Situated at Taweelah in Abu Dhabi, Khalifa Port and Industrial Zone is the headline project of the emirate’s premier developer of ports and industrial zones, the Abu Dhabi Ports Company (ADPC).
ADPC’s objective is to create a sustainable growth platform that spurs economic expansion and diversification for Abu Dhabi by developing world-class infrastructure, real estate and business services in conjunction with the private sector. ADPC has been mandated to develop all ports (with the exception of oil and gas and military ports) and related infrastructure in the emirate of Abu Dhabi.
Development of the multi-billion dollar, multi-purpose Khalifa Port and Industrial Zone (KPIZ) – located strategically between the cities of Abu Dhabi and Dubai – is not only in line with these objectives; it is also a central plank of Abu Dhabi’s broader growth strategy and a future premier destination for businesses looking to operate in the region. The aim is to drive economic growth in the emirate by consolidating unique expertise, operations and technical advantages from both Abu Dhabi and Dubai.
Construction of the first phase is of the project now under way. When fully operational, KPIZ will include a world-scale container and industrial port along with more than 100 square kilometres of special economic and free zone space dedicated to logistics, industrial, commercial, educational and residential facilities.
The economic zone has been designed to cater for a range of industries, including base metals, chemicals, logistics, building materials and light to heavy industry. But part of KPIZ has already been allocated to serve one significant industry, a development that is set to be a major highlight of the project.
The industrial zone will be home to Emirates Aluminium (EMAL), a joint venture between Abu Dhabi’s Mubadala and Dubai-based Dubal. The plant is already under construction and when completed is set to be the world’s largest aluminium smelter, producing 1.3 million tonnes a year.
Ahmed Al Calily, CEO and managing director of Abu Dhabi Ports Company, says that the smelter will lure additional clients from all parts of the supply chain, which will deliver valuable collective benefits to the port and industrial area.
“We are working closely together for the benefit of both EMAL and ADPC to attract downstream tenants that add value to the industrial zone and create a viable aluminium cluster,” he explains.
The industrial zone will be well placed to take advantage of a unique location near two major ports, Jebel Ali and Khalifa, and two international airports, the new Jebel Ali and extended Abu Dhabi airports, as well as the extensive highway system and will also be serviced by the emirate’s planned new freight rail.
It is this strategic position at the crossroads of key transport routes that will ensure KPIZ attracts significant foreign investment.
Trade and investment draw
The port is also designed to be major facilitator of trade and investment. Initial construction to create a 260-hectare marine platform nearly five kilometres offshore began in January 2008 and when this phase is completed it will be able to handle two million 20-foot equivalent container units a year in its first phase. It will also be able to handle bulk cargo destined to the industrial zone when operational by the end of 2010.
Khalifa Port will ultimately be the main entry point for cargo shipped into Abu Dhabi; all sea traffic currently being served by Port Zayed will be transferred to Khalifa Port. Khalifa Port will also be the prime export gateway for material produced in the adjacent industrial zone.
The UAE is already considered a key transhipment point, on a par with Singapore and Hong Kong. An increase in traffic has huge commercial implications for the nation as well as driving economic activity and accelerating the growth of local industry.
ADPC initiated the KPIZ project as part of its mandate to contribute to the economic development of Abu Dhabi. The company was formed to create a sustainable growth platform through trade that would spur economic expansion and diversification. It does this by establishing, operating and regulating a range of zone and port-related activities, including industrial zones, port terminals, utilities, real estate developments and value-added services.
Its principal project will be a significant industry cluster and home base for a range of manufacturing, logistics and industrial activities.
As a result, KPIZ is set to drive substantial economic activity in the region and, according to Mr Al Calily, “contribute to a new phase of development in both Abu Dhabi and the entire UAE”.
This “new phase” is based on diversifying the emirate’s economic base and reducing its dependence on oil revenues. The new port and industrial area are an essential part of the government’s strategic vision to increase the pace of development in the economic, industrial and tourism sectors.
Abu Dhabi and Dubai have this diversification objective in common. It makes sense that the emirates are streamlining and combining their efforts to broaden their respective economic bases. To this end, Mr Al Calily has revealed that the agreement between ADPC and Dubai’s DP World stipulates that Jebel Ali and Khalifa Port will be operated as a single megaport servicing both emirates.
The decision to involve Dubai’s principal ports and zones operators in this project is further evidence of a shift towards greater co-operation and integration between the two cities. It also signals a growing awareness within the UAE of the need for the emirates to combine resources and work together to drive economic growth at a national level. “It has always been our view that it is a complementary relationship: we are not competing with each other, instead together we are competing with the rest of the world,” says Mr Al Calily.
As Abu Dhabi and Dubai become individual world-class trade and industrial hubs, the impact of a combined venture on the national economy is likely to be substantial. The spillover benefits for the entire UAE may encompass everything from increased trade and growth of local industry to diversified development and greater economic cohesion across the emirates.
ADPC is determined to develop world-class infrastructure, real estate and business services in conjunction with the private sector. It supports the government’s strategic development vision while contributing to the scale-back of state involvement in the domestic economy.
Crown Prince of Abu Dhabi, Sheikh Mohammad Bin Zayed Al Nahyan, recently stated: “As Abu Dhabi moves to diversify and drive economic growth, it is clear that an empowered private sector will emerge to fulfil roles once provided by the government.”
KPIZ puts this economic strategy into practice. The port and industrial zone will be based on public-private partnerships that will enable global and local industrial players to enjoy commercial advantages while benefiting from the risk-mitigating effects of state involvement.
“Most of the time the government acts as a facilitator, taking over certain risks that the private sector shies away from in the early stages of development. We view the public-private partnership as key to the success of this development,” says Mr Al Calily.
This structure ensures all partners, whether public or private, are able to reap the rewards of this major trade and industrial project. Local businesses are set to benefit from foreign capital and expertise as they boost efficiency and productivity to retain a competitive edge.
Foreign investors will enjoy a world-class infrastructure and services in a strategic global location.
But the overall winners will be the emirates of Abu Dhabi and Dubai and the UAE at large, which, through combining their resources and expertise, are on a path of sustainable economic growth.