Abu Dhabi Municipality and the UAE Armed Forces.

Damtec is the second offsets project set up by AJE in partnership with a South African company.

In mid-2002, it established the Dh 60 million ($16.3 million) Safewater Chemicals in partnership with Specialist Mechanical Engineers (SME), which was the first offsets project set up in the UAE with participation of a South African firm.

Under the UAE Offsets Programme, all defence contractors signing deals with the UAE Armed Forces are required to fulfil offset obligations.

The nature of their offset obligation varies from one contract to another depending on the value of the contracts. Offsets ventures should yield benefits to the UAE economy equivalent to up to 60 per cent of a contract's value over a period of several years - the typical duration of an offset obligation is seven years — and earn offset credits that are evaluated at several milestones during the life of each project.