Opportunities for private investors in public transport

An initiative to open up Dubai’s public transport sector to private investment is in a process of development, as the emirate is stepping up efforts to promote the greater use of existing options and rolling out plans for new public transport projects.

The proposal to open up the public transport sector to private investment has been raised a number of times over the past decade. However, the idea gained momentum in January 2011, when the RTA announced it had submitted draft legislation to the government aimed at encouraging private participation in the transport sector.

In 2011, the Dubai’s government outlined the foundations for a partial privatisation of some operations in the emirates’s growing road, rail and waterborne networks.

According a resolution from October 19 2011, issued by the Crown Prince Sheikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, the chairman of Dubai Executive Council, the Public Transportation Agency (PTA) of the Roads and Transport Authority (RTA) will beenabled to issue licences to private companies interested in operating public buses and bus stations. The agency also became 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 vehicles, and for licensing drivers.

Another resolution issued at the same time 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. For example in Hong Kong, few ferry providers compete in servicing the water roots, with the most known names Turbojet and Fast Ferry.

Potential private sector  investors and operators will need to proceed with caution to ensure that by taking part in Dubai’s public transport system they can reap the dividends and research carefully at what routes the RTA will make available for investments.

The change of government policy 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.

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.

In October 2011, HE Mattar Al Tayer, the chairman of the RTA, said the agency aims to achieve 30% of all trips conducted in the emirate made via public transport by 2020 – a sizable increase from the 6% registered in 2005 and the 10% as of the middle of 2011. The 2020 target date is earlier than originally planned, as the RTA had previously intended to achieve the 30% movement figure in 2030.

Setting a new, earlier date is achievable, according to the latest data released by RTA. There has been a steady increase in the number of people using state-provided transport modes, with the metro in particular being well supported. A total of 346.5 million passengers used public transport in Dubai last year, Mattar Al Tayer, chairman and executive director of the Roads and Transport Authority (RTA) has announced during the third week of January, 2012.