Dubai Taxi Corporation Plans Privatisation, What About The Fares?

Dubai Taxi Corporation is reportedly looking to raise Dhs1,101,885,000 ($300million) from a share sale next month.

Dubai’s Roads & Transport Authority (RTA) is working with Bank of America, Citigroup Inc. and Emirates NBD Capital on the initial public offering that will list in Dubai, according to Bloomberg News.

The outlet has seen an investor presentation that explains that the taxi operator plans to pay a fourth-quarter dividend of at least Dhs71 million ($19 million) in April.

After that, Dubai Taxi will pay at least 85 per cent of its annual net profit in two dividend payments from the 2024 fiscal year.

An advert advertising the shares in local media explains that Dubai Taxi Company will be offering 624.75 million shares – with the share price range to be announced on Tuesday November 21.

Privatisation is the transfer of a business, industry or service from public to private ownership and control.

At this stage, it’s not known what the changes will be for taxi users if cabs in Dubai are privatised.

Those who support privatisation argue that privately owned companies run businesses more economically and efficiently (good news for those making the most of taxis in Dubai).

However, it will mean that Dubai taxis become profit-incentivised but we don’t know if this will have a direct impact on fares.

Last year, the Roads and Transports Authority (RTA) converted Salik into a public joint stock company.

At the time increased advertising for Salik in advance of the IPO caused Dubai residents to worry that more gates would be added imminently. But there are still only eight gates in Dubai (the same amount as before the IPO).

It was expected at the time that dynamic pricing could be introduced for Salik, which would mean increased toll prices during peak hours and for certain lanes. Again, there have been no changes to Salik’s prices to-date.