Dubai to Invest $1 Billion in Roads to Spur Growth as Expo Looms

(Bloomberg) -- From commuter trains to highways, Dubai is doubling down on its bet that investments in transportation will spur the emirate's economy as lower crude prices strain budgets in the oil-dependent Persian Gulf region.  

Dubai expects to solicit bids within eight months for road projects worth as much as four billion dirhams ($1.1 billion) as part of a bigger drive to upgrade transport links in the city, Mattar Al Tayer, director general and chairman of its Roads and Transport Authority, said in an interview in the city. His comments followed the awarding on Wednesday of a 10.6 billion-dirham contract to extend the emirate's metro-train system as Dubai prepares to host the 2020 World Expo.

“There's a lot of cuts in projects in neighboring countries,” Al Mattar said. “Investing in infrastructure is one of the policies which the Dubai government has taken to steer the economy.” He declined to give details of the planned road improvements.

International Hub

Dubai is focusing on infrastructure projects amid an economic slowdown triggered partly by a decline in oil prices by about half since 2014. The slide in crude is affecting businesses from real estate to hotels, though the city's economy relies less on oil than many of its neighbors. Dubai, the second-largest sheikhdom in the United Arab Emirates after Abu Dhabi, is an international trading, transportation and financial hub.

A group led by Alstom S.A. of France and including Spain's Acciona S.A. and Gulermak of Turkey won a contract to extend the metro network by 15 kilometers (9 miles) to the desert site of the 2020 Expo. The RTA has received 1.5 billion dirhams from the Dubai government's department of finance to begin work on the extension, Al Tayer said. 

The contractors have submitted offers to pay for the metro project, and the department is to decide within six months how to fund it, he said. The RTA expects work on the network to proceed on schedule even amid a challenging economic environment, he said.

To help pay for the transportation upgrades, Dubai's transport authority is studying whether to increase road tolls within three years, Al Tayer said. Dubai International Airport, the world's busiest by international traffic, imposed a service fee of 35 dirhams per passenger that took effect Thursday.

To contact the reporter on this story: Deena Kamel Yousef in Dubai, UAE at dhussein1@bloomberg.net. To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net, Bruce Stanley, Claudia Maedler