Fuel shortages slow recovery services for stranded motorists



DUBAI // Motorists who run out of petrol are facing longer waits to be rescued - because car recovery companies have their own fuel supply problems.

At least two firms said they had been receiving more calls from motorists in need of fuel over the past few days, but that shortages meant their response times had greatly increased.

"Previously, when motorists used to call us requesting fuel, we would get to them in 10 or 20 minutes, after buying fuel," said Vince Joe, the director of the International Motoring Club. "But now we have to drive for more than an hour just to look for petrol."

Calls to the company, mostly from motorists in Sharjah, had gone from about 160 calls to day to more than 190, he added.

"Breakdown of cars because of lack of fuel used be less than two per cent of our total calls. Now, they comprise at least 20 per cent. A lot of stranded customers are calling us, and since they are our members, we are contractually bound to assist them," he said.

The company has also decreased the amount of fuel it gives stranded customers from 10 litres to two.

Similarly, AAA Roadside Assistance said it had been receiving at least five extra calls a day since the fuel shortages began and was being forced to turn down some requests for help.

The shortage meant the organisation took twice as long to reach stranded motorists and those it did reach were being given one litre of fuel, rather than the usual three.

"We can only supply enough fuel to take them to the closest petrol station," said Paul Joseph, AAA's managing director.

Most calls it received came from Sharjah, Ajman and Dubai.

However, not all recovery services reported increased business. An official from Arabian Automobile Association said demand for their services remained unchanged. "We haven't seen any cars breaking down because of lack of fuel," said the official.

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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.”