Fears that Abu Dhabi might cancel or delay projects as it redirects funds to help bail out neighbouring Dubai are leaving consultants facing more uncertainty in the Gulf.
Several major projects are expected to be awarded in the emirate in the coming weeks but consultants are expecting delays.
“It is the cash flow issue. The liquidity in the system is a lot worse than people think, therefore Abu Dhabi may have to slow down its infrastructure spend to support Dubai,” said the head of one major UK consultant working inthe region.
“Abu Dhabi may have to help more than it was expecting to and that could delay some of the very big infrastructure projects. The metro, the light rapid transit, the PPP highway may all slow down. For us it is quite a concern.”
In December 2009 Abu Dhabi stepped in to rescue Dubai World with a $10bn (£6.4bn) loan to the Dubai government, but not before Dubai World had asked for a standstill on £16.7bn of debt.
Bankers in the region say that refinancings from other developers are also likely in 2010 and 2011, with the emirate’s total liability estimated at £64bn.
There are signs from Abu Dhabi that the consultant’s fears could be well founded. Last week NCE sister magazine MEED revealed that Abu Dhabi had delayed three hospital projects citing a need to review the procurement strategy.
Bidders for the region’s first PPP highway running from Abu Dhabi to Saudi Arabia have said that the review of their tenders is taking longer than expected.
And firms also expect the 130km Abu Dhabi metro to be delayed.
Many firms had refocused their businesses to concentrate on major projects in Abu Dhabi.
The news comes a few weeks after neighbouring Kuwait launched a £67bn, four year, state development plan aimed at addressing years of under-investment in infrastructure.
In the first year, the government is to invest £10.7bn in establishing five companies owned jointly by the state and private investors.
These companies will then drive through the much needed social infrastructure projects such as housing, road projects and a new metro.