Salik announces financial valuation of two new gates at Dhs2.734 billion

Gulf Today, Staff Reporter

Salik Company PJSC (“Salik” or the “Company”), Dubai’s exclusive toll gate operator, announced the combined valuation of the two new toll gates at Business Bay and Al Safa South. These two new gates have been valued at a total of Dhs2,734 million (two billion and 734 million dirhams), with the Business Bay Gate valued at Dhs2,265 million (two billion and 265 million dirhams) and the Al Safa South Gate valued at Dhs469 million.

The new gates are expected to be operational by the end of November 2024. The two new gates at Business Bay Crossing on Al Khail Road and Al Safa South on Sheikh Zayed Road, positioned between Al Meydan Street and Umm Al Sheif Street, will expand Salik’s toll gate network in Dubai from eight to ten.

These additions aim to optimise traffic flow by redirecting vehicles to routes with higher capacity, thereby alleviating congestion. RTA has conducted detailed traffic impact studies to ensure that the placement of each gate aligns with its strategic goals for traffic management optimisation.

As per the Concession Agreement with RTA, Salik has the exclusive rights to construct, operate, and maintain the toll gates until end of June 2071.

Mattar Al Tayer, Chairman of the Board of Directors of Salik, commented: “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 and the combined valuation of the two gates was determined to be Dhs2,734 million (two billion and 734 million dirhams); with the Business Bay Gate valued at Dhs2,265 million (two billion and 265 million dirhams) and the Al Safa South Gate valued at Dhs469 million. It is worth noting that the differences between the valuation by Salik and the valuation by the Roads and Transport Authority, did not exceed the 5%. Accordingly, and as per the terms of the concession agreement, the average of the two valuations was adopted as the final value for the two new gates, in line with the concession agreement. This reflects our commitment to transparency and accuracy in financial and operational assessments, as well as the alignment of future visions between Salik and the Roads and Transport Authority.

Regarding the payment schedule for the gates' valuation, an agreement has been reached with the Roads and Transport Authority on a repayment plan for the total valuation amount for the two new gates over a period of six years starting from the end of November 2024. The annual instalment will be Dhs455.7 million, to be paid in two equal instalments of Dhs227.9 million each, every six months, which will be provided from the company's own financial resources.

Expected financial Impact

Salik expects to see an increase in annual revenue-generating trips with the operation of the Business Bay and Al Safa South gates supported by the positive macro-economic factors in Dubai. Upon their operational launch, the new gates are expected to generate a revenue impact from the starting date till the end of the year 2024.

In light of the new gates, revenue-generating trips are now expected to increase in the range of 7-8% for 2024 versus previous guidance of 4-6%, with a robust EBITDA margin of 67-68%, versus previous guidance of 65-66%.