Salik's New Dubai Toll Gates Valued At AED 2.7 Billion To Improve Traffic Flow

Salik Company, Dubai’s exclusive toll gate operator, has announced the valuation of two new toll gates at Business Bay and Al Safa South. The combined valuation for these gates is AED2,734 million, with the Business Bay Gate valued at AED2,265 million and the Al Safa South Gate valued at AED469 million.

The new toll gates are expected to be operational by the end of November 2024. Positioned on Al Khail Road at Business Bay Crossing and Sheikh Zayed Road between Al Meydan Street and Umm Al Sheif Street, these additions will expand Salik’s network from eight to ten gates. This expansion aims to optimise traffic flow by redirecting vehicles to routes with higher capacity, thereby alleviating congestion.

Mattar Al Tayer, Chairman of the Board of Directors of Salik, commented on the launch: "The launch of the two new gates highlights the commitment of both the Roads and Transportation Authority and Salik Company to advancing sustainable mobility solutions and improving Dubai’s transport infrastructure. These strategic investments underscore our dedication to sustainable growth and providing more seamless mobility across Dubai by enhancing travel efficiency and reducing traffic congestion. The new gates will play a crucial role in optimising travel time and reducing congestion on some of Dubai’s busiest routes."

Ibrahim Sultan Al Haddad, CEO of Salik, added: "We are extremely pleased with the progress we are making on our long-term objectives, in line with our ambition to become a global leader in mobility solutions. We are thriving in the tolling business and remain focused on strengthening our core business offering as we expand our footprint within Dubai."

Salik’s Board approved the valuation of the two new gates. The combined valuation was determined to be AED2,734 million; with Business Bay Gate valued at AED2,265 million and Al Safa South Gate valued at AED469 million. The differences between Salik's valuation and that by the Roads and Transport Authority did not exceed 5 percent. Accordingly, as per the concession agreement terms, an average of both valuations was adopted as the final value for these gates.

An agreement has been reached with the Roads and Transport Authority regarding a repayment plan for this total valuation amount over six years starting from November 2024. The annual instalment will be AED455.7 million, paid in two equal instalments of AED227.9 million each every six months from Salik's financial resources.

Revenue Projections

Salik expects an increase in annual revenue-generating trips with these new gates' operation supported by positive macro-economic factors in Dubai. Upon their operational launch expected by November 2024's end, these gates are anticipated to generate revenue impact from their starting date till year-end 2024.

In light of these new gates, revenue-generating trips are now expected to increase by 7-8 percent for 2024 versus previous guidance of 4-6 percent. Additionally, a robust EBITDA margin is projected at 67-68 percent compared to previous guidance of 65-66 percent.

The Roads and Transport Authority (RTA) has conducted detailed traffic impact studies ensuring each gate's placement aligns with its strategic goals for traffic management optimisation. Under a Concession Agreement with RTA, Salik holds exclusive rights to construct, operate, and maintain these toll gates until June 2071.

This reflects Salik's commitment to transparency and accuracy in financial assessments while aligning future visions between Salik and RTA.

With inputs from WAM