Gulftainer Company Limited, a Sharjah based LLC incorporated in 1976, is a company which primarily operates two container terminals in the Emirate of Sharjah, UAE, (Khorfakkan and Port Khalid) that have handled a total of about 2.6 million twenty-foot equivalent (“TEU”) containers in 2009 (vs. 2.4 million in 2008). Over the past few years, Gulftainer has expanded its business via two main strategic axes:

Logistics: In addition to its historical core business of container terminal operation, Gulftainer has developed logistics (freight forwarding, warehouse management, inland container depot, container repair) and inland transportation business under its subsidiary Momentum Logistics L.L.C.

International expansion: Gulftainer started to export its know-how in 2004 by acting as a consultant to the Kuwait Port Authority to help operate Kuwaiti’s largest container terminal. In 2006, it formed a joint-venture in the Comoros to operate the Port of Moroni and another one in Pakistan focusing on inland logistics and cargo transportation. The company has pursued its international expansion strategy in 2008 by partnering with Demas International (Turkey) in order to expand logistic business in Turkey and surrounding countries.

The Company is owned by two shareholders: Mr Hamid Dhia Jafar and HH Dr. Sheikh Sultan Bin Mohammad Al Qassimi, Ruler of Sharjah.

The total investment program that has been identified in Iraq is expected to be in the range of $60 million (including amounts to be contributed by local partners). IFC’s proposed investment is in the form of a senior loan to Gulftainer group and its offshore subsidiaries, up to an amount of $ 45million, and with a condition that the funds will be exclusively used towards the development of the identified projects in Iraq and other projects eligible for IFC financing.

45.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	45.0
Equity

* These investment figures are indicative

The Project is expected to be located in the northern part of Iraq, i.e. Kurdistan (the areas of Chemchemal and Sulaymaniyah) and in the southern part of Iraq in Umm Qasr, about 70 km south of Basra.

Once regarded as having one of the Middle East’s most comprehensive transportation systems, Iraq’s transport and logistics infrastructure has suffered from more than two decades of neglect and underinvestment. Rehabilitation of such infrastructure is a major national and regional trade issue. Gulftainer investments in Umm Qasr Port and Sulaimaniyah airport should help solve this issue and thus contribute to Iraq integration in the regional and global economy.

Iraq heavily relies on imports for its consumer goods and for its reconstruction program. Cost effective transport of imported goods is therefore critical to Iraq’s economy. World Bank’s Doing Business indicators however shows that Iraq is facing difficulties in terms of logistics performances. Gulftainer’s investments to modernize one of Umm Qasr berth combined with its experience to efficiently manage container terminals should contribute to improve the situation.

At present, a substantial portion of goods coming into Iraq are off-loaded at ports in the neighboring countries such as Kuwait, Turkey and Jordan and are then transported into the country by road, which tends to increase the time and cost of delivering the goods to the end consumer. The Project will have a significant impact on reducing these impediments to trade in Iraq and foster the country’s reconstruction efforts along with the economic growth and development.

Efficient and well-developed transport and logistics infrastructure is an essential component for the expected growth in the country’s Oil & Gas production & export-related activities and the project would play a strong role in facilitating these improvements.

In addition to its direct impact on trade, the Project will also contribute towards socio-economic development through the creation of several hundred jobs, reduction in the cost of goods paid by the end consumer (through reduction of costs incurred in the transportation process) as well as substantial royalty payments to the Government of Iraq.

Through its involvement in Iraq (Umm Qasr port in particular), Gulftainer will also play a strong role in training and improving the skills of the employees that would be seconded from IMTC, help introduce industry best-practice and contribute its valuable know-how in managing ports and logistics operations, which would help in improving the overall efficiency of the sector.

IFC is in a position to offer a long-term funding that would enable Gulftainer to develop its Iraqi ventures in a phased and sound manner.

IFC will also improve the environmental and social standards of Gulftainer’s activities, as a result of the inclusion of IFCs Performance Standards, particularly as it expands its international activities.

IFC’s presence at such early stage of Gulftainer’s development in Iraq should help the Company structure its emerging market activities in a way that could facilitate future fundraising and also mobilize

The key issues associated with Gulftainer’s port and inland logistics facilities include corporate capacity to assess and manage the impacts and risks of its operations; labor policies and performance during construction and operation; maintenance dredging and dredge spoil disposal; liquid, solid and hazardous waste disposal; oil/hazardous materials storage and handling; handling and storage of dangerous cargoes; ship support operations, fueling services and spill response; employee health, safety and training programs; and emergency response planning and preparedness.

IFC''s review of this project included site visits to Gulftainer’s container facilities in Khorfakkan and Port Khalid, Sharjah Inland Container Depot, UAE, as well as meetings with key members of Gulftainer’s management team at the company’s corporate offices in Sharjah, UAE. IFC staff also appraised technical, environmental, and social information submitted by Gulftainer, including environmental and social policies and procedures, checklists, and human resources policies and procedures. Security issues prevented visiting either Gulftainer’s existing operations in Iraq or the proposed sites for new facilities. Gulftainer has provided detailed maps and photographs to document the location and surrounding areas for each of its existing or proposed facilities. A detailed description of IFC’s environmental and social due diligence of this investment can be found in the Environmental and Social Review Summary (ESRS), which is also available on IFC’s website at http://www.ifc.org/projects.