Dubai: Private opportunities in public transport

Dubai has cleared the way for private investors to enter the emirate’s public transport sector, having laid the foundations for a partial privatisation of some operations in the state’s growing rail, road and waterborne networks.

On October 19, Crown Prince Sheikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, the chairman of Dubai Executive Council, issued a resolution clearing the way for the private sector to move into the public transport field. Under the resolution, the Public Transportation Agency (PTA) of the Roads and Transport Authority (RTA) will be empowered to issue licences to private companies interested in operating public buses and bus stations. The agency will also be authorised to lease public transportation utilities to private firms, on the condition that the companies adhere to the rules and regulations laid down by the PTA.

Though the RTA is looking to hand over at least some of its public transport concerns, the resolution made it clear that responsibility for the planning and introduction of new routes within the city, and for bus connections between Dubai and other emirates, would remain with the PTA. The agency would also be responsible for testing, maintaining and repairing RTA buses, and for licensing drivers.

Another resolution issued the same day set out the conditions for the RTA to lease operation rights for abras, or water taxis, with the authority retaining control of routes and maintaining a regulatory role.

The proposal to open up the public transport sector to private investment is not a new one, the concept having been raised a number of times over the past 10 years or so. Yet the idea was given added impetus last January when the RTA announced it had submitted draft legislation to the government aimed at promoting private involvement in the transport sector.

However, interest in taking over some of the RTA’s services has yet to be publicly announced, nor have the exact terms of any operational agreements been issued. What is also unclear is how keen the private sector is to buy into Dubai’s public transport network. To date, it is only the bus services and the abras that appear to be on the radar for limited privatisation, with no mention of the jewel in the crown, the emirate’s metro.

Potential private sector operators will need to proceed with diligence to ensure that by taking part in Dubai’s public transport system they can reap the dividends, so will likely look carefully at what routes the RTA may bring to the table. Finer details, such as shared ticketing arrangements, between those elements of the network that go private and the part that remains in state hands will also have to be hammered out.

The proposal to open up the public transport sector to private investment comes as the state is stepping up efforts to promote greater use of existing options and rolling out plans for new public transport projects.

In mid-October, Mattar Al Tayer, the chairman of the RTA’s board and its executive director, said the RTA hoped to see 30% of all trips conducted in the emirate made via public transport by 2020 – a substantial increase from the 6% posted in 2005 or even the 10% as of the middle of this year.

Al Tayer said 13% of all passengers would be carried by the metro, with the remainder split between other modes. The 2020 target date is sooner than originally planned; the RTA had previously aimed to achieve the 30% movement figure in 2030.

Recent data released by the RTA suggests that setting a new, earlier date is achievable. There has been a steady increase in the number of people using state-provided transport modes, with the metro in particular being well supported. In September, nearly 6m passengers travelled on the metro’s two lines, with 1.27m of these riding the newly opened Green Line, which had only been in operation for the final 20 days of the month.

The public will be even more spoiled for options in the coming years, with Dubai unveiling the final design for the first stage of an extensive tram system. With a cost of around $1bn, the 10.7 km-line will run from the Dubai Marina via Media City to Knowledge Village, with at least 13 stops on the route.

Following completion in 2014, the tram system is expected to be able to move some 10,000 passengers an hour. A second line, running for 4 km, is planned for later development, and will link the Burj Al Arab Hotel and the Mall of the Emirates.

While Dubai’s public transport system is growing apace, so too is the emirate’s love affair with the combustion engine. As of the end of 2010 there were more than 1.1m cars on the roads, and though the RTA’s campaign to encourage the travelling public to make use of public transport is meeting with some success, and the authority’s road building programme has improved traffic flow, problems remain.

Privatisation of some public transport services may help, especially if operators can further entice commuters away from their cars, though much will depend on how attractive the government makes the terms for making some of its network private.

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