Public-private partnerships (PPPs) can improve the UAE’s wastewater network and prevent more than Dh1 billion of treated wastewater being discharged back into the sea, according to Besix.
The Belgian construction company, which gave a presentation to the International Water Summit in Abu Dhabi last week, said that industries across the UAE use about 20 million cubic metres of desalinated water each year at a cost of Dh240m, while a further 460 million cubic metres is drawn from priceless groundwater resources. At the same time, about 197 million cubic metres of treated wastewater, with an approximate value of Dh1.1bn per year, according to the company’s estimates, is not used and pumped into the Arabian Gulf.
Olivier Crasson, the executive vice president for business development at Besix, said that the production and distribution of wastewater across the country was too “fragmented”, with each emirate relying on its own network of unconnected treatment plants.
“We are actively looking at solutions, with different emirates, to propose sustainable solutions under a PPP scheme for reusing the water.”
Besix and its partners Veolia and Black & Veatch have a 25-year concession to run Ajman’s first sewage treatment network, which was built in 2009.
Mr Crasson said that this was one of the first PPPs in the region that involved real commercial risk for the partners, as its client was not the government but the 100,000 or so households that were connected to the network, which had to pay for a service that had been previously free (although it involved sewage collection by lorry, with waste dumped in the desert).
“This exercise was very tough in the beginning because people could not yet see the benefits. But today, the same people who were reluctant to pay are the ones asking us to connect additional properties.”
A similar sales job may be required to increase take-up of treated wastewater by industry, including a potential two-tier charging structure.
“It will need a change of policy. The decision-makers are aware of that and they are working on it,” said Mr Crasson. “Already, we are proposing solutions in the Northern Emirates and we have ideas in Abu Dhabi where we can develop a scheme where water is produced, used, treated and reused – hence reducing the need for water, while respecting religious values that are very important.”
In Ajman, only about one-third of treated wastewater is being used, but Mr Crasson said that a target has been set by the royal family to reuse 100 per cent. “We are actively looking at solutions.”
Jane Boyle, the Middle East head of sustainability and energy at WSP Parsons Brinckerhoff, said that in Dubai there was a treated sewage effluent [TSE] network around the emirate, where treated wastewater is used to water plants and trees.
“There are a couple of buildings that offer TSE for toilet flushing, which is a great idea. One of the issues with this is cultural, because it’s seen as unclean, but it’s not. It’s not up to potable standards, so it’s not classed as drinking water, but it’s treated to a fairly high level,” she said.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
The specs
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
