Let's hope Singapore MRT fares won't go up if SMRT suffers losses in Dubai. Its Dubai partner has a cash problem and construction in the area where the Singapore transport operator has a monorail is falling behind, according to reports from Abu Dhabi.
SMRT has a six-year contract worth about 120 million Singapore dollars (about $87 million) with the Dubai World property developer Nakheel to operate and maintain a monorail running through the Palm Jumeirah development in Dubai, reported the Straits Times.
SMRT chief operating officer Yeo Meng Hin told the Straits Times: "We are long-term partners with Nakheel, and will continue to work closely with its management during this challenging time."
The SGD120 million, six-year Palm Jumeirah monorail contract is really chump change for SMRT.
It almost made as much in just six months here in Singapore. SMRT reported in its latest financial results:
Net profit after tax for the first half of the year rose to SGD101.0 million, 21.9 percent higher on account of higher operating profits.
Things are not hunky-dory in Dubai, though.
Nakheel said today it had asked for three of its listed Islamic bonds worth $5.25 billion to be suspended from trade until it provides details about its restructuring plans, reports the Khaleej Times in Dubai. It adds:
The three instruments listed on the exchange are its $3.5 billion sukuk due on Dec. 14, its 3.6 billion dirham sukuk ($980.1 million) due on May 13 and a $750 million sukuk due on Jan. 16, 2011.
Nakheel wants more time to redeem those bonds.
The Government of Dubai last Wednesday said it would ask all creditors of Dubai World and Nakheel to “standstill” and extend their loan agreements by six months.
The Central Bank of the United Arab Emirates has pledged support for lenders in the UAE and made emergency funds available to avert any liquidity shortage that might result from the proposed restructuring of Dubai World, reports The National newspaper published from Abu Dhabi.
But the report did not specifically mention Nakheel, the property arm of Dubai World.
Palm Jumeirah problems
Nakheel's Palm Jumeirah development — a palm tree-shaped, man-made island — is facing problems.
The National reports under the headline, Delays to hotels may be a blessing:
The glut of extra rooms would have only exacerbated the decline in revenues caused by the lower demand that accompanied the global tourism downturn…
Several projects on the Palm Jumeirah have… been pushed back. No hotels have opened on the man-made island since the launch of the 1,539-room Atlantis last year.
So few tourists are visiting Atlantis that it has been forced to slash rates, reports The Times.
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