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In a significant move set to reshape Dubai’s urban transportation landscape, Salik, the city’s toll gate operator, has announced a Dh2.73 billion investment for two new toll-gates. This development marks a pivotal moment in Dubai’s ongoing efforts to optimise traffic flow and enhance mobility across the emirate.

Key Highlights:

• Salik to pay Dh2.73 billion to RTA over six years for two new toll-gates
• New gates located in Business Bay and Al Safa South
• Set to open in November 2024, bringing Salik’s total to 10 gates in Dubai
• Expected to boost Salik’s revenue and profit prospects from 2025 onwards

Strategic Locations and Valuations

The two new toll-gates have been strategically positioned to address high-density traffic areas:

1. Business Bay Gate: Valued at Dh2.26 billion
2. Al Safa South Gate: Valued at Dh469 million

These locations were chosen after careful consideration of traffic patterns and urban development trends. The Al Safa South gate will be linked with the existing Al Safa gate, now dubbed ‘Al Safa North’. In a user-friendly move, commuters will only be charged once if they pass through both gates within one hour in the same direction.

Impact on Urban Mobility

Mattar Al Tayer, Chairman of Salik, emphasized the importance of these new gates: “The new gates will play a crucial role in optimizing travel time and reducing congestion on some of Dubai’s busiest routes.” This statement underscores the strategic thinking behind the expansion, aiming to alleviate traffic bottlenecks and improve overall urban mobility.

Financial Implications and Growth Projections

The investment is structured as a long-term commitment, with Salik agreeing to repay the Dh2.73 billion to the Roads and Transport Authority (RTA) over a six-year period. This translates to semi-annual payments of Dh227.9 million, commencing in November 2024.

Ibrahim Sultan Al Haddad, CEO of Salik, expressed optimism about the company’s future: “We are thriving in the tolling business and remain focused on strengthening our core business offering as we expand our footprint within Dubai.” This confidence is reflected in Salik’s updated financial projections:

• Revenue-generating trips expected to increase by 7-8% in 2024 (up from previous 4-6% estimate)
• EBITDA margin projected at 67-68% (increased from 65-66%)

Market Response and Stock Performance

The anticipation surrounding this announcement has already had a positive impact on Salik’s stock performance. On August 27, 2024, the stock saw a 1.79% increase on the Dubai Financial Market (DFM). Year-to-date, Salik shares have risen by nearly 10%, positioning it as one of the top performers in the market.

Long-Term Vision and Partnership with RTA

The expansion aligns with Salik’s long-term vision and its partnership with the RTA. Under the concession agreement, Salik holds exclusive rights to construct, operate, and maintain the toll-gates until the end of June 2071. This long-term commitment underscores the company’s integral role in Dubai’s transportation infrastructure.

The RTA conducted thorough traffic impact studies to validate the placement of the new gates, ensuring alignment with its strategic goals for traffic management optimization. The valuation process for the new gates was transparent, with the final value being an average of assessments by both Salik and the RTA, demonstrating a collaborative approach to urban development.

Looking Ahead: Implications for Dubai’s Future

This significant investment in Dubai’s toll-gate infrastructure signals a proactive approach to managing the city’s growth and increasing traffic demands. As Dubai continues to expand and attract both residents and businesses, efficient traffic management becomes increasingly critical.

The new toll-gates are expected to:

1. Reduce congestion on key routes
2. Improve overall travel times across the city
3. Encourage the use of alternative routes and public transportation
4. Support Dubai’s smart city initiatives by generating valuable traffic data

Conclusion

Salik’s Dh2.73 billion investment in two new toll-gates represents more than just an expansion of infrastructure. It’s a strategic move that aligns with Dubai’s vision for a smarter, more efficient urban environment. As these gates become operational in November 2024, residents and visitors alike can anticipate improved traffic flow and reduced congestion on some of the city’s busiest thoroughfares.

This development not only strengthens Salik’s position in the market but also reinforces Dubai’s commitment to innovative solutions for urban mobility challenges. As the city continues to grow and evolve, such forward-thinking investments in infrastructure will play a crucial role in maintaining Dubai’s status as a global leader in urban development and smart city technologies.