Middle East Business News Review – 2 September

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Photo – Vahid Salemi/AP

Ageing population boosting demand for UAE Islamic savings products

Sharia compliance is the key factor driving savings decisions by United Arab Emirates nationals, where an ageing population is expected to boost demand for Islamic savings products, a top Dubai-based National Bonds Corp executive said.

“Sharia compliance has been the number one driver of choice of savings instruments among Emiratis and Arab expats,” Mohammed Qasim al-Ali said in an interview late last week. “We are seeing a definite increase in product demand.”

The company, wholly owned by the Investment Corp of Dubai, the investment arm of the Dubai government, offers a variety of savings products including a mudaraba fund which now has 4.6 billion dirhams ($1.25 billion) in assets under management. Mudaraba is an investment management partnership, where profits are shared on a pre-agreed basis between parties but losses are borne by the provider of the capital.

BP announces investment of $24bn for developing Oman’s gas fields

British Petroleum (BP) will be investing $24 billion to develop gas fields in north-central Oman, according to the Ministry of Oil and Gas.

The amount is for the first phase of a development program for 61 tight gas fields, and will be spread out over a 25 year concession period. Eventually, the goal is to produce one billion standard cubic feet of natural gas per day, or 6.7 trillion cubic feet.

Sheikh Ali bin Thabit Al Battashi, an advisor at the Ministry of Oil and Gas, said that the first gas delivery should be by 2017. He added that initially the company will start with a lower production, which will eventually reach 1 billion cubic feet by 2019.

Saudi Arabia approves road contracts worth over $790m

Saudi government announced on Sunday it has approved road construction contracts worth more than 3 billion riyals ($790m).

Arab News reported that Jabara Al-Seraisry, Saudi Arabia’s Transport Minister, signed 41 road contracts which cover developments valued at $56.8m (SAR 213m) in the Makkah province, including the first phase of the second ring road in Jeddah as well as Jabal Sharqi and Jabal Thudair roads in Muzdalifah, have been approved in the current national budget.

Referring to the new road contracts in Madinah, the minister said they include construction of Madinah-Al-Ula Expressway at a cost of $37.3m (SAR 140m), with new road projects in the province costing a total $71.5m (SAR 268m).

Sanctions failed to affect oil exports – Iran

Iran’s oil exports are at their normal levels and are unaffected by Western embargoes, an Iranian oil official was quoted as saying on Sunday.

“We don’t see anything abnormal, almost everything is progressing routinely,” Mohammad Ali Khatibi Tabatabaei, director for international affairs at the National Iranian Oil Company (NIOC), told the Iranian Students’ News Agency (ISNA). He did not give any figures on Iran’s current oil export levels.

Iran’s top oil customers have slashed Iranian purchases under pressure from European Union and US sanctions that aim to squeeze Tehran’s oil income and curb its nuclear programme.

Kuwait Global shareholders give nod to final debt restructuring plan

Kuwait’s Global Investment House shareholders on Sunday approved a final plan to create new special purpose vehicles that will carry the company’s debt as part of the $1.7 billion debt restructuring plan.

Global Managing Director Maha al-Ghunaim told a news conference that they will create at least two special purpose vehicles (SPVs), one to hold company assets along with a debt of $1.3 billion and one which will take part in a capital increase for the parent company, which will carry a debt equivalent of $430 million. GIC is undergoing its second debt restructuring in three years.

“One special purpose vehicle is going to hold the assets from our balance sheet which will be moved to that company,” al-Ghunaim said. “The other SPVs, one SPV or more that are going to be created, will participate in the capital increase of the company and it is going have a debt equivalent to 430 million dollars,” she added.

Abu Dhabi’s Etihad Airways: Virgin Australia Stake Has Now Reached 10%

Etihad Airways said on Sunday its stake in Virgin Australia Holdings (VAH.AU) has now reached 10% but the Abu Dhabi-owned airline ruled out becoming a majority shareholder or taking control of the Australian carrier.

Etihad received approval from Australia’s Foreign Investment Review Board in July to take its Virgin Australia holding to a maximum 10%, from 5%.

Etihad has recently taken a number of minority equity stakes in airlines as it forges a network of international partners to funnel traffic in and out of its hub in Abu Dhabi.

Jeddah to spend $2.39bn on water and sanitation projects until 2015

Saudi Arabia’s Jeddah governorate has allocated USD 2.39 billion for drinking water and sanitation projects over the next three years, a senior official told Zawya.

While some of these projects have been started, others will come up for bidding soon, the official said on condition of anonymity. Of the total cost, approximately $266.72 million will be spent on sewerage networks, $130 million on water network reform to minimise leakage, and the rest on creating strategic water storage sites and delivery mechanisms.

Saudi health ministry to build 6 hospitals in Jizan for $331m

Saudi Arabia will spend $331 million to build six health centers in Jizan province in the south-west of the kingdom, a senior official in Jizan’s General Directorate of Health Affairs told Zawya.

The Saudi health ministry has allocated $93.32 million for a specialty hospital with 500 beds; $125 million for two general hospitals with a total capacity of 500 beds; and USD 16 million for a mental hospital with 200 beds, the official said on condition of anonymity.

The other projects under this initiative include a primary health center at a cost of $4 million and a maternity hospital for $79 million; and SAR 297 million, the official said.

Jordan hikes petrol prices for second time this year

Jordan has raised the price of lower grade gasoline, used by the poor, by 10 percent in the second hike this year as part of IMF-guided austerity measures to cut costly subsidies, officials said on Saturday.

The move, which was announced by the cabinet and took effect after midnight, leaves unchanged the price of premium petrol since a major price hike last May.

The government then raised premium gasoline by 20% in the first such move since street protests early last year inspired by the wave of Arab unrest that pushed the authorities to expand social spending and freeze fuel price hikes, including gasoline.

Egypt’s Mobinil Signs $2.9 Bln Loan to Repay Debt, Expand Network

The Egyptian Co. for Mobile Services, or Mobinil, said Sunday that it has signed a 2.9 billion Egyptian pounds ($475 million) consolidated loan to repay some of its debts and to expand its network.

The consortium consists of National Bank of Egypt, Commercial International Bank Egypt, or CIB, HSBC, and National Societe Generale Bank, Mobinil said in a statement on the Egyptian bourse.

Mobinil reported a first half net loss of EGP47 million, almost half of the EGP85.8 million loss it chalked up a year ago.

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