An incoming tide for Blue City
To bring you up to date with the story of Blue City, there was a flurry of publicity in June, after Cayman Island registered Essdar Investments Ltd announced that it had bought 99% of the Class A Floating Rate Senior Secured Unrestricted Notes ("Notes") issued by BCC1, at a face value of US$655.
Essar Investments Ltd is in turn owned by Essdar Capital in partnership with Essdar Capital Managers Ltd. The group is based in Dubai where it is regulated by the Dubai Financial Services Authority, but ultimate ownership rests in the hands of members of the ruling Abu Dhabi family.
So what will happen to the dream of Al Madina Al Zarqa? Early intimations suggest that revised ownership might focus on developing tourism, since many of the 'planned hotels, commercial and associated facilities' are on track, and 'better fit demand.' Mr Sanghvi, senior managing director of structuring and investment at Essdar at the time of the deal, is reported to have remarked that the occupancy rates of hotels in Muscat were very high and tourism prospects healthy.
However, a major part of the security on the bond lies in the 25 sq kilometres of land that was gifted by royal order to the original Blue City project back in 2005-6.
Thus Essdar has also had to await the judgement of Oman's Supreme Court on the ownership dispute between AAJ Holdings of Bahrain and Cyclone LLC, the Omani partner, 50% owned by Sayyid Haitham bin Tariq al Said, the minister of culture and heritage and a member of Oman's royal family. See the many earlier postings on this blog.
Earlier this month, Bin Muhanna Holding Group of Qatar and AAJ Holdings Co. of Bahrain said that they had lost the ruling over ownership of the Blue City.
How does Bin Muhanna Holding Group come into the picture? The chairman of the company is Dr Najeeb bin Mohammed Al Noaimi, formerly minister of justice in Qatar, and a defence lawyer for Saddam Hussein. His company's partnership with AAJ Holdings, owned by Ahmed Abu Baker Janahi, was announced in April this year. Indeed, it's been suggested that the interest of Qatari investors added incentive to Essdar's completion of the bond purchase.
Mr Al-Noaimi for his part did not rule out "lawsuits at the London Court of International Arbitration and the ICC International Court of Arbitration in New York," to contest the Omani court's decision, echoing some of Mr Janahi's earlier pronouncements.
What will happen to Cyclone's interest?
It's one thing to own the project, quite another to develop it to make it work. Apparently there had been more interest from US and European investors than from other Gulf partners while BCC1 was running the show. Yet 'as of November last year, only $75m worth of sales had been made, compared with a forecast of $860m.' Legal niceties remain to be resolved and new investment partners found. That's not so easy in a depressed market.
Essdar itself has not committed to injecting further cash into the development.
AAJ Holdings brought the Qatari company in because it needed further financing, not only for Blue City but also for its stalled $750 million Marina West development in Bahrain. Work stopped abruptly on Marina West in March, leaving dozens of residents who had bought off-plan, wondering when they might be able to move into their homes.
Mr Janahi used a press release to announce that his company was determined to bring the project to completion, was working with the developers, Bahrain's major construction company Al Hamad, and had introduced new partners (Bin Muhanna) whose input would give fresh impetus.
Everybody seems reluctant to comment.
Essar Investments Ltd is in turn owned by Essdar Capital in partnership with Essdar Capital Managers Ltd. The group is based in Dubai where it is regulated by the Dubai Financial Services Authority, but ultimate ownership rests in the hands of members of the ruling Abu Dhabi family.
So what will happen to the dream of Al Madina Al Zarqa? Early intimations suggest that revised ownership might focus on developing tourism, since many of the 'planned hotels, commercial and associated facilities' are on track, and 'better fit demand.' Mr Sanghvi, senior managing director of structuring and investment at Essdar at the time of the deal, is reported to have remarked that the occupancy rates of hotels in Muscat were very high and tourism prospects healthy.
However, a major part of the security on the bond lies in the 25 sq kilometres of land that was gifted by royal order to the original Blue City project back in 2005-6.
Thus Essdar has also had to await the judgement of Oman's Supreme Court on the ownership dispute between AAJ Holdings of Bahrain and Cyclone LLC, the Omani partner, 50% owned by Sayyid Haitham bin Tariq al Said, the minister of culture and heritage and a member of Oman's royal family. See the many earlier postings on this blog.
Earlier this month, Bin Muhanna Holding Group of Qatar and AAJ Holdings Co. of Bahrain said that they had lost the ruling over ownership of the Blue City.
How does Bin Muhanna Holding Group come into the picture? The chairman of the company is Dr Najeeb bin Mohammed Al Noaimi, formerly minister of justice in Qatar, and a defence lawyer for Saddam Hussein. His company's partnership with AAJ Holdings, owned by Ahmed Abu Baker Janahi, was announced in April this year. Indeed, it's been suggested that the interest of Qatari investors added incentive to Essdar's completion of the bond purchase.
Mr Al-Noaimi for his part did not rule out "lawsuits at the London Court of International Arbitration and the ICC International Court of Arbitration in New York," to contest the Omani court's decision, echoing some of Mr Janahi's earlier pronouncements.
What will happen to Cyclone's interest?
It's one thing to own the project, quite another to develop it to make it work. Apparently there had been more interest from US and European investors than from other Gulf partners while BCC1 was running the show. Yet 'as of November last year, only $75m worth of sales had been made, compared with a forecast of $860m.' Legal niceties remain to be resolved and new investment partners found. That's not so easy in a depressed market.
Essdar itself has not committed to injecting further cash into the development.
AAJ Holdings brought the Qatari company in because it needed further financing, not only for Blue City but also for its stalled $750 million Marina West development in Bahrain. Work stopped abruptly on Marina West in March, leaving dozens of residents who had bought off-plan, wondering when they might be able to move into their homes.
Mr Janahi used a press release to announce that his company was determined to bring the project to completion, was working with the developers, Bahrain's major construction company Al Hamad, and had introduced new partners (Bin Muhanna) whose input would give fresh impetus.
Everybody seems reluctant to comment.
The bridge to Masirah Island
Hard on the heels of Cyclone Phet came the announcement that HM Sultan Qaboos bin Said al-Said of Oman had approved the building of a 40km bridge between the mainland and the island of Masirah.
My first thought was that the airlift operation to evacuate the island in the path of the cyclone had not worked fast enough. I know from having travelled there by boat, that it's not possible to rely on the ferry services because they need to run at high tide. Treacherous currents operate in the straits, and maybe some inhabitants were trapped on the island during the cyclone. Subsequent reports indicated a general dissatisfaction that the island doesn't get enough tourists, that prices are too high because transport costs are high, ferry services are erratic and that there's no work on the island itself. All of which I have to concede are true.
The cost of the bridge is projected to be US$1.5bn. That's US$125,000 per head of population of 12,000. Has the bridge been in planning for some time, or have the feasibility, engineering and technical studies yet to be done?
Starry-eyed dreams of prosperity need to be counterbalanced by recognition that a bridge alone will not achieve results. More tourists mean that there would need to be more facilities for them. Coaches of tourists still require to be fed and watered in places which have ambience. They are not likely just to be content with visiting beaches and then returning to the mainland.
There will have to be more hotels. What kind of jobs are anticipated to be created? Will the young people of the island be willing to stay there and work in tourist hospitality? But of course, I forget, these will be high net-worth tourists, as per Oman's tourism policy. In coaches?
Beaches on the eastern side of Masirah facing the Indian Ocean are breeding grounds for rare loggerhead and greenback turtles. Any tourism drive to reveal the turtles should at least strive to be eco-friendly. I have seen tourists arrive late in the evening at Ras al Hadd trouping down to the beach to watch the nesting turtles, shining flashlights and using flash photography, before trekking back to wherever they had come from. None of this is conducive to preserving turtle nesting sanctuaries.
Think about it. It takes quite a time for a female turtle to burrow herself into a fairly deep hole in the sand, and then to lay her many eggs and cover them up. By the time she makes it back to the sea, she must be exhausted. If you were a turtle, would you want to be overlooked while laying eggs, and have flashlights shone in your eyes and be banged on the top of your shell, at a time when you are most vulnerable?
How long would the nesting sites last in the face of inconsiderate tourists? And once the nesting places go, what else is there on the island to attract tourists unless you're a bird watcher or geo-tourist? There's always water sports I suppose, providing the seas don't get too rough.
In short, is there a plan for development of Masirah as a whole, other than for building a bridge to the island? No wonder the official from the Ministry of Finance declined to be identified. As one of the longest sea bridges in the world, rivalling the Qatar-Bahrain causeway, it might be a tourist attraction in its own right.
I remember camping on the beach at Masirah with my husband and son just two nights before the millennium. We were quite alone save for a rare vehicle on the coast road. It wasn't the time of year for nesting turtles to visit anyway. I think one of the treasures of my life must be the solitude and space that we experienced there. I wouldn't trade that for the world to share with a busload of tourists.
An afterthought to my previous post. One report stated that houses in the village of Ghaf were flooded when Cyclone Phet passed through, although not as badly as during Cyclone Gonu. Ghaf lies downstream of the new dam on Wadi Dayqah. Did the dam overflow during the cyclone? How are the water levels in the dam holding up, and how much alluvium was brought down into the dam during that period of discharge? Just a thought.
My first thought was that the airlift operation to evacuate the island in the path of the cyclone had not worked fast enough. I know from having travelled there by boat, that it's not possible to rely on the ferry services because they need to run at high tide. Treacherous currents operate in the straits, and maybe some inhabitants were trapped on the island during the cyclone. Subsequent reports indicated a general dissatisfaction that the island doesn't get enough tourists, that prices are too high because transport costs are high, ferry services are erratic and that there's no work on the island itself. All of which I have to concede are true.
The cost of the bridge is projected to be US$1.5bn. That's US$125,000 per head of population of 12,000. Has the bridge been in planning for some time, or have the feasibility, engineering and technical studies yet to be done?
Starry-eyed dreams of prosperity need to be counterbalanced by recognition that a bridge alone will not achieve results. More tourists mean that there would need to be more facilities for them. Coaches of tourists still require to be fed and watered in places which have ambience. They are not likely just to be content with visiting beaches and then returning to the mainland.
There will have to be more hotels. What kind of jobs are anticipated to be created? Will the young people of the island be willing to stay there and work in tourist hospitality? But of course, I forget, these will be high net-worth tourists, as per Oman's tourism policy. In coaches?
Beaches on the eastern side of Masirah facing the Indian Ocean are breeding grounds for rare loggerhead and greenback turtles. Any tourism drive to reveal the turtles should at least strive to be eco-friendly. I have seen tourists arrive late in the evening at Ras al Hadd trouping down to the beach to watch the nesting turtles, shining flashlights and using flash photography, before trekking back to wherever they had come from. None of this is conducive to preserving turtle nesting sanctuaries.
Think about it. It takes quite a time for a female turtle to burrow herself into a fairly deep hole in the sand, and then to lay her many eggs and cover them up. By the time she makes it back to the sea, she must be exhausted. If you were a turtle, would you want to be overlooked while laying eggs, and have flashlights shone in your eyes and be banged on the top of your shell, at a time when you are most vulnerable?
How long would the nesting sites last in the face of inconsiderate tourists? And once the nesting places go, what else is there on the island to attract tourists unless you're a bird watcher or geo-tourist? There's always water sports I suppose, providing the seas don't get too rough.
In short, is there a plan for development of Masirah as a whole, other than for building a bridge to the island? No wonder the official from the Ministry of Finance declined to be identified. As one of the longest sea bridges in the world, rivalling the Qatar-Bahrain causeway, it might be a tourist attraction in its own right.
I remember camping on the beach at Masirah with my husband and son just two nights before the millennium. We were quite alone save for a rare vehicle on the coast road. It wasn't the time of year for nesting turtles to visit anyway. I think one of the treasures of my life must be the solitude and space that we experienced there. I wouldn't trade that for the world to share with a busload of tourists.
An afterthought to my previous post. One report stated that houses in the village of Ghaf were flooded when Cyclone Phet passed through, although not as badly as during Cyclone Gonu. Ghaf lies downstream of the new dam on Wadi Dayqah. Did the dam overflow during the cyclone? How are the water levels in the dam holding up, and how much alluvium was brought down into the dam during that period of discharge? Just a thought.