Dubai deal gets nod from US port authority

THE New York-New Jersey Port Authority and American International Group (AIG) have reached a preliminary agreement to let the insurer buy Dubai Ports World's (DP World) stake in the Port Newark container terminal.

DP World acquired assets at six United States ports when it bought British port operator P&O last year for 6.8 billion dollars, pipping Singapore's PSA. The other US ports include New Orleans, Miami, Tampa, Baltimore and Philadelphia.

The high-profile deal, which aims to ease security concerns raised last year by the prospect of a company owned by the United Arab Emirates controlling US port assets, almost broke down.

DP World and AIG said the interstate agency demanded an estimated 83 million dollar fee to approve the lease transfer as well as detailed data about the AIG affiliate that is the buyer.

The agency said it should be repaid for its capital investments in the Newark port, arguing that DP World was making an 'extraordinary' profit on its investment.

New York Senator Charles Schumer and New Jersey Senator Robert Menendez, both Democrats, threatened to block the port authority's federal funding if the agency stuck to its demands.

The agreement reached, which must be formally approved by the agency's board, obliges the AIG firm, called Ports America, to invest a minimum of 50 million dollars in the port over the life of its investment. This period is 23 years.

The port authority's approval was expected to be the last one needed for the deal to be completed.