The Gulf state of Dubai is to merge its two separate ports businesses into a single company as it pushes to challenge the world's largest container terminal operators.
The move will merge the commercial operations of the Dubai Ports Authority with Dubai Ports International to form DP World, which will become the world's sixth-biggest container terminal operator.
Dubai's Jebel Ali Free Zone Authority -- which runs a customs-free zone around the port -- will also merge with its international arm, which administers free zones for some other Gulf countries.
The two will be overseen by a new board of ports and free zones, which will encourage their development.
The regulatory function of the existing Dubai Ports and Jebel Ali Free Zone Authorities -- which oversee issues such as safety standards of ships entering the port -- will pass to a new Port and Free Zone Authority.
The move will not affect the businesses' status as state-owned companies but should help Dubai Ports' international business -- which last year bought CSX World Terminals, an international terminals company, for $1.15bn -- to use the container port expertise of the port of Dubai, the world's tenth-busiest container port.
Jamal Majid bin Thaniah, who has been chief executive of DPA and will become chief executive of the ports and free zone authority, said the separation of DPA's regulatory and commercial functions would allow the company to have a better focus and would give it a clearer presence outside Dubai.
The move is reminiscent of the Singapore government's move in 1997 to turn the Port of Singapore Authority into a separate regulatory organisation and commercial arm. The commercial arm, known as PSA, is now the world's second-largest container terminal operator, with investments outside Singapore in Europe and Asia.
DP World is likely to seek further international purchases in China, India and Europe.
Neil Davidson, container ports analyst at London-based Drewry Shipping Consultants, said the merger and the separation of regulatory powers was logical.
"It gives particularly the terminal side of the business greater autonomy to act as a pure terminal operator," he said.
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