ABU DHABI // The regulatory agency for Abu Dhabi's water and electricity will add another figure to customers' bills in January: the actual cost. The plan is part of a broader effort to reduce waste and put the nation's development on a more sustainable path, setting the course for potential rate increases.
Abu Dhabi has among the cheapest rates for electricity and water in the region due to major subsidies: the Government pays nearly 86 fils of every dirham of power consumed by Emiratis, and 50 fils for expatriates.
A tariff increase is being considered by the Abu Dhabi Executive Council, but for now the independent regulatory agency for Abu Dhabi's water and electricity hopes to tap guilt about the environment and the cost to the Government.
Next year, an Emirati family that receives a typical bill for, say, Dh559 would first see charges of Dh3,920, followed by the final amount owed, and a third item entitled the "waived cost", which in this case would be Dh3,361.
"There's a pretty stark message there: they're costing someone," said Nick Carter, the director general of the Regulation and Supervision Bureau (RSB), which was created last year to address the emirate's use of resources.
Because the tariff for water has not changed since 1995, the price of providing drinking water has long outpaced the fixed price that Abu Dhabi residents pay. The RSB deputy director general, Rashed Hamad al Rashedi, is hoping consumers will feel compassion for the Government, which has to foot most of the bill.
But despite efforts at consumer education, usage has grown in the past year. In August, electricity demand was 16 per cent higher than in August last year.
"To be honest, I'm not sure whether it will reduce consumption across all different groups," said Christian von Tschirschky, a regional utilities expert from the management consultancy AT Kearney.
From January, water units will also shift from imperial gallons to litres, a unit that the RSB hopes will be as easy to visualise as a bottle of water. An added benefit: with 4.55 litres in every gallon, the volume figures on each bill will appear to be five times higher, impressing, Mr Carter hopes, consumers with the tens of thousands of litres they consume each month.
Bills sent out at the end of January will come with an explanatory letter.
In the Abu Dhabi Distribution Company billing systems office, drafts for bills to be released after the January revision include graphs showing customers' use from one season to another. Another splits water and electricity bills into separate sheets of paper, creating room for energy-saving tips.
Dr Abdullah al Hammadi, 41, an Emirati, said he hoped fellow citizens would cut back on water and electricity once they received the new bills.
"It would be a form of respect for us as Emiratis to be careful with our usage, since our Government is carrying the brunt of the cost," Dr al Hammadi said.
ayee@thenational.ae
* With additional reporting by Hala Khalaf
MATCH INFO
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Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
- Ovarian tissue surgically removed
- Tissue processed in a high-tech facility
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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.”
A MINECRAFT MOVIE
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The specs: 2018 Renault Megane
Price, base / as tested Dh52,900 / Dh59,200
Engine 1.6L in-line four-cylinder
Transmission Continuously variable transmission
Power 115hp @ 5,500rpm
Torque 156Nm @ 4,000rpm
Fuel economy, combined 6.6L / 100km
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