UAE Law and Practice Contributed by: Arsalan Tariq, Nil Acar and Ahmed Kamran, BSA LAW
Overall, the UAE offers a flexible and increasingly sophisticated legal environment for structuring com- plex, cross-border project finance transactions. 8.6 Common Financing Sources and Typical Structures Project finance transactions in the UAE are typi- cally structured using a combination of syndicated bank loans, export credit agency (ECA) support, and increasingly, alternative capital sources such as pri- vate equity, green bonds and commodity-backed facilities. Senior debt is most commonly provided by UAE-based and international banks through syndi- cated or club deals, with Islamic financing (eg, mura- baha, ijara, sukuk) often incorporated, especially in energy and infrastructure projects. ECA support plays a significant role in large-scale transactions involving imported equipment or international sponsors, with institutions like Euler Hermes, UKEF, SACE and KEX- IM offering direct loans, buyer credit guarantees and risk insurance – often blended with uncovered com- mercial bank tranches. The UAE’s project bond market is developing, particu- larly in the context of sovereign and quasi-sovereign issuers, with green and sustainability-linked bonds gaining traction. However, regulatory constraints, limited rating history and underdeveloped platforms remain challenges for broader market access by private SPVs. Alternative financing sources are also expanding. Private equity and infrastructure funds – particularly from sovereign investors like Mubadala and ADQ, or global platforms like Brookfield and Actis – frequently invest alongside senior lenders. In sec- tors like oil and gas and mining, commodity traders (eg, Glencore, Vitol) offer structured trade and offtake- backed financing, while development finance institu- tions (eg, IFC, AIIB, IsDB) provide long-tenor debt, political risk cover and ESG structuring. Most UAE project financings are structured as lim- ited or non-recourse transactions, with lenders relying on project cash flows and robust security packages over assets, accounts, shares and contracts. Deal structures often include multiple tranches, such as senior debt, subordinated loans, and equity or qua- si-equity. Security is held by a local security agent (often a UAE bank), with intercreditor arrangements
regulating rights and enforcement. The UAE’s mature legal and banking ecosystem supports increasingly sophisticated financing models, with growth in green infrastructure, digital projects, and energy transition initiatives helping to diversify the market beyond tra-
ditional bank-led models. 8.7 Natural Resources
Natural resources in the UAE are considered sov- ereign assets, with ownership and control vested in each individual Emirate rather than the federal gov- ernment. Resource exploration and development are typically conducted through concession agreements, production-sharing contracts (PSCs), or joint ventures between state-owned enterprises, such as ADNOC, SNOC or RAK Gas, and international investors. Each Emirate regulates its own resources indepen- dently: for example, Abu Dhabi’s regime is governed by the Supreme Petroleum Council and ADNOC poli- cies, while Sharjah and Dubai operate through SNOC and the Dubai Supreme Council of Energy, respec- tively. There is no overarching federal natural resources law. Instead, licensing requirements include Emirate- issued exploration permits, environmental approvals under Federal Law No 24 of 1999, and land access arrangements with local authorities. While export of hydrocarbons and minerals is generally permitted, it is contractually regulated and subject to Emirate- level control, especially in relation to long-term offtake agreements and destination restrictions aligned with international sanctions and dual-use export control regimes. The UAE encourages local value creation through initiatives like ADNOC’s In-Country Value (ICV) pro- gramme, which rewards local manufacturing, employ- ment of UAE nationals and engagement with UAE- based suppliers. Although beneficiation (domestic processing) is not legally required, state-linked devel- opers often prioritise projects that support industrial diversification and downstream integration – such as refining, smelting and petrochemical development. Foreign investment in upstream sectors is typically restricted or subject to state partnerships, while
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