Meed 04-2021

MEED UAE: Optimism builds as oil
recovers and vaccines roll out
BUSINESS TOURISM: Regional hoteliers

brace for long, slow recovery
REVIEW
Vol 06 No 04 | April 2021
REWIRING A REGION
Putting AI at the centre of post-Covid recovery
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From the Editor
A digital mindset
T
here is no doubting the adoption in the region, accord-
potential of digital data ing to research from IBM’s Insti-
to transform the Mid- tute of Business Value in 2018.
dle East economy. In a The research also noted that the
region where high growth has availability of data to apply and
been driven by vast government draw context for decision-mak-
spending, one of the biggest ing is another key barrier.
challenges is waste. Governments must also be
Capturing data and using arti- alert to the societal risks of
ficial intelligence (AI) to analyse digital transformation. Replac-
behavioural patterns and make ing expats with robots does not Cover story, pages 14-21
decisions will cut bureaucracy, mean jobs for locals. Unemploy- Turning the Middle East into
increase transparency and re- ment is the biggest structural an artificial intelligence hub
duce corruption. It should also threat to stability, and if the requires coherent policies,
make countries less reliant on focus on data investment is on people and capital
foreign workers. driving efficiency, there is a risk
According to consultant PwC, of overlooking job creation.
the adoption of AI will earn Nationally focused digital
the Middle East economies up investment will increase the di-
to $320bn in 2030 through vide between wealthy countries,
improved productivity and
increased customer demand.
It is hardly surprising that “Governments must be alert to the societal
the development of AI capa- risks posed by digital transformation”
bility is being given a high
priority by governments.
The UAE appointed a minister and those that are economically
of state for AI and formed a weak, adding to insecurity risks.
national AI strategy in 2017. In Holistic thinking is required
2020, Saudi Arabia launched a to ensure that the full potential
national strategy to train 20,000 of the digital rewiring of the
data and AI experts, set up 300 Middle East is achieved, rather
AI startups and attract $20bn- than just delivering fiscal effi-
worth of investments by 2030. ciencies to a lucky few.
Of course, obstacles exist.
Regulatory constraints and le-
gal, security or privacy concerns
emerged as top barriers to AI
Richard Thompson is editorial director www.youtube.com/user/

of MEED and has more than a decade meeddubai
and a half of experience covering business
and economics in the Middle East and www.twitter.com/meeddubai
North Africa. Twitter: @MEEDEditor
Email: richard.thompson@meed.com
www.meed.com
MEED Business Review / 3

P. 42
CONTENTS
Vol 06 No 4 | April 2021
P. 14 14-16
ARTIFICIAL INTELLIGENCE
Middle East economies stand to
gain up to $320bn in 2030 by
adopting artificial intelligence
18-19
DIGITAL COMPETITIVENESS
The UAE leads the way
in the region in MEED’s
Digital Transformation Index
20-21
DIGITISING CONSTRUCTION
Digital solutions can help drive
the recovery of the region’s
construction industry
“To become a global centre for

AI, the region needs a robust
22-23
LIBYA ELECTION CHALLENGES
Significant issues must be
academic structure and laws addressed ahead of Libya’s
protecting intellectual property” scheduled elections in December
8-10
BOARD REPORT
P.34 Transport
experts analyse
Regional merger and how digital
acquisition activity connectivity will
increases; Riyadh impact mobility
advances legal reforms; in the post-
Iran’s president calls pandemic world
for hardliners to stop
obstructing efforts to
lift US sanctions
12-13
CORONAVIRUS UPDATE
Countries make mixed
progress in securing
vaccine doses
4 \ MEED Business Review

Despite stellar
progress with
testing and
vaccination,
the UAE
economy
needs the
world at large
to recover
24-25
MILITARY BALANCE
Regional defence spending
remains resilient despite
the Covid-19 pandemic
26-27
KUWAIT REFORMS
A projected budget deficit
of $40bn underscores
Kuwait’s need for reforms
P. 24
30-33 Militaries in
TOURISM REPORT
The outlook for the region’s
travel and tourism sector
the region
face ongoing
78-79
INFOGRAPHIC
threats and
is cautiously optimistic The pandemic hit the
need to adapt
North African hospitality
to the rapid
42-59 evolution of
the battlefield
market particularly hard
UAE IN FOCUS
The UAE’s return to
business-as-usual hinges
81
GULF PROJECTS INDEX
on the global recovery Gulf projects market
continues to decline
61-77
BUSINESS OUTLOOK 82
Analysis of the outlook CONTRACT AWARDS
for the Gulf region’s Qatar’s gas contract
major sectors awards buoy the market

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Energy & Technology Editor Jennifer Aguinaldo jennifer.aguinaldo@meed.com
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Board Report
APRIL 2021
Merger and acquisition activity increases in Middle East; Opec+ maintains oil
output cuts; Riyadh advances legal reforms; Iran’s President Rouhani calls for
hardliners to stop obstructing efforts to lift US sanctions; Houthi strikes escalate
Tehran and
Washington are
clashing over
which side must
move first to
revive the 2015
nuclear deal
ECONOMY OIL
Middle East M&A activity Oil prices reach 14-month high
grows despite global drop after Opec+ maintains cuts
Merger and acquisition (M&A) The Opec+ alliance agreed on 4
activity increased by 6 per cent in March to extend existing oil produc-
the Middle East last year even as tion cuts during April, with Saudi Ara-
Covid-19 led to a global decline in bia volunteering to extend additional
M&A deals of 9 per cent. cuts of 1 million barrels a day (b/d).
PwC estimates there were 235 Oil prices reached a 14-month
transactions in the region in 2020, high of $68 a barrel following the
with activity levels increasing latest announcement.
6%
M&A growth in the
during the second half of the year.
Deals are taking longer to complete,
The organisation has downgraded
the outlook for crude demand until
however, due to uncertainties. the third quarter, and expects it
PHOTOGRAPH: GETTY IMAGES
Middle East in 2020 The consultancy expects the will need to reduce daily output by
Middle East’s M&A environment 690,000 b/d in the second quarter.
$68
to be shaped by consolidation in Opec’s March report estimated
Covid-hit sectors, reallocation of crude demand would total 27.2 mil-
14-month crude price capital, restructuring and digital lion b/d this year, a month-on-month
high in March transformation in the near term. reduction of 250,000 b/d.

SAUDI ARABIA EGYPT
Riyadh approves privatisation It was approved after a law Thaw in strained relations
law and eases sponsor system reforming the expatriate worker between Ankara and Cairo
Saudi Arabia’s cabinet approved sponsorship system took effect on Turkey and Egypt have made
a privatisation law on 16 March 14 March. first contact since both countries
that is expected to unlock $9.3bn- Some expatriate employees broke off diplomatic relations
$10.7bn from selling government may now leave the kingdom when in 2013.
assets and create 10,000-12,000 their work contract has ended, Turkish Foreign Minister
new private sector jobs. or transfer jobs following the Mevlut Cavusoglu said the
The law sets out the general expiration of an existing contract, countries had made contact “both
principles governing private without requiring prior consent at the level of intelligence and
sector participation in the country. from their employers. foreign ministries”, adding that
diplomatic-level engagements had
also begun.
IRAN SANCTIONS Cavusoglu reportedly said in
mid-March that neither side had
Upcoming elections shift which side must move first to put forth preconditions, adding:
focus on sanctions revive the agreement. “Negotiations are taking place
President Hassan Rouhani has The US wants to lift sanctions and continuing under a certain
called for hardliners to cease only once Iran returns to full strategy [and] roadmap.”
obstructing efforts to lift US compliance with the terms of the Egyptian-Turkish ties broke
sanctions on Iran. Rouhani said nuclear deal, which it stopped off when both countries expelled
the “small minority” causing adhering to after Trump withdrew each other’s ambassadors and
delays to sanctions must “stop its from the pact. downgraded relations after
destructive act”. Iran’s Foreign Minister Javad President Abdul Fattah al-Sisi
US President Joe Biden wants Zarif has urged swift progress, came to power.
Iran to return to the 2015 warning that diplomatic efforts His predecessor, Mohammed
nuclear accord abandoned by his will stall due to presidential Mursi, was an ally of Ankara.
predecessor Donald Trump in elections in June. Rouhani is
exchange for easing sanctions. barred from standing for a third
However, Tehran and term, and election candidates have
Washington are clashing over yet to be finalised.
SAUDI ARABIA OMAN

Aramco’s Riyadh Refinery Muscat pursues fiscal recovery Turkey and Egypt have resumed
attacked in drone strike after GDP shrinks 4.9 per cent diplomatic contact for the first
time since their fallout in 2013
Saudi Aramco’s Riyadh Refinery Oman approved an economic
was attacked by drones early in the stimulus plan on 9 March with
SR40bn
morning on 19 March, resulting in exemptions from income tax for
a fire that was eventually brought firms that carry out business in
under control. There were no economic-diversification-oriented Gains likely through
injuries or supply disruptions, sectors until the end of 2022. Riyadh’s privatisation law
according to the Energy Ministry. Additional reforms to buoy the
RO300m
Yemen’s Houthi rebels have economy include the introduction
claimed responsibility. The attack of 5 per cent VAT on 16 April,
was the second strike on an which is expected to grow revenue Expected proceeds from
Aramco facility in March. by RO300m ($779m) this year. launch of VAT in Oman

Board Report
ISRAEL LIBYA FURTHER READING
Trip by Israeli prime minister Democratic process gains Scan the QR code
to the UAE is cancelled traction with Tunisian support with your camera
The latest attempt by Israeli Prime The Libyan elections planned phone to read
Minister Benjamin Netanyahu for 24 December have received more from
www.meed.com
to secure a trip to Abu Dhabi, support from Tunisia, with
scheduled for 18 March, was President Kais Saied stating that Aramco profits drop 44 per cent
called off after Jordan refused the countries must overcome Saudi Aramco has announced
to allow him to fly through all causes of “coldness” in total net income of $49bn
its airspace, allegedly over bilateral relations. for 2020, a 44 per cent drop
disagreement surrounding a A democratic transition not compared with 2019. Despite the
proposed visit to Jerusalem by unlike Tunisia’s is being charted sharp fall in profit it maintained
Jordan’s crown prince. for Libya after a ceasefire in its $75bn dividend payout. The
However, UAE officials have December 2020 paved the way company expects 2021 capital
repeatedly indicated the country’s for an interim government to take expenditure to be about $35bn,
wish to be kept out of Israel’s power in March. significantly lower than the
electioneering ahead of its Stability in Libya is expected previous guidance of $40-45bn.
upcoming polls, presenting a to benefit neighbouring Tunisia,
possible behind-the-scenes motive which was previously a key trading Saudi to make armoured vehicles
for the trip’s cancellation. partner of the oil-rich country. The UAE’s Nimr has signed a
deal with Saudi Arabian Military
Industries to supply the kingdom
LEBANON with armoured vehicles. The
units will initially be built in
Lebanese economic situation the UAE, but the agreement
worsens amid political rift requires transfer of production
The Lebanese pound has continued and technology to Saudi Arabia.
to sink, dropping to a record low of
15,000 against the US dollar on 16 Tencent teams up with Bahrain
March, as ongoing political deadlock China’s Tencent Cloud has
has once again dimmed the prospect teamed up with Bahrain’s
of a positive outcome. Economic Development Board
There are reports of a widening (EDB) to open an internet data
rift between Prime Minister- Hariri was re-elected to office in centre in the country by the
October 2020 after resigning in
designate Saad Hariri, who was 2019 following mass protests end of 2021. EDB will join public
reappointed to office in October and private sector stakeholders
2020 after resigning in 2019, and $16bn in foreign currency to encourage the adoption of
President Michel Aoun over the reserves remaining. cloud services.
formation of a government. Last month, parliament
A caretaker cabinet is currently approved a $246m World Bank DP World expands in UK
governing under former prime loan to act as a social safety UK chancellor Rishi Sunak
minister Hassan Diab. net, but international donations confirmed last month that
The Central Bank meanwhile largely remain in limbo and a freeport backed by Dubai
continues to subsidise imports contingent on the implementation port operator DP World will
of fuel, wheat and medicine at an of sweeping economic reforms. be developed on the Thames
official rate of 1,507 Lebanese Estuary. DP World lodged a bid
$246m
pounds to the dollar. However, for the freeport in consortium
the artificial rate is costing an with the UK’s Thames Enterprise
estimated $500m every month, Value of World Bank loan, Park and US carmaker Ford.
and the country only has about approved by Lebanon in March

Opinion
The US is under
new management
President Joe Biden’s Earth Day plans
reveal how much priorities have changed
O
n 22 April, US President Joe Biden
will host a virtual global climate
summit to mark Earth Day, an an-
nual event that promotes environ-
mental protection.
It represents a clear break with the priorities
of his predecessor, a climate-change sceptic and Arabian deserts. The idea has been welcomed by
fossil-fuel champion. Biden’s plans will have institutional investors.
implications for the Middle East, the world’s In a book published this spring, former UK
leading hydrocarbon-exporting region. Bank of England governor Mark Carney expands
Action is already under way. The US rejoined on the theme. “The logic of buying and selling no
the Paris Climate Agreement in February. For- longer applies only to material goods,” he writes.
mer US secretary of state John Kerry has been “[It] increasingly governs the whole of life from
appointed Biden’s climate the allocation of healthcare to education, public
envoy to forge a new safety and environmental protection”.
Governments environment consensus

under US leadership. Commoditising nature
should Others are following
the White House’s lead.
There are sceptics, however. In 2012, Harvard
political philosopher Michael Sandel argued that
develop the The UN has called for
a new approach to the
pricing nature was the wrong answer: “When we
decide that certain goods and services can be
concept of environment that involves
pricing it as if it were any
bought and sold, we decide, at least implicitly,
that it is appropriate to treat them as commodi-
green capital, other saleable asset. ties, as instruments of profit and use.”
“If we put a value on
a price-based nature, then we will meas-
Doubts about green capital markets champi-
oned by Elliott were expressed on 12 March in
quantification ure it,” UN chief econo-

mist Elliott Harris said
the Financial Times. “… canny marketers have
also used environmentalism to relabel many, at
of nature in an interview published
in March.
best, neutral products as world-saving,” it ar-
gued. “[But] investors will find that new product
“If we measure it, we badging cannot replace the hard work of scruti-
can manage it. If we manage the value, we avoid nising exactly what is being offered.”
destroying it. Since we did not take that value Going green is not easy and will take decades.
into account, we’ve treated nature as though Biden’s summit will nevertheless be a new be-
it was free and limitless. We’ve been using it ginning with lasting consequences.
up without being aware of how much value we
were losing.”
Harris argues that governments should devel- EDMUND O’SULLIVAN is a former
op the concept of green capital, a price-based editor of MEED
quantification of nature, from polar ice caps to Twitter: @eddieosullivan

COVID-19 TRACKER
Countries in the Middle East and North Africa are making mixed progress
in their efforts to secure vaccination doses and inoculate their populations
CONFIRMED COVID-19 CASES IN THE MENA REGION

1,800
Saudi Arabia Jordan
CONFIRMED CASES (THOUSANDS)
1,600 UAE Lebanon
Bahrain Morocco
1,400
Kuwait Libya
29% Oman Tunisia
1,200
Qatar Algeria
1,000 Iran Yemen
47% Egypt Syria
800 Iraq
600
24% 400
200
0
Iran GCC Rest of Mena
20
20
20
20
20
20
20
20
21
21
21
r2
l2
t2
t2
ar
ar
ay
ar
Ju
Ap
Oc
Oc
No
De
Au
Ju
Se
Ja
Fe
M
M
M
15
25
31
18
20
16
11
27
2
29
24
15
7
22
FOUR-WEEK COVID-19 CASE RATE PER MILLION*

12,000
11,333
10,000
10,448
8,000
8,731
6,000 5,761
5,410
4,000
1,795
3,401
1,143
2,000
2,341
2,307
2,073
219
217
126
76
77
0
ria
pt
an
it
co
an
ria
ia
E
ta
by
ai
Ira
Ira
no
bi
wa
UA
is
y
oc
rd
Om
ge
Sy
Qa
Eg
hr
ra
Li
n
ba
Ku
Jo
or
Tu
Al
Ba
iA
Le
ud
Sa
COVID-19 SITUATION AND LATEST UPDATES
ALGERIA BAHRAIN EGYPT IRAN IRAQ JORDAN KUWAIT LEBANON

115,265+
115,265 131,000+ 190,925+
190,925 1,754,930+
+ 758,190+
758,190 477,050+ 209,525+ 418,450+
418,450
Talks with Bahrain Cairo receives Trials of a third Agreement Amman ap- Health ministry World Bank
Russian authorises US 300,000 doses domestic signed to import proves Sputnik-V reportedly plans threatens
partners to firm Johnson of China’s Sinop- vaccine candi- 1 million doses vaccine for to vaccinate to withdraw
produce the & Johnson’s harm vaccine af- date, Fakhra, of the Sputnik-V emergency 2 million people vaccine funding
Sputnik-V vaccine vaccine, making ter being sent a get under way. vaccine. Bagh- use, according by September, if politicians
are at “very ad- it the fifth jab major shipment Trials are dad expects to to the Russian to coincide with violate ad-
vanced” stages, approved for use in February. ongoing for the receive 2 million Direct Invest- the reopening ministration
according to in the country. locally made Sinopharm ment Fund. of schools. rules and
an official from jabs Coviran doses as well. jump queues.
the country’s Barakat and
pharmaceutical Razi Covpars.
industry ministry.
Tunisia Lebanon Syria

Jordan
Morocco Iraq Iran
Algeria Kuwait
Libya
Egypt Bahrain
Qatar
Saudi Arabia
UAE
Oman
VACCINATION DOSES ADMINISTERED PER 100 PEOPLE Yemen

More than 50 20 to 50 10 to 20 5 to 10 1 to 5 Less than 1
LIBYA MOROCCO OMAN QATAR SAUDI SYRIA TUNISIA UAE

146,080+ 488,940+
488,940 147,425+ 170,250+ ARABIA 16,480+ 241,835+
241,835 428,300+
382,410+
Interim Prime Sputnik-V and Thirty per cent A total of Russia’s First major Vaccinations now
Minister Abdul Johnson & John- of the population 561,044 Health minister Sputnik-V is vaccine delivery open to all citizens
Hamid Dbeibah son’s vaccines will be vaccinat- vaccine doses says Covid-19 authorised completed as and residents aged
says acquiring are authorised ed by the end have been ad- vaccines are for use in the 30,000 doses of over 16 years after
vaccine doses is for use as of June and ministered since essential for country, which Sputnik-V arrive, the completion of
a top priority for part of Rabat’s 70 per cent by the start of the health workers is also signed with priority to be the six-week priority
the government. national inocula- the end of 2021, programme, participating in up to procure given to health- entitlement for high-
tion drive. according to public health the Hajj season jabs through the care workers. risk individuals.
a health ministry says. this year. Covax alliance.
ministry official.
Produced on 21 March 2021. *=As of 15 March 2021; Mena=Middle East and North Africa; WHO=World Health Organisation
Sources: WHO, Worldometers, MEED
Agenda
CREATING AN
AI ECOSYSTEM
By Jennifer Aguinaldo
M
Elevating
the Middle
East into an
artificial
intelligence
hub requires
policies,
people
and capital
iddle East economies stand to There is a growing desire not
gain up to $320bn in 2030 by only to adopt AI, but to create
adopting artificial intelligence an indigenous AI ecosystem,
(AI), if data from a large-scale as opposed to the previous
economic model by US-head- practice of merely consuming
quartered consultancy PwC is or importing technologies that
anything to go by. originate elsewhere, mainly
Larger than Egypt’s GDP from Silicon Valley.
and twice the size of Kuwait’s AI’s potential in enabling
GDP in 2019, this figure countries to be less reliant on
equates to about 2 per cent of foreign labour and enhancing
$320bn
AI’s expected net global eco- productivity underpin this.
nomic impact, achieved mainly “Robots can work throughout
Amount that Middle Eastern through improved productiv- the day, regardless of weather
economies stand to gain ity and increased customer and around health issues such
in 2030 by adopting AI demand and consumption. as the current pandemic,”
Perhaps not coincidentally, notes Kai Chan, a Dubai-based
20,000
Number of data and AI
some Middle East countries
have made major AI strides
economist exploring the social
implications of AI.
over the past few years. The
experts Saudi Arabia UAE appointed a minister AI innovation
aims to train by 2030 of state for AI and formed a The desire to foster an AI
national AI strategy in 2017. ecosystem is most palpable
AED52.6m
Last year, Saudi Arabia also in the UAE, which has been
launched a national strategy bringing together policies,
Dubai Electricity & Water that aims to train 20,000 data expertise, technologies and
Authority’s savings from its and AI experts, set up 300 AI capital to promote AI across
AI-led Smart Living initiative startups and attract $20bn- the entire spectrum of govern-
in six months worth of investments by 2030. ment and economy.

Regulatory constraints and legal, security and privacy concerns
are the top barriers to AI adoption in the Middle East region
gaining prominence by making And China has its equivalent

its resources – including the in Shenzhen because of its
Artemis supercomputer – universities, which produce
available when the Covid-19 world-class AI talent; and it is
pandemic unfolded. doing so with the help of the
Abu Dhabi also established government and industry,”
Mohammed bin Zayed Univer- emphasises Chan.
sity of Artificial Intelligence Options include attracting
(MBZUAI) and the Advanced leading AI experts, endowing
Technology Research Council AI positions at local univer-
(ATRC) in 2019 and 2020, sities or attracting key AI
respectively. MBZUAI offers players to set up in the region.
graduate studies in computer “Once [these types of experts]
vision, machine learning and arrive, they will either come
natural language processing, with an entourage of talent, or
and also fosters links with attract and create their own
leading AI research entities ecosystems,” Chan explains.
internationally. The Abu Dhabi
Economic Council-affiliated Data and privacy
ATRC will oversee all ad- While most experts consider
Dubai is at an advanced vanced research and develop- the lack of AI talent as the
stage of digitalising its entire ment activities in the emirate biggest roadblock, regulatory
government structure and has and seek to “solve practical constraints and legal, security
formulated policies such as problems while achieving or privacy concerns emerged
the open data law to enable commercial purposes … re- as top barriers to AI adoption
sharing of non-confidential sulting in inventions, products, in the region, according to
data between government and services or technologies”. research from IBM’s Institute
other entities. But while the UAE in of Business Value in 2018.
Abu Dhabi began staging a particular has been taking IBM’s research also noted
dramatic pivot in 2018, when proactive steps to create an that the availability of data to
it established an AI and cloud enabling environment for AI, apply and draw context for de-
computing company, G42. The the Middle East region is still cision-making is another key
firm’s Inception Institute of nowhere near establishing barrier, as opposed to availa-
Artificial Intelligence focuses itself as an AI hub. bility of technology, which is
among the least concerns.
“Privacy laws are very
“There is a growing desire for countries important, but not necessarily
in this region not only to adopt AI, in the ways that many think,”
says Chan, who argues that
but to create an indigenous AI ecosystem” placing too many barriers for
enterprises to work with data
will limit their ability to thrive.
on applied research, including To become a global centre China’s rise as an AI super-
deep learning, which is the for AI activity, the region power is attributed to a large
fastest-growing AI area, G42 needs to develop a robust extent to the social accepta-
CEO Peng Xiao tells MEED. academic structure and bility of access to data. “AI
The company has been at laws protecting intellectual researchers over there have
the forefront of deploying AI property. “The US has Silicon access to data,” Chan explains.
across key industry sectors, Valley because of Stanford. “For example, CCTV cam-

Agenda
eras are more the norm and

MOTIVATION FOR AI INVESTMENT IN THE MIDDLE EAST
researchers are able to access
% of respondents
such data with fewer data pri-
vacy concerns relative to those Headcount redeployment 2018
in western countries.” 2016

Headcount reduction
According to the executive, Customer acquisition cost reduction
striking a balance between
Revenue growth from shorter sales cycle
privacy and data access may
require a measure resembling Revenue growth from large orders
a global data privacy constitu- Revenue from new customer growth
tion or bill of rights. “It needs Revenue growth from shorter product development cycle
to be at a global level, as it
Customer retention improvement
would otherwise create an
unfair playing field for coun- Customer satisfaction
tries. However, differences in 0 10 20 30 40 50 60 70
the social values of nations Source: IBM Institute for Business Value global survey of artificial intelligence and cognitive computing, 2018
may make this an impossible
agreement to arrive at.” few years earlier, “The region over a six-month period, in the
needs billions of dollars in form of conserved electricity
Venture funding yearly investments in venture and water.
Dubai, Bahrain and Abu Dhabi capital to catch up with the These projects show that gov-
have all undertaken major ini- level of wealth created through ernment policy and initiatives
tiatives to promote and attract it in other regions like Europe.” have stepped up to encourage
startups. In 2019, Saudi Ara- startups, government and
bia’s Public Investment Fund Government initiatives corporate innovation, as Car-
created Jada, a $1bn fund that Saudi Arabia’s plans for The rington Malin, a Dubai-based
will invest in venture capital Line, part of the $500bn Neom marketing consultant focusing
and private equity funds geared project, promise to create a on AI-related technology ven-
towards small businesses. pioneering cognitive city by uti- tures, notes.
Initiatives such as Dubai Fu- lising AI “to continuously learn
ture Accelerators and Mubada- and predict ways to make life Regional outcome
la’s Hub71 host startups that easier”. The plan entails har- Overall, certain countries in
are creating applications in nessing 90 per cent of available the region have demonstrated
finance, healthcare, retail, real data to enhance infrastructure strong political will to support
estate, logistics and hospitality, capabilities – far beyond the an AI industry. This will play
to name a few. 1 per cent typically utilised in a big role in overcoming the
According to MagNitt, a existing smart cities. major roadblocks, including
Dubai-based data platform While opinions are split on steering government poli-
for startups, venture capital- the feasibility of the plan, it cies towards taking risks by
ists plowed $1bn into startup must be noted that some enti- promoting entrepreneurs or
businesses across the Middle ties have achieved clear benefits technologies that can fail.
East and North Africa region from deploying the building As Chan puts it, it is all part
last year, a 30 per cent rise blocks of AI, such as analytics of the game. “Much like ven-
compared to the previous and big data. Abu Dhabi Nation- ture capital operations, many
year’s funding. al Oil Company has generated leads must be explored to find
While the growth is com- about $2bn in business value the eventual winners. And the
mendable, the level of invest- from its multi-year digitalisation game plan should be calibrat-
ment is still far from being on initiatives. An AI-led initiative, ed to ensure that the success-
par with those seen in other Smart Living, has also saved es of the winners will cover
hubs. As Middle East Venture state utility Dubai Electricity the calculated risks taken on
Partners’ Walid Hanna said a & Water Authority AED52.6m the wider field.”

ARTIFICIAL GROWTH
The contribution of artificial intelligence (AI) to the Middle East
economy is expected to grow rapidly in the coming decade
and will represent a significant portion of GDP by 2030
$320bn $135.2bn 13.6% 20-34%

Potential impact In absolute terms, In relative terms, the UAE Expected annual growth
of AI for the the largest gains are is expected to see the in the contribution
Middle East expected to accrue to largest impact of of AI across
Saudi’s economy close to 14% of the region
in 2030 2030 GDP
CONTRIBUTION OF AI TO GDP IN 2030

GCC4
EGYPT Bahrain, Kuwait, Oman, Qatar
$42.7bn $45.9bn
(7.7% of GDP) (8.2% of GDP)
CAGR 2018-2030 CAGR 2018-2030
25.5% Kuwait
28.8%
Bahrain
SAUDI ARABIA Qatar UAE
Egypt
$135.2bn $96bn
Saudi Arabia UAE
(12.4% of GDP) Oman (13.6% of GDP)

CAGR 2018-2030 CAGR 2018-2030
31.3% 33.5%
CONTRIBUTION OF AI IN 2030 BY INDUSTRY Contribution Share

to Middle of regional
East GDP AI contribution
Construction and manufacturing $99bn 12.4%

Energy, utilities and resources $78bn 6.3%
Public sector including health and education $59bn 18.6%
Financial, professional, administrative services $38bn 13.6%
Retail, wholesale, trade, consumer goods $23bn 19.0%
Transport and logistics $12bn 15.2%
Technology, media, telecommunications $10bn 14.0%
CAGR=Compound annual growth rate. Source: PwC

Agenda
UAE LEADS REGION’S

The GCC DIGITAL GROWTH
O
currently By John Bambridge
leads the rise
in the region’s
digital compe-
titiveness, but
lower infras-
tructure costs
in North
Africa provide
a window of
opportunity
f all the sweeping changes that it is in mines and factories or in
have been brought about over hospitals and schools.
the past year as a result of the In the Middle East and North
Covid-19 pandemic, one of the Africa (Mena) region, many
most lasting will end up being countries are moving forwards
MEED DIGITAL the rapid acceleration in digi- with national AI programmes
TRANSFORMATION INDEX talisation that has taken place and strategies geared towards
UAE 3.8
within the global economy. turning their economies into
Qatar, Saudi Arabia 3.7 From the new opportunities pillars of global AI develop-
Bahrain 3.6 and challenges that come from ment, testing and application.
Morocco 3.5
working-at-home arrange- This is as equally true in the
Egypt 3.3 ments to the huge boost that GCC countries, where auto-
Kuwait, Oman, e-commerce and other digital mation holds the potential to
Iran, Jordan 3.2
Tunisia 3.1 platforms have received, the reduce dependence on expa-
crisis has led to major shifts in triate labour, as it is in North
Algeria 2.8
the workforce. This has pro- Africa and the Levant, where
pelled the advent of automation the fresh perspective presented
forward and put artificial intelli- by AI could help solve complex
gence (AI) front and centre. infrastructure challenges and
Lebanon 2.2 AI is a particularly bright new drive technological growth.
frontier of value generation
Iraq 1.9 within the global economy. Regional progress
Machine-learning and heuristic MEED’s Digital Transformation
softwares, and programmes Index seeks to build a picture of
capable of handling complex how well placed regional econ-
tasks and displaying human-like omies are for this change in
Sources: OpenSignal, behaviour, are expected to terms of physical infrastructure,
cable.co.uk, International underpin much of the auto- human capital and government
Telecommunication
Union, World Bank, mation anticipated within the policy regulation. It also tracks
European Centre for Digital
Competitiveness, MEED economy and society, whether the progress of the markets so

economies and favourable and represents an ongoing
business environments. inhibitor of competitiveness.
Qatar and Saudi Arabia both Morocco places fifth in the
have exceptional cybersecurity index, in recognition of its fast
ratings – better even than that but also relatively cheap data
of the UAE. However, they fall transmission. The country has
short in terms of ease of doing also been rated highly for ease
business, potentially providing a of doing business, and noted for
less welcoming environment for its growing digital economy and
digital entrepreneurs and small rising digital competitiveness.
and medium-sized enterprises. Egypt is also a rapidly rising
Saudi Arabia has also been digital contender, boasting a
rated as the strongest ‘digital highly skilled digital workforce
riser’ by the European Centre that has led global names such
for Digital Competitiveness. as Ericsson to establish analyt-
Bahrain, meanwhile, has ics and AI hubs in the country.
region-beating average data What Egypt lacks in terms of
speeds that clock in at near- country-wide infrastructure, it
ly twice those of the closest makes up for in low costs.
competition in the region. This Kuwait and Oman are falling
advantage has already secured behind the rest of the GCC
far in the development of their the country Amazon’s regional nations in terms of digital devel-
digital economies. web services data centre. opment. Both have poorer phys-
In the lead is the UAE, where However, Bahrain’s re- ical infrastructure, lower data
the government has consist- gion-beating infrastructure is speeds and higher costs. The
ently pressed its digital and not presently translating into a ease of doing business is also
now its AI agenda, and where region-beating digital platform weaker in both these countries
the relatively mature economy economy. Areas such as cyber- as compared with the ratings for
their GCC neighbours.
Next in the index come Iran,
Jordan, Tunisia and Algeria, all
“MEED’s Digital Transformation Index builds of which have low data speeds,
a picture of how well placed economies are to but also low costs. However,
the main burdens for these
take advantage of rapid digitalisation” economies are more general
indicators of competitiveness in
– by regional standards – has a security and digital regulation the form of weaker, more inter-
well-developed digital ecosys- are also weaker. mittent power networks, weak
tem. The physical infrastruc- cybersecurity and low ease of
ture, as in much of the GCC, Data transmission doing business scores.
is excellent, and cybersecurity, It should be noted that no coun- The last two countries in
digital regulation and the try in the region has achieved a MEED’s ranking, Lebanon
ease of doing business are score above four in the index, and Iraq, perform fairly poorly
all conducive to the digital where five is the maximum. across all metrics considered
business environment. This is largely due to the fact within the index, and excel in
Perhaps unsurprisingly, the that, at present, while several of none. Weak infrastructure and
next three countries are all the GCC countries lead in terms poor business environments
also within the GCC. Again, of infrastructure and other met- all but write off these coun-
they are supported by robust rics, the costs of data transmis- tries, at least in the near term,
physical and regulatory infra- sion per unit in these countries when it comes to digital growth
structure, expanding digital also remains consistently higher and competitiveness.

Agenda
CONSTRUCTION GETS
DIGITAL RENOVATION
D
Widespread By Anas Bataw
adoption
of digital
solutions will
help to drive
the recovery
of the
construction
industry
in the
Middle East
isruption and innovation have and digital practices to enhance
changed the way we think and the construction industry’s pro-
operate across industries. We ductivity to catch up with the
have witnessed this increasingly total economy would boost the
in the past year as the Covid-19 sector’s value by an estimated
pandemic has pushed most $1.6tn. This would add about 2
industries out of their comfort per cent to the global economy,
zone and into digitally enabled or the equivalent of meeting
environments. And the con- about half of the world’s infra-
struction industry is certainly structure needs.
no exception.
However, competence and Driving digital adoption
keeping pace with technological The pandemic has challenged
advancements is imperative for the traditional processes and
the construction industry to ad- platforms in the construction
vance and continue flourishing. sector. For an industry that
Prior to Covid-19, digital relies on manual labour and
practices in the construction on-site working, the closure of
sector evolved at a glacial pace, sites, the reduction of on-site
despite efforts to drive initia- personnel and the need for
tives such as building informa- more remote communications
tion modelling (BIM) and geo- and monitoring have driven a
graphic information systems. significant increase in the use of
ABOUT THE AUTHOR According to McKinsey Global digital practices. Many organ-
Anas Bataw is director of Institute’s digitisation index in isations are now leveraging
the Centre of Excellence 2016, the construction industry technology to stay on target and
in Smart Construction and was among the least digitised in within budget, and to help the
associate professor – smart the world. industry’s recovery.
construction at Heriot-Watt In 2019, McKinsey & Compa- While Covid-19 has expedit-
University Dubai ny said that utilising technology ed this shift, existing efforts to

it is imperative to look at the tions that can drive a real shift
willingness of the workforce in digital construction.
to embrace digitisation. If Despite the challenges, there
construction sector employees are several initiatives under way
are not equipped with the right to drive the construction indus-
resources, mindset and solu- try’s uptake of digital solutions
tions to adopt technology, any and develop best practices.
strategy involving a digital shift The UAE’s Energy & Infra-
is bound to fail. structure Ministry recently
Complex new processes bring unveiled the National Guide for
with them the need for training. Smart Construction, which aims
Therefore, while digital trans- to develop flexible policies,
formation is crucial, workforce elements and targets that stim-
upskilling must be considered ulate the development of the
in parallel. construction industry. The goal
Many organisations aim is to drive innovations and best
to achieve this by providing practices to meet the UAE’s as-
development programmes pirations for the next 50 years
for employees; however, this and enhance its global leader-
does not provide a long-term ship in smart construction.
solution. Industry and academia
adopt BIM in the industry have must collaborate to design and Developing best practices
provided a platform of knowhow deliver educational and work- The National Guide for Smart
and capabilities that can be built based programmes to equip the Construction includes key ele-
on for future technologies. future generation of profession- ments that are essential for all
The use of BIM has reduced als to drive a more innovative, parties to improve the construc-
costs, increased efficiency and digital-led industry. tion lifecycle, and suggestions
improved collaboration on The construction sector’s for how to adopt advanced
projects. It has also triggered challenges must also be tackled digital solutions. It includes
the modernisation of processes, from within. Despite the efforts chapters on digital platforms
such as BIM, blockchain, arti-
ficial intelligence, robotics, 3D
printing and more. It also cov-
“The construction sector is still at the start ers benchmarking capabilities,
of the digital transformation journey and and emphasises the need for
cooperation between stakehold-
still has many challenges to tackle” ers to provide a unified smart
building index.
promoting the use of innovative of software vendors, construc- The Centre of Excellence in
platforms, as well as attracting tion industry professionals still Smart Construction (CESC) is
young talent to further drive struggle to find solutions that contributing to the develop-
the change. would allow them to shift comment of guidelines to support
fortably to digital processes. the UAE and its construction
Upskilling the workforce Therefore, better collabora- sector in the adoption of digital
However, the construction tion is needed between the in- solutions. Inspired by its three
sector is still at the beginning dustry and technology vendors, core themes of performance
of the digital transformation to outline the issues facing and productivity, sustainability
journey and therefore still has the construction sector. This and wellbeing, CESC’s aim is to
many challenges to tackle. would better enable technology help to create a smarter, safer
Before focusing on technology companies to design, build and and more productive construc-
limitations for the industry, deliver industry-specific solution industry.

Libya
Prime Minister
Abdul Hamid
Mohammed
Dbeibah during
the Libyan
Political
Dialogue
Forum on
5 February
2021
LIBYA ELECTIONS COULD

CREATE INSTABILITY
W
Concerns remain that the country will slide back into war
hile great strides have been made to- whether Dbeibah can truly unite the
wards restoring economic and political country and prevent a descent back into
stability in Libya, significant challenges conflict over the coming months.
remain ahead of the elections scheduled Dbeibah’s proposed cabinet includes
for 24 December 2021. 33 ministers and two deputy prime min-
On 10 March, Libya’s House of Repre- isters, who he said are representative of
sentative (HoR) approved a government Libya’s different geographic areas and
of national unity headed by Prime Minis- social segments.
ter Abdul Hamid Dbeibah (pictured), in
the latest step towards holding success- Unity government
ful elections later this year. The speaker The new government replaces two rival
of the HoR, Aguila Saleh, declared the administrations – the HoR based in the
vote in favour of the government of east and the government of national
national unity “a historic day”. accord (GNA) in the west – that have
The mandate of the government will been vying for control of territory within
last until 24 December when presiden- Libya since 2014.
tial and legislative elections are held. Over recent years, the GNA, which is
PHOTOGRAPH: UN/JEAN MARC FERRÉ
Speaking after the vote, Prime Minis- based in Tripoli and backed by the UN,
ter Dbeibah urged Libyans to “open your has controlled western regions in Libya.
hearts to one another and forget the In November 2019, Turkey signed a
grudges”. However, after so many years treaty with the Tripoli government vio-
of fighting and deep divisions in Libyan lating the UN arms embargo. The terms
society along both tribal, geographical gave the GNA military support in return
and class issues, it remains to be seen for access to Mediterranean gas fields.

The HoR’s main military force is of the existing peace deal crumbling
known as the Libya National Army will increase. “While nobody
and is headed by the military general “There has been some progress
Khalifa Haftar. It has been supported by with the LPDF, as key power brokers
seems to
countries including Egypt, the UAE and have not tried to obstruct the approv- have a strong
Russia over recent years. al of a new unity government,” said incentive to
Currently, Libya is seeing more sta- Richard Bronze, a geopolitical analyst
bility and freedom of movement than it at Energy Aspects. disrupt the
has done for years as a result of a peace “I think we will see a bit more stability status quo, it
agreement that was announced by both this year, because nobody seems to have
sides in the conflict in September 2020. a strong incentive to disrupt the status
still doesn’t
In October, a formal peace deal was quo, but it still doesn’t look and feel like look and feel
signed and this was followed by the
establishment of the Libyan Political
this is the path to a long-term period of
political and economic stability.”
like this is the
Dialogue Forum (LPDF). path to a long-
The first round of the LPDF was held International focus term period
from 7 to 15 November 2020 in Tunis Amid concerns that the existing peace
and it has helped to push forward pro- deal could collapse, the international of political
gress in negotiations. community has committed additional and economic
resources to try to keep negotiations
Guarded ceasefire on-course.
stability”
One of the main issues Libya faces over The advance team of a UN observ- –––
coming months is the potential for for- er mission arrived in Libya early this Richard Bronze,
eign backers to try to use their influence month, according to an AFP report. It Energy Aspects
to gain more power within the country said a group of about 10 UN staff flew
as the election approaches. into Tripoli on 2 March to monitor the
In February, MEED revealed that fight- existing ceasefire.
er jets commanded by Khalifa Haftar The unarmed observer team is also
were secretly upgraded and serviced tasked with verifying the departure of
using parts shipped in by Russia over thousands of mercenaries and foreign
2019 and 2020, violating the existing fighters who have been deployed in the
UN arms embargo. oil-rich North African country and have
There are also concerns about the so far shown no sign of leaving.
continued military support from Turkey Under the terms of the peace deal
to the GNA. signed in October, all foreign fighters
Sources within Libya have revealed and mercenaries were required to leave
to MEED that work to fortify military the country by 23 January 2021, three
positions on both sides has continued months after the agreement was signed.
despite the ongoing peace process. The upcoming elections that are
Fighters from both sides also remain scheduled to take place in December
positioned in areas that were previously are a significant opportunity to set the
frontlines in the conflict near the towns country on a more stable footing for
of Sirte and Jufra. decades to come, but a raft of different
One source said: “A lot of normal Liby- factors could potentially undermine the
ans are worried that both sides of the political process.
war are using this period of stability to Keeping the peace process on-track
restock with weaponry and prepare for ahead of the elections is likely to require
the next war, which could well start in significant focus and resources from all
December as tensions escalate.” of the country’s major power brokers as
Political analysts are concerned that, well as international institutions.
as the elections move closer, the risk Wil Crisp

Military Balance
TUNISIA LEBANON SYRIA IRAQ KUWAIT IRAN

Morocco saw
ALGERIA
15% 0% 4% -1% -18%
the biggest 2020: $1.15bn 2020: $1.92bn 2020: $10.3bn 2020: $7.76bn 2020: $14.1bn
jump in defence -4% (2019: $1bn) (2019: $1.93bn) 169,000 (2019: $9.86bn) (2019: $7.86bn) (2019: $17.2bn)
spending with a 2020: $9.92bn 35,800 60,000 139,000 193,000 17,500 610,000
(2019: $10.3bn)
24 per cent rise
130,000 BAHRAIN
in its budget ISRAEL
last year to -1% 0%
2020: $1.41bn
almost $6bn 2020: $16.6bn (2019: $1.41bn)
(2019: $16.8bn)
8,200
169,500
MOROCCO QATAR
24% 1%
2020: $5.96bn 2020: $6.46bn
(2019: $4.82bn)
(2019: $6.39bn)
195,800 SAUDI 16,500
EGYPT JORDAN ARABIA YEMEN OMAN UAE
22% 2% -5% -1% 3%
2020: $4.11bn 2020: $1.72bn 2020: $48.5bn 2020: $7.48bn 2020: $19.8bn
(2019: $3.35bn) (2019: $1.69bn) (2019: $50.9bn) 40,000 (2019: $7.53bn) (2019: $19.3bn)
438,500 100,500 227,000 20,000 42,600 63,000
MAP KEY: Positive Negative Neutral Civil war Total troops Insurgents forces Source: IISS
DEFENCE BUDGETS STAY

RESILIENT DESPITE COVID
Militaries in the region face ongoing threats and need
D
to adapt to the rapid evolution of the battlefield
efence spending across the Middle East IISS noted that, in some countries, the
and North Africa (Mena) region fell by role of the military expanded as a result
2 per cent in 2020, according to the of the pandemic, with governments mo-
latest Military Balance report by Lon- bilising their armed forces to help deal
don-based think tank the International with the crisis, from closing borders
Institute for Strategic Studies (IISS), the and enforcing curfews to assisting with
third year in a row it has declined. logistics and humanitarian aid supplies.
However, given the Washington-based
IMF has estimated the region lost about Changing tactics
5 per cent of its GDP last year amid the In the more traditional military areas of
coronavirus pandemic, it is perhaps defence and power projection, things
surprising that military expenditure did have also been evolving.
not fall faster. The need to adapt to adversaries’
The reason for the relative resilience changing capabilities and tactics and
lies in a combination of spending plans to take advantage of technological
that were already formulated, the fact developments is a constant feature of
that defence spending has often been defence planning. These days there
prioritised by Mena governments and is an increased focus globally on the
the sense that major threat perceptions importance of air power and a need for
have not changed. enhanced cyber defences – issues that
Indeed, in some ways there was more have been highlighted by events such as
for the military to do than before. The the Stuxnet cyber attack on Iran’s nu-

clear programme in 2010 and the more Elsewhere in the Gulf, Iran has contin-
recent waves of missile and unmanned ued to struggle with economic sanctions “These days
aerial vehicle (UAV or drone) attacks on imposed by the US and was forced into
an 18.2 per cent cut to its budget last
there is an
Saudi Arabia by Iran-backed groups in
Yemen and Iraq. year, leaving it at $14.1bn. Inflation will increased focus
Another war on the fringes of the Mid- have also played a part in that down- globally on the
dle East late last year offered a lesson ward trajectory.
for defence ministries. “Azerbaijan’s use Despite its economic travails, Iraq importance
of loitering munitions and UAVs in 2020, found 4.2 per cent more for its defence of air power
in the short Nagorno-Karabakh war
[against Armenia], has only boosted in-
budget, taking it to $10.3bn.
and a need for
terest in air defence,” said IISS secretary Double-digit rises enhanced cyber
general John Chipman. In North Africa, by contrast, govern- defences”
Despite these pressures, low oil ments have been pouring more money
revenues and large budget deficits have into their armed forces in order to
forced some governments to make cuts recapitalise equipment and boost their
to their defence budgets. The extent capabilities. Leading the way has been
of this varies around the region. While Morocco, with a 24 per cent rise in its
overall expenditure in the Gulf fell by budget last year to almost $6bn. Egypt,
3.9 per cent last year, it dropped by just Mauritania and Tunisia also saw dou-
0.7 per cent in the Levant and rose by ble-digit rises in defence spending.
8.6 per cent in North Africa. All these countries remain dwarfed by
The fall in the Gulf was driven by a Algeria, which has in recent years ac-
4.7 per cent cut to the Saudi defence counted for more than half of all defence
budget, taking it to $48.5bn. Some spending in North Africa and which still
of the smaller GCC economies also easily outspends its neighbours. Even
trimmed their military spending, with so, the gap has closed slightly, following
Bahrain cutting its outlay by 0.4 per the 3.7 per cent fall in Algiers’ military
cent to $1.4bn, Oman making cuts budget last year to $9.9bn.
of 0.6 per cent to $7.5bn and Kuwait Among the Levant countries there has
reducing its budget by 1.3 per cent to been less dramatic movement. Israel cut
$7.8bn. However, Qatar increased its its budget by 1 per cent to $16.6bn, al-
spending by 1 per cent to $6.5bn, while though it has still overtaken Iran to now
the UAE expanded its defence budget by have the third-largest defence spend in
2.6 per cent to $19.8bn. the region, after Saudi Arabia and the
Abu Dhabi has continued that trend UAE. Jordan increased its spending by
this year at the International Defence 1.9 per cent to $1.7bn while Lebanon
Exhibition (Idex) in February. The UAE trimmed its by 0.4 per cent to $1.9bn.
Armed Forces announced AED21bn It remains to be seen what the long-
($5.7bn)-worth of deals at the event, term economic consequences of the
some AED1.1bn more than at the coronavirus crisis will be, but in the
previous edition two years earlier. Local years to come some countries are likely
defence firms picked up half of those to find budgets coming under strain,
deals by value, underlining the desire of as they strive to pay for healthcare and
many regional governments to support other social costs while trying to rein-
and develop their own defence indus- vigorate their economies. “It will likely
tries. However, some potential big-ticket take until 2022-23 for the full effect of
purchases remain on hold, due to the governments’ financial responses to
decision by US President Joe Biden to the pandemic to translate into defence
freeze arms sales to Saudi Arabia and budget cuts,” IISS noted in its report.
the UAE pending a review. Dominic Dudley

Kuwait
Kuwait cut
the 2020/21
budgets of
government
entities by
20 per cent in
June as part
of measures
to cope with
the Covid-19
pandemic
KUWAIT BUDGET HIGHLIGHTS

URGENT NEED FOR REFORMS
The country’s Finance Ministry has projected a
T
budget deficit of $40bn for the current financial year
he need for reforms is growing in Kuwait revenues, saying that “easy” solutions to
as the country braces for its eighth boost liquidity “have been exhausted”.
straight year of fiscal deficit.
The Kuwaiti Finance Ministry’s draft Debt and expenses
budget for 2021/22 forecasts revenues Among the solutions Hamada refers to is
to reach KD10.9bn ($36.1bn) and the sale of income-generating assets from
expenditures to hit KD23bn during the the General Reserve Fund (GRF), and a
year. These figures are 45.7 per cent and halt during deficit years on the annual 10
6.9 per cent higher than corresponding per cent transfer of state revenues to the
2020/21 values, respectively. Future Generation Fund (FGF).
Kuwait forecasts a budget deficit of The GRF, the state’s main source of
KD12.1bn for the year ending 31 March budget financing, has been used to plug
2022, 13.8 per cent lower than this the deficit in recent months. The cabinet
year’s estimated gap of KD14bn. also submitted a draft bill in February
The country’s non-oil revenues are to allow the withdrawal of KD5bn a year
expected to shrink by 3.8 per cent to from the FGF, but the move is expected
reach KD1.8bn in 2021/22, with oil to face resistance.
revenues projected to grow 62.2 per cent Parliament speaker Marzouq al-
to KD9.1bn. Ghanim has said that withdrawing from
Kuwait’s Finance Minister Khalifa the FGF would be “a very dangerous
Musaed Hamada has called for “radi- matter”, given the fund’s principal role
cal economic and financial reforms” to as a nest egg for the future and not the
help cut expenditures and grow non-oil current generation.

The National Assembly also rejected point is set at $90 a barrel. According to
the passing of a public debt law last year Hamada, the recent increase in oil reve- EXPENDITURE
that would have allowed Kuwait to bor- nues will not “cover budget obligations, BREAKDOWN
row KD20bn over a 30-year period.
Kuwait has not returned to the in-
ternational debt market since its 2017
nor delay or reduce [the commitment]
to draft laws aimed at raising liquidity in
the GRF”.
71.6%
Salaries and subsidies
Eurobond debut, after existing provisions Kuwait’s anticipated 3.8 per cent fall in
lapsed in October that year.
According to Hamada, procedures for
non-oil revenues is likely to further risk
its fiscal position in the medium term. 15%
Capital expenditure
issuing bonds and “an organised and Raghu says a substantial part of Ku-
limited withdrawal from the [FGF] are wait’s historic non-oil revenues are attrib-
not reform solutions, but temporary
measures that must be taken to fulfil the
utable to administrative fees and charges
by government departments, some of
12%
Other expenses
immediate obligations that are represent- which may have been waived due to the
1.3%
ed by salaries and subsidies”. Covid-19 pandemic last year.
Salaries and subsidies account for “Only 17 per cent of the 2021/22 reve-
about 71.6 per cent of Kuwait’s planned nues will be from non-oil sources, which Arrears settlements
KD23bn expenditure this year, up 5.4 indicates Kuwait’s efforts to diversify its
per cent from the 2020/21 budget. This economy are very much at their infancy.”
rise can be partly explained by “higher SUBSIDIES IN
localising costs, since foreigners occupy Project funding THE BUDGET
low-paying jobs in government, and re-
placing them with locals could be expen-
Despite the budget deficit, capital
expenditure is projected to grow 20 per
KD3.9bn
42.6%
sive”, says M R Raghu, CEO of Marmore cent in 2021/22. The largest commit-
Mena Intelligence, a subsidiary of Kuwait ments scheduled for the year include the
Financial Centre (Markaz). approximate payments for the KD360m Energy and fuel subsidies
“However, salary expenditure has con- Terminal 2 expansion of Kuwait Interna-
sistently increased in recent years – 6 per
cent a year since 2016/17, despite low
tional airport; the KD86.6m Salem al-Ali
military camp; and the KD50m expansion 20.3%
Educational support
inflation during the period.” of the Umm al-Hayman sewage plant.
Kuwait cut the 2020/21 budgets of While capital spending is hoped to
government entities by 20 per cent in
June as part of measures to cope with the
have a multiplier effect on the economy,
the importance of at least partly funding
16.1%
Social welfare
Covid-19 pandemic, but parliamentarians these schemes through alternative financ-
have historically resisted spending cuts. ing sources is growing in the country.
In August, members of parliament voted
against a draft law that would have al-
Kuwait’s approval of the public debt
law allowing it to tap international bond
8.8%
Housing support
lowed private sector firms to reduce sala- markets is “imperative”, Raghu says.
ries by 50 per cent due to the pandemic. Allowing withdrawals from the FGF
Local newspaper Kuwait Times report- could also provide some much-needed
ed that the proposal was rejected because impetus to programmes aimed at easing
its retrospective implementation would the fiscal tightening and the depletion
violate the constitution, and because it of liquidity in the treasury, according
did not protect the approximately 72,000 to Hamada.
Kuwaitis working in the private sector. “The people of Kuwait have the right
to feel reassurance about the state’s
Diversification obligations to them, and it is our duty to
The 2021/22 budget reiterates the need [provide] sufficient liquidity in the state’s
to ease Kuwait’s reliance on oil revenues. treasury in a sustainable manner, not day
The draft budget assumes an average by day or month by month.”
price of $45 a barrel, but its breakeven Neha Bhatia

Interview
The Covid-19
pandemic has
heightened the
importance of
the social part
of ESG, says
Candriam’s
Chafic Jabbour
SUSTAINABLE INVESTING
FOR LONG-TERM VALUE
The environmental, social and governance agenda may
E
offer a breakthrough for the region’s future development
nvironmental, social and governance the $157bn of total assets under man-
(ESG) investment is a megatrend that agement. “Everybody is talking about
businesses cannot ignore. the recent pickup in ESG globally over
“It is a no brainer. This is growing,” the past five to seven years. But it has
says Chafic Jabbour, senior executive of- been there for a while,” says Jabbour.
ficer – head of Mena, Candriam. “When
you talk about long-term trends, this E element
is one of the main long-term trends for The environment has been the key area
the future. The way we used to run the of interest for investors so far.
world is taking us to a dead end.” “If you look at what people can see
ESG is already big business. Globally, or quantify, it is really the E element
a record $490bn of green, social and that grew a bit faster,” says Jabbour.
sustainability bonds were sold in 2020 “Although interest had existed since the
along with a further $347bn allocated late 80s and 90s with the Kyoto Agree-
into ESG-focused investment funds. ment, the Paris Agreement was really
For 2021, sustainable-debt issuance is the game changer,” says Jabbour.
expected to reach $650bn while money The 2016 Paris Agreement and
flows to ESG funds is set to continue. interest in ESG received a major boost
Candriam, a subsidiary of New York on 19 February when US President Joe
Life, is an established player in the ESG Biden signed an executive order for the
space. While it manages a portfolio of US to rejoin the Paris Climate accord,
traditional equities and bonds, sustain- reversing the earlier withdrawal ordered
able assets account for about $50bn of by former president Donald Trump.

The Middle East is playing a role in and loss, the challenge for the industry
combating climate change and, over the is quantifying ESG. “We need a unified, “ESG investment
past decade, there have been significant standardised measuring tool. There are
efforts in the right direction – we are
is one of the
advances in areas such as solar power
and, more recently, the development of getting there,” says Jabbour. main long-term
smart cities. Quantifiable data could have big impli- trends for the
“The smarter the city, the less trans- cations for the region as it seeks to attract
portation and less Co2,” says Jabbour. foreign direct investment (FDI). “With
future. The way
“Saudi Arabia is building the world’s ESG promoting transparency and access we used to run
most sustainable city with Neom so
there are a lot of positive plans and the
to data, that should create a lot more
flows into the region,” says Jabbour.
the world is
region is going in the right direction. Candriam already has experience taking us to a
It is just a matter of time. Europe may of relying on ESG as a tool for mitigat- dead end”
have been a leader, but the region is not ing risk. “We manage emerging markets
far behind. A decade down the line you equities purely by ESG and this has
will see a different region.” helped us over the years. ESG could
be a way to grow local markets, increase
S and G factors liquidity and increase flows into the
As environmental awareness gains local exchanges.”
traction, the other two elements of ESG To help facilitate the further develop-
are developing. “Over the past couple of ment of ESG investment, Candriam is
years, the S and G elements have been promoting education. It runs the Can-
growing in importance,” says Jabour. driam Academy, which has more than
The Covid-19 pandemic has height- 5,380 members and has delivered more
ened the importance of the social part than 11,400 accredited training hours.
of ESG. To be successful, companies Candriam’s course was added to the
now have to actively engage and support DIFC Academy in December 2020. This
employees as they struggle with global ESG-focused course is the only one of-
uncertainty, and operational challenges fered by the Candriam Academy on the
such as working from home. DIFC platform, and is accredited by the
“Employee loyalty impacts overall per- Dubai Legal Affairs Department.
formance. Although we haven’t talked With more money moving into
a lot about it, the pandemic has forced sustainable investment and growing
us to look at the social aspects of ESG. awareness that ESG is a trend that
This is very important. A lot don’t pay is here to stay, Jabbour says this is a
attention,” says Jabbour. golden opportunity for the region as it
The pandemic has obliged companies continues its development.
to look beyond traditional short-term “I am confident sustainable and re-
targets and focus on other ways of sponsible investment will progress rapid-
measuring performance. ly in the region going forward, especially
“The world used to have a very short- when you consider the important role
term approach. Listed companies used to ESG integration, reporting and transpar-
focus on the short end of the curve, but ency could play in promoting the GCC to
as risks increase and, down the line affect international asset owners,” he says.
your business growth, investors started “The ESG agenda could offer the
to realise we should integrate this a lot breakthrough for the region’s next
earlier in the process and ultimately work phase of development, attracting new
towards a long-term evolution rather than FDI and capital, as well as boosting
Chafic Jabbour is
short-term profits,” says Jabbour. liquidity in our stock exchanges. So there senior executive
While traditional investing can rely is a lot to play for.” officer – head of
on basic financial metrics such as profit Colin Foreman Mena at Candriam

Industry Report
Report
The Royal
Atlantis Resort &
Residences under
construction
on the Palm
Jumeirah in
Dubai
TOURISM
OUTLOOK IS PROMISING
FOR REGIONAL HOTELIERS
T
An upward trend in occupancy and other performance metrics
has boosted confidence in the Middle East’s hotel market
he hospitality industry in the Middle East Tourism Organisation. It estimates that in
is cautiously optimistic about the future of 2020, this figure was 74 per cent lower
the sector, with data indicating that a slow than in 2019, with 1.1 billion fewer tour-
but steady recovery is on the cards for the ists travelling in 2020.
region’s hotels – particularly in countries
that have opened borders to tourists and Dip in performance
worked on domestic tourism advertising Not surprisingly, hotels in the Middle
campaigns during periods of lockdown. East reported all-time lows in occupancy
The challenges facing the sector in the and revenue per available room (revpar),
past year have been many and varied, not according to year-end 2020 data from in-
least of which has been the decline of the ternational hotel industry data benchmark-
global travel market. Data from real estate ing firm STR. While total-year occupancy
consultancy Knight Frank shows that in and revpar levels fell to all-time lows,
2020, the total number of flights world- December monthly data reached closer to
wide fell from a 2019 average of about pre-pandemic levels in each of the three
115,000 a day to lows of about 28,000 a key performance metrics. Occupancy
day in the early stages of the pandemic. across hotels in the Middle East stood
As lockdown restrictions around the at 45.9 per cent, a fall of 30.3 per cent
world were eased and traveller confidence from the previous year; average daily rate
returned, activity recovered to an annual (ADR) dipped 17.3 per cent to $117.2;
average of about 70,000 flights a day in and revpar stood at $53.8, a decline of
2020. However, this still represented a fall 42.4 per cent.
of 39.1 per cent from 2019. Danielle Curtis, exhibition director for
Total international tourist arrivals have tourism exhibition Arabian Travel Market,
also decreased, according to the World noted: “The Middle East region was a top

performer globally during 2020, with
average occupancy of 45.9 per cent. One MENA HOTEL SUPPLY FORECAST
of best-performing countries was the UAE, Country Key expectations
with an average occupancy of 51.7 per
Saudi Arabia 17,000 new keys by 2023
cent and an ADR of $114.
8% annual growth rate
“Although these figures were 29.3 per
cent and 16.5 per cent down year-on-year, UAE 22,100 new keys by 2023
respectively, given the challenges present- 7% annual growth rate
ed by the pandemic, it is a remarkable Kuwait City 8,400 new keys by 2023
achievement and proves just how resilient Manama 47% supplied in Muscat
Muscat
the hotel sector is in the UAE and wider Amman 34% supplied in Manama
Middle East.” 13% annual growth rate
ADR in the emirates of Fujairah and
Egypt 7,000 new keys by 2023
Ras al-Khaimah actually rose last year
compared to 2019, by 7 per cent and 1 Source: Colliers
per cent, respectively, according to Curtis.
Over the new year period, “hotels in Dubai – or unwilling – to travel internationally
were running average occupancies of 76 due to pandemic-related restrictions. “Many
per cent with an ADR of $300”, she added,
noting: “Many hoteliers in the Middle East Hotel openings
hoteliers in
are now preparing for a ‘V-shaped’ recov- Against this backdrop, the region’s the Middle
ery, especially with the successful roll-out hospitality industry is gearing up for new East are now
of the vaccines.” hotel openings, both this year and next.
STR’s preliminary data for February In 2020, Radisson Hotel Group signed preparing
2021 was encouraging for Abu Dhabi’s contracts for five hotels in the region, for a
hotel sector, which reported its best per- comprising 1,500 keys. The group aims
formance since the start of the pandemic, to open six properties across Saudi Ara-
‘V-shaped’
largely bolstered by the International bia and two hotels in the UAE in 2021. recovery”
Defence Exhibition & Conference, which
brought more than 62,000 visitors to the
In Qatar, GHM has announced plans
for the luxury Chedi Katara Hotel & Re-
– Danielle
emirate on 21-25 February. sort in Doha, with 59 rooms and suites
Curtis,
Abu Dhabi hotels saw their highest and 32 chalets and villas. The city is also exhibition
ADR and revpar levels for the month set to get its first Fairmont and Raffles director, Arabian
on the first day of the conference, with hotels and residences in 2022. Travel Market
ADR up 50.5 per cent to AED606.8 In the UAE, Emaar Hospitality Group
($165.2) and revpar rising 34.4 per cent opened its first resort under the Vida
to AED446.6 ($121.6). Hotels & Resorts brand in Umm al-Quwain
In the previous month, Riyadh reported this year, and the Hilton Abu Dhabi Yas
its highest overall performance since the Island opened in February. The DoubleTree
start of the pandemic, according to pre- by Hilton Yas Island Residences and the
liminary January 2021 data from STR. WB Abu Dhabi, the world’s first Warner
In addition, according to Knight Frank’s Bros-branded hotel, are also expected to
recent UAE Market Overview and Forecast open later this year.
2021, year-to-date data from December If the pipeline of new properties in these
2020 showed that several markets had markets materialises, support from local
recorded “relative outperformance”. governments and tourism bodies – particu-
These markets included Abu Dhabi, Ras larly in the form of international and domes-
al-Khaimah and Fujairah, as well as the tic advertising campaigns – combined with
beach property market segment in Dubai, returning traveller confidence amid vaccine
all of which benefitted from diverted de- roll-outs will make for a better year ahead.
mand from UAE residents who were unable Devina Divecha

Industry Report
Report
Winter season
marketing in the
UAE included
Ras al-Khaimah’s
Funderful
campaign
TRAVEL INDUSTRY GEARS

UP PROMOTION EFFORTS
W
Tourism authorities are doing everything they can to entice
residents and travellers to explore their destinations
ith traveller confidence slowly recovering as In Saudi Arabia, the tourism authority ran
pandemic-related restrictions on movement an advertising campaign titled ‘Winter is
and international travel ease, hotel opera- Around You’ to highlight the appeal of desert
tors and tourism bodies are keen to ensure a destinations during the cooler weather. Sim-
sustainable path to recovery. ilarly, the UAE produced its ‘World’s Coolest
Uncertainty remains, due to the potential Winter’ campaign, alongside emirate-level
for further waves of infection around the marketing, such as Dubai’s ‘Live Your Story’
world as countries attempt to restart their campaign and Ras al-Khaimah’s ‘Funderful’
economies by easing precautions. The out- campaign, which aimed to entice holiday-
ward signs are positive, however. makers with prize draws. These efforts were
The latest forecasting, including a De- broadly successful in increasing occupancy
cember report from commercial real estate levels, according to data from Colliers.
services company Colliers, suggests that the However, consultancy Knight Frank’s
recovery that began in the fourth quarter of 2021 UAE market overview and forecast
2020 will continue in 2021, and projects a indicates tourism is not expected to return
faster recovery in the UAE and Saudi Arabia. “in a meaningful manner until the latter part
of 2022”, despite the country’s successful
Tourism encouraged vaccination drives.
The optimism in the market can be attrib- One way to encourage more people to
uted in large part to the efforts of tourism travel is to roll out confidence-boosting
bodies. While countries’ borders were safety measures. To that end, Emirates air-
closed, they sought to boost domestic travel; line, Etihad Airways and Qatar Airways have
now, increasingly, they are promoting the started trials of the Iata Travel Pass, which
return of inbound tourism as flights are shares polymerase chain reaction (PCR)
allowed to resume. test results with the airlines and updates

passengers about Covid-19 regulations at
their destination. SELECTED MENA OCCUPANCY FORECASTS, 2021
Bahrain, meanwhile, has launched a
YoY YoY
digital Covid-19 vaccine passport via its Occupancy change Occupancy change
BeAware smartphone application. The reo- Market (%) (%) Market (%) (%)
pening of the King Fahd causeway between Ras al-Khaimah (city) 70 0% Medina 51 88%
Bahrain and Saudi Arabia has been pushed Dubai Marina/JBR 67 44% Fujairah 49 7%
back to May from March, but when the Dubai Creek 66 61% Aqaba 49 35%
transport link is reinstated, regular move-
Dubai DIFC/SZR 65 63% Hurghada 48 88%
ment of tourists across the causeway should
Dubai Palm Jumeirah 65 64% Manama 45 58%
improve local hotel performance metrics –
especially for Bahrain. Alexandria 62 38% Cairo 43 53%
Ras al-Khaimah (beach) 61 38% Sharm el-Sheikh 43 78%
Saudi projects Abu Dhabi 56 16% Kuwait City 42 61%
The continued development of Saudi Ara- Sharjah 56 23% Muscat 41 64%
bia’s tourism megaprojects lends obvious
Riyadh 55 10% Amman 40 57%
positivity to the prospects of both domestic
Al-Khobar 55 3% Mecca 37 75%
and inbound travel within the kingdom.
The recent launch of a planned tourism Jeddah 51 39% Beirut 35 33%
project in the kingdom’s Asir region by DIFC=Dubai International Financial Centre; JBR=Jumeirah Beach Residence;
SZR=Sheikh Zayed Road. Source: STR Global
Soudah Development Company, which is
owned by the Public Investment Fund, has “when significant portions of the
only added to the positive sentiment. The masterplans are delivered, regional “Increasingly,
planned developments within the project are
understood to include 2,700 hotel rooms,
visitation will quicken, and as they
are completed, international visita-
tourism bodies
1,300 residential units, and 30 commercial tion will begin to accelerate”. are promoting
and entertainment attractions. This is expected to benefit Saudi the return
The Red Sea Development Company has Arabia, but could lead to knock-on
meanwhile awarded initial contracts to begin improvement in the tourism sector of inbound
work on the construction of hotels within across the region in the long term. tourism as
the resort, which is set to open in late 2022.
Ali Manzoor, a partner focused on hos-
However, this trend will likely be
two-phased, explains Manzoor.
flights are
pitality and leisure at Knight Frank, notes: Initially, the regional markets allowed
“While it is true that the hospitality sector that are dependent on Saudi to resume”
has suffered significant trauma due to the Arabia could suffer due to subdued
global pandemic, large-scale hospitality-led outbound travel from the kingdom
mega-developments have continued unfet- as Saudi nationals increasingly
tered throughout the kingdom. choose to visit the country’s megaprojects.
“Given the nature of these projects, the Of the major regional markets, Bahrain,
development teams have a long-term invest- Dubai, Abu Dhabi and Kuwait would likely
ment horizon and, as such, short-term mar- be significantly affected.
ket shifts are deemed to be inconsequential, In the longer term, however, “the impact
regardless of severity,” he adds. “With is not likely to run along geography, but
well over 200,000 keys planned within the asset class”, says Manzoor.
mega-developments alone, and many more In other words, the competition will be
envisaged to be developed by the private more focused on the luxury segment, where
sector, the kingdom will have a more vibrant “the notion of exclusivity and scarcity are
offering over the coming decade.” embedded within the value proposition” and
In terms of segmentation, Manzoor notes the growth of Saudi capacity will devalue
that these projects will primarily attract other regional assets.
domestic visitors in the initial stages. Then, Devina Divecha

Leadership
FROM COMMUTING BUILDING BLOCKS FOR THE

FUTURE OF TRANSPORT
TO COMPUTING
Transport experts analyse how digital connectivity
will impact mobility in the post-pandemic world
Connect
people, services
and opportunities
digitally
Embed Expand
sustainability definitions
and social and action
inclusion within on transport,
accelerated health,
infrastructure safety and
Enable wellbeing
and reconfigure
future mobility
technologies
and services
Reaffirm
public transport
as the
backbone
of mobility
“Y
ou’re on mute.” Digital connectivity was identified
“Can everyone see by Atkins Acuity, a member of the
my screen?” SNC-Lavalin Group, as one of the
One year into the eight building blocks for the future
Covid-19 pandemic,
the experience of daily conference
of transport. In a white paper titled
“Covid-19 and Transport: Reimag- While commuting
calls has brought a whole new set
of buzzwords into our lives. People
ining transport and mobility for a
sustainable economic recovery”, the will remain, it may
have been repeatedly required or
encouraged to work from home,
company’s experts highlight that
many of these digital connectivity
flatten and become
and multiple interactions have gone
online, creating a raft of new phras-
practices could become permanent
behavioural changes.
more variable by day
es, habits and behaviours. All these new platforms have one or hour, reducing
important outcome – the elimina-
Digital accelerator tion or sharp reduction of the need peak demand
In the midst of crisis, necessity has
been the mother of invention and
to travel from one’s home base.
The growth in digital connectivity and capacity
technology has provided a lifeline. has therefore been paralleled by
Use of videoconferencing services a slump in physical mobility and
has exploded and daytime inter- trip-making, itself an outcome of
net demand has doubled in some the public health emergency. It is
places. Zoom, the most downloaded likely to be some time before travel
iPhone and iPad app of 2020, grew returns to pre-pandemic levels.
from 10 million daily meeting par- As mass vaccination starts to turn ABOUT THE AUTHORS
ticipants in December 2019 to 350 the tide of the pandemic, things
million a year later. Digital services will settle down. Over time, we will Jonathan Spear (top) is a trans-
have advanced years in the space of see how much of our new virtual port policy and strategy adviser
and Roger Cruickshank (below)
months, and what was a peripheral personas outlast Covid-19 and how is senior director at Atkins Acuity,
activity for a few has become a uni- society will transition to a more a member of the SNC-Lavalin
versal experience for almost all. stable state. Group, in the Middle East

It seems likely that some acquired Players who are timid and unre-
behaviours will remain. Digital ser- sponsive, or with inflexible legacy
vices will be seen as convenient and assets, may struggle.
flexible, providing greater choice A key test will be whether physi-
and potentially better work-life cal mobility will be seen as neces-
balance. For many, the opportunity sary – or desirable – to undertake
to ditch traffic congestion and over- activities. Travel could become
Commit
crowded trains will be irresistible. more discretionary – to enjoy fresh
the whole Many firms are eyeing the financial air, spend time with friends and
transport sector
towards credible savings from downsizing expensive have other personal experiences
net zero
city centre offices and moving to that cannot be had online. We
Optimise
asset and smaller, agile hot-desking layouts. therefore need to consider the need
supply chain
performance According to a survey published to travel against diverse future sce-
and resilience by UK-headquartered consultancy narios and whether offices, shops,
PwC on the future of remote work, universities, tourist attractions and
80 per cent of employers anticipate city centres will reinvent themselves
adopting remote working in some around human interaction.
Deliver form and many plan to allow it for At the same time, there will be
smart governance,
regulation and at least two days a week. opportunities to remodel neigh-
collaboration
The hybrid office therefore looks bourhoods to encourage active
set to become a reality, transitioning travel for short distances, counter
from a nine-to-five workplace to a car (and fossil)-fuelled lives, and
more flexible proposition around promote compact and sustainable
face-to-face collaboration and concepts such as the 20-minute city.
engagement. While commuting will
remain, it may flatten and become Future toolkit
350 more variable by day or hour, re-

ducing peak demand and capacity.
Digital connectivity will need to
be included in our future toolkit of
million
Number of daily
This has huge implications for the
economics of urban, and possibly
planning approaches, model fore-
casts and design concepts. Digital
inter-urban, travel. networks will need to be assessed
Zoom meeting
In cities where the car is king, for policy alignment alongside
users by the end of
2020, up from there could be less traffic and better roads, railways and public transport.
10 million streets. Elsewhere, public trans- In deriving solutions, there are
in December port, already hammered during the some fundamental questions. What
2019 pandemic, could see a long-term will the mode share of future travel
reduction in ridership and revenue. be if home is a new non-travel
If this combines with a decline of mode? How many non-essential
80%
secondary businesses serving office journeys will be eliminated by dig-
workers, then long-term city centre ital platforms and what secondary
Proportion of vitality could be at risk. trips (notably by freight and home
employers who Business travel may also look deliveries as well as people) will
anticipate adopting very different. Covid-19 has shown replace them?
remote working that many corporate interactions Beyond Covid-19, we will grapple
in some form can be done online. Operators with these questions in the years to
post-pandemic, reliant on the higher margins of come. However, making progress
according business travellers may face a will be vital to ensure the digital
to PwC drawn-out recovery and will need to revolution fully enriches socie-
reinvent their market propositions. ty rather than reducing it to the
Bold, agile and innovative players, two-dimensional bandwidth of a
Sources: SNC-Lavalin; Atkins Acuity; PwC with cash to invest, may thrive. conference call.

Road to Expo
PepsiCo and
Expo 2020
Dubai are
working together
to showcase
the future of
sustainable food
and beverages
SUPPLYING FARM-TO-
FORK SUSTAINABILITY
PepsiCo is using Expo 2020 to highlight the need
T
to strengthen local and global food supply chains
he current state of the world’s food inclusive of poor and marginalised pop-
systems is exposing profound inequal- ulations, environmentally sustainable
ities in society. Amid the fallout from and resilient, and able to deliver healthy
the Covid-19 pandemic, the World and nutritious diets for all.
Food Programme estimates that the These are complex and systemic chal-
number of people experiencing acute lenges, solutions for which transcend
food insecurity around the world has geographic, disciplinary and institution-
doubled to nearly 270 million. al boundaries. They require a combina-
As the world’s population continues to tion of interconnected actions at local,
increase, the burden on global food sys- national, regional and global levels, and
tems is growing. Over the next 30 years, by both public and private actors.
food systems will need to feed a project-
ed 10 billion people while withstanding Platform for change
the impacts of a changing climate and PepsiCo and Expo 2020 Dubai are
protecting natural resources. working together to showcase the fu-
This is where countries and govern- ture of sustainable food and beverages,
ments must step in. Efficient, inclusive aiming to inspire ideas while educat-
and resilient food systems underpin ing visitors. PepsiCo will create new
the UN’s sustainable development experiences for consumers by launching
goal of zero hunger. innovations related to hydration, nutri-
The global food system needs to be tion, on-the-go snacking and sustainable
reshaped to be more productive, more packaging at the expo.

Prior to and during the event, the growers. For example, by blending
company will leverage the collective procurement traditions with new
power of its portfolio of brands to technologies, PepsiCo has developed
ensure the themes of Expo 2020 reach precision agriculture methods to
millions of households internationally. ensure efficient use of resources
Visitors can expect one-of-a-kind acti- across farming operations.
vations around the expo’s core themes In order to overcome some of these
with global brands such as Pepsi, Gato- challenges in the Africa, Middle East
rade, Aquafina and Lay’s. and South Asia (Amesa) regions,
PepsiCo will also leverage the global PepsiCo is using SmartAgro, a mul-
stage that Expo 2020 offers to engage tilingual, user-friendly interface that
in high-level discussions with experts has strengthened the company’s
on several important issues, including relationship with farmers by delivering
food, agriculture and livelihoods, water enhanced yields, faster payments and
security, and climate and biodiversity. transparent quality controls. It has
put the company on a fast-track to
Circular returns achieving its traceability and sustaina-
In order to be able to feed everyone bility goals for water use efficiency and
today while protecting the natural greenhouse gas footprint.
resources for tomorrow, it is necessary The SmartAgro platform has played
to make a circular economy available to a pivotal role in enabling PepsiCo’s
consumers through the creation of more agricultural supply chain to carry out
products with ingredients that have been experiments in irrigation, fertilisation,
grown sustainably. crop protection and yield estimation.
There has been significant progress in It has paved the way to accelerate the Precision agriculture
methods have been
this space. The manufacturing sector is company’s digital journey in building developed to ensure
PepsiCo Smart Farms, adapting preci- efficient use of
transitioning to facilities that are carbon- resources across
and water-neutral, packaging that uses sion agriculture concepts and tools. farming operations
materials that are 100 per cent recycled
or renewable, as well as optimised trans- New beginnings
portation and logistics processes. There is an opportunity to change
Similarly, some retailers are driving how the world produces, distributes,
circularity within their sector by focusing consumes and disposes of foods and
on facilities that are carbon-neutral; re- beverages, and digital technology has
distributing unsold food; and taking part been important in unlocking this for
in the recycling of all materials, includ- farmers in the Amesa region.
ing food and beverage packaging. Over the past few years, PepsiCo
Consumers, meanwhile, are seek- has digitised farming operations to ABOUT
ing to prevent avoidable food waste give full visibility throughout the crop
THE AUTHOR
through storage mechanisms and smart lifecycle for all its contract farmers.
Eugene Willemsen is
buying, and are recycling and sort- The company is also investing in the CEO of PepsiCo Africa,
ing household waste to minimise the capability building among female Middle East and South
amount of packaging and food waste farmers, addressing the imbalance Asia (Amesa)
that ends up in landfills. to create a more sustainable food
system that benefits families, and
Deploying agritech everyone in society.
The challenge that the industry is We have a responsibility to help build
battling right now is climate volatility, a more sustainable food system, not
and agricultural technology (agritech) only because it is the right thing to do,
is integral to managing this, provid- but because it goes hand in hand with
ing real-time information on crops to the success of the company.

Road to Expo
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Enoc unveils service

station of the future
Expo 2020’s official
integrated energy part-
ner Enoc has opened
a dedicated service
station for the expo THE KALEIDOSCOPIC
FACES OF MONACO
site. The design of the
station is inspired by
the UAE’s national tree,
the ghaf, and incorpo-
rates several energy-
The glitzy principality will present a deep dive into
conserving features. its art, culture and ecology at Expo 2020 Dubai
F
Improving on-site
mobility at expo or the principality of Monaco, design, taking visitors on a multi-senso-
Abu Dhabi’s Falcon Expo 2020 Dubai presents ry journey through mirrored exhibition
Aviation Services and the chance to provide a spaces and replicating the sights and
Italian aerospace firm unique perspective on the scents of the French Riviera.
Leonardo have started nation’s variegated offerings.
work on a rotorcraft ter- Inspired by a kaleidoscope, the theme Multifaceted
minal at the expo site, ‘Monaco 360° – a World of Opportuni- Located in the Opportunity district, the
to provide helicopter ties’ will emphasise lesser-known aspects polygonal pavilion features two main
transport services to of the jewel of the French Riviera. exhibition areas. The first, called the
and from the location. “Monaco’s diversity and opportunities Garden of Opportunities, includes in-
are like this optical instrument with two teractive experiences that will recollect
Philippines’ pavilion or more reflecting surfaces: it always Monaco’s warm, sunny climate.
set for handover offers new facets,” says pavilion com- An interactive bench placed in this
The national pavilion missioner general Albert Croesi, who section of the pavilion will allow visitors
of the Philippines is is also managing director of organiser to connect with people seated on anoth-
scheduled for hando- Monaco Inter Expo. er interactive bench right in the centre
ver. The design of the “The kaleidoscope is an ideal meta- of Monaco harbour.
1,386 square-metre phor to showcase Monaco’s excellence in Next, visitors will enter the kaleido-
pavilion is inspired by art, culture, history and science, gastron- scope show, a 360-degree taste of the
PHOTOGRAPHS: SUPPLIED
the “extreme intercon- omy, hospitality and luxury, research, country’s history, culture and values.
nectedness” of a coral environment and new technologies.” Maraterra, a new waterfront eco-district
reef ecosystem. The Monaco pavilion incorporates in Monaco, will be showcased in this
the many faces of a kaleidoscope in its space. Designed as an extension of the

existing coastline, Mareterra is sched- proven climate crisis, and with esti-
uled to be completed in 2024. mates suggesting that 25 per cent of
Should hunger strike, visitors can the world population will lack water by
stop by the pavilion’s Cafe de Paris for 2030, it is important to act now.”
some takeaway Mediterranean special- FGWRS’s goal is to recycle 80 per
ities, including barbajuan, a traditional cent of grey water, while providing visi-
vegetable savoury pastry. tors access to daily figures that demon-
Finally, Monaco will showcase its strate the efficiency of the process.
ecological footprint, technology geared The pavilion is also striving to be
towards education, construction, sci- self-sufficient in terms of its energy
ence and its cultural spirit. needs. In February, Emirates Insolaire,
“We want to make a key contribution a joint venture of Dubai Investments
to the Opportunity thematic district,” and Swiss manufacturer Swissinso,
says Croesi. “And share the Mone- announced that it had installed its pat-
gasque savoir-faire and life skills: how ented Kromatix coloured photovoltaic
we found the balance between human (PV) panels on the facade of the main
technological development and respect building and standard PV systems on
of the Earth’s ecosystem.” the adjacent building. The panels are
The main contractor on the pavilion estimated to reduce energy use by up to
is Germany-based Facts and Fiction, 85 per cent, and will meet the pavil-
while the design was delivered by archi- ion’s entire energy demand. After the
tecture firms AODA (Monaco) and OOS expo, the panels will be donated to a
(Switzerland). Work is nearly finalised, yet-to-be-confirmed organisation.
with outdoor paving and landscaping
nearing completion. Building relations
A French Riviera-coloured harlequin Croesi says the primary goal of the
vinyl covers the external facade, and in- Monegasque participation at Expo
side the air conditioning, irrigation and 2020 is the development of relation-
fire safety systems have been deployed. ships with the UAE and other interna-
The scenography that will make up the tional participants.
tour will be installed in April. Following Monaco will use its pavilion as a
the event, the pavilion will be dismantled business platform for its own entities,
and 80 per cent of its material recycled. including the Monaco Economic
Board. The pavilion has also partnered From top: After the
event, 80 per cent
Innovative practices with institutional entities such as the of material from
the pavilion will
In terms of breakthroughs, “Monaco Palace of Monaco, the government’s be recycled; the
not only wants to showcase innovation communications department, Monaco scenography that will
make up the pavilion
during the event, but has wanted to in- City Hall, the Scientific Centre of Mo- tour will be installed
in April; FGWRS’s
tegrate as much innovation as possible naco (CSM), Monaco Explorations, the grey water recycling
right from the start”, says Croesi. Ballets of Monte-Carlo and the Philhar- solution is installed at
the pavilion
Keen to demonstrate the sovereign monic Orchestra.
city-state’s efforts in the environment CSM was set up in 1960 to provide
and ecology fields, Monegasque firm Monaco with the means to conduct
FGWRS’s grey water recycling technol- biological research. “Our future will
ogy has been installed at the pavilion. be built on the basis of the scientific
“Grey water is the wastewater pro- knowledge accumulated by researchers,”
duced by daily domestic activities,” ex- says scientific director Denis Allemand.
plains Croesi. “An astronomical quantity “It is therefore necessary to connect all
of water is lost worldwide after washing people, and it is in this spirit that CSM
machines, showers and kitchens have approaches the theme of Expo 2020.”
been operated. In the context of a Mehak Srivastava

Insight
ECONOMIC DIVERSITY
MORE VITAL THAN EVER
The Middle East and North Africa is rich with project opportunities
for investors, developers, contractors, manufacturers and suppliers
W
ith about $4.1tn The power and water sector is economic activity due to lock-
of projects also booming as governments seek downs has dampened the outlook
planned or under to meet rising demand for electric- for non-oil sectors, adding to
way across the ity and water, while at the same falling property prices.
Middle East and time increasing energy security Despite the uncertainty, much
North Africa (Mena) region, every and reducing carbon dioxide emis- of the region remains wealthy and
country is investing heavily to sions by investing in clean energy. committed to their development
diversify and expand their econ- Transport and logistics capacity plans. This will continue to drive
omies, and to meet the needs of is a key component of the region’s huge investments into capital
fast-growing populations. economic plans as it seeks to build projects. While 2020 saw a sharp
Some $3.3tn-worth of pro-
jects – more than three quarters
of the total market value – are at “Some $3.3tn-worth of projects in the Mena
the pre-execution planning stage, region are at the pre-execution planning stage”
meaning the pipeline for future
opportunities is vast. This is par-
ticularly true for the GCC, which high-speed networks, while ambi- contraction in the value of contract
accounts for over two thirds of all tious city masterplans are shaping awards across the region, project
projects in the region, and Egypt, a wave of smart city projects. activity is set to rebound in 2021
a country that is enjoying a strong The construction of building and as the economy and oil prices
economic renaissance. real estate projects is the biggest continue to recover.
segment of all, driven by private
Projects by sector property investment and the devel-
National oil companies are invest- opment of schools, hospitals and
ing in upstream oil and gas pro- other social infrastructure projects. Updated to assess
jects to find new reserves, increase But as well as the immense the impact of Covid-19
on the projects market,
capacity and improve efficiency in opportunities, major challenges Mena Projects 2021
their assets. They are also pushing also exist. Covid-19 has delayed Learn more at provides a compre-
ahead with downstream plans to planned projects. Weak oil prices buy.meed.com/ hensive review of
product/report- the market at the
produce higher-value refined oil have resulted in cuts to project mena-projects-2021 start of 2021.
and petrochemicals products. spending, while the collapse in

CONTENTS
P 44 The UAE’s economy faces an uphill struggle
P 46 Banks must tackle post-Covid challenges
P 48 Abu Dhabi makes upstream strides
P 50 Adnoc pursues downstream growth
P 52 UAE to diversify energy system in 2021
P 53 Abu Dhabi to boost desalination capacity
P 55 Contractors must beware of past pitfalls
P 57 Mixed performance for UAE real estate
P59 Stable but slow recovery forecast for UAE

Market Focus
The UAE
stands ready
and waiting
T
Despite stellar progress with testing and vaccination,
the UAE economy needs the world at large to recover
hree months into 2021 2021, the UAE economy is showing signs of being on
the mend, with improving economic output indicators, a recovering job market,
and stabilising prices for goods and services. So far so good.
Fronted by a world-beating testing infrastructure and advanced vaccine rollout
programme, the UAE government has worked hard over the past year to support
the economy and the continuation of daily life in spite of the restrictions and limi-
tations entailed with managing the Covid-19 pandemic.
Standing in the way is the country’s deep exposure to the global economy,
which continues to affect energy and travel markets in a way that is unconducive
to rapid recovery. On top of this, the stimulus provided by the government in the
form of additional liquidity for the banking sector is set to elapse soon. Without an
extension, the cascade of payment deferrals will draw to an end.
Real estate is expected to be an area of heightened exposure for the UAE finan-
cial sector. As such, 2021 is unlikely to be a smooth ride, and it remains possible
that much of the economic pain from the pandemic may yet lie ahead.
In the projects industry, the bright spots are the Etihad Rail programme and Abu
Dhabi’s continued investment in oil and gas. There is also ongoing activity in the
utilities sector, where capacity building to meet future demand is an imperative.
However, the projects sector saw total activity fall by $23bn in 2020 as com-
pletions vastly outstripped new contract awards. This followed a $19bn decline in
2019 and could point to a reckoning for the construction industry, where most of
the value is being lost. The recent cashing of bonds for the Midfield terminal at Abu
Dhabi International airport is indicative of the dire straits that project owners and
contractors alike find themselves in.
Yet there remains a substantial baseline of work still under way, and the bottom-
ing out of real estate prices amid customer demand for more space and a shift in
interest away from apartments and towards villas could stimulate the market in new
directions. How the sector fares in the long term will depend in large part on how
firms tackle the tricky process of downsizing while maintaining enough agility to
seize new opportunities when they arise.
This is in many ways an apt metaphor for the UAE economy at large, which
remains poised in a state of readiness to return to business as and when the world’s
fight against Covid-19 begins to turn a corner and the potential for growth returns.
John Bambridge

Market Focus
Economy
UAE faces
wavering economic
growth prospects
A sharp decline in the
country’s population and weak
economic indicators signal an
uphill climb for the UAE
In many regards, the UAE has stepped up to
the challenges of the Covid-19 pandemic better The Dubai 2040 Urban Masterplan will further
Read the latest
than numerous countries and can claim both a develop the city’s business and leisure hubs
analysis on the
UAE by scanning genuinely world-beating testing rate and impres-
the QR code with
sive vaccine rollout. by the pandemic and lower oil prices in 2020,
your phone camera
The UAE government was quick to initiate the emirate’s population decline has been the
stimulus measures in early 2020 and inject its sharpest among the GCC states, which saw an
financial sector with liquidity, as well as to rapidly average 4 per cent reduction in their populations
develop its testing infrastructure. Now, it aims to as expatriates departed amid the global econom-
have 50 per cent of the population vaccinated by ic downturn.
the end of March. While an exact breakdown of the demograph-
And yet the country also faces a slew of ics of those leaving the country has yet to be
challenges that are far more difficult to control, provided, the scale of the exodus will test the
not least in the form of the weakened global city’s retail and real estate sectors and “rever-
economy – and particularly the beleaguered berate around the economy”, according to S&P.
energy markets and travel industry. Both have Ultimately, the UAE may only see GDP in dollar
severely impacted the revenues of Abu Dhabi terms return to 2019 levels by 2023, “keeping
and Dubai. the pressure on most sectors until then”.
The recent report by ratings agency S&P In the meantime, the leverage of real estate
Global, which estimated that Dubai’s population companies is expected to remain high, according
shrank by 8.4 per cent in 2020, has only further to S&P credit analyst Sapna Jagtiani, who noted
illustrated the challenges faced by the local econ- that without “a substantial recovery in revenue,
omy in its recovery journey. companies are likely to focus on cost optimi-
While Dubai is expected to begin to recover sation, managing their liquidity and preserving
this year from the steep recession triggered their cash flows”.
Despite these operational challenges, rated
Dubai-based real estate companies have “good
UAE ECONOMIC INDICATORS liquidity and access to funding”, S&P said,
2018 2019 2020 2021 2022 adding that some companies are expected to
Real GDP growth (%) 1.2 1.7 -6.6 1.3 2.2 “reduce or eliminate dividends to conserve
Inflation (%, CPI average) 3.1 -1.9 -1.5 1.5 2.0 cash, and sell assets to reduce leverage”.
Nominal GDP ($bn) 422.2 421.1 353.9 373.1 389.7
Current account (% of GDP) 9.6 8.4 3.6 7.5 8.5 Challenging outlook
In the face of ongoing weak growth at a global
Fiscal balance (% of GDP) 1.9 -0.8 -9.9 -5.1 -3.7
level, the UAE economy likely faces an uphill
Public debt (% of GDP) 20.9 27.3 36.9 38.2 39.6
struggle, while that of Dubai in particular, with
Source: IMF its dwindling populace, faces a clear demand

DUBAI PMI AND KEY COMPONENTS
Dubai PMI
70
Activity/output
65 Employment
Prices charged
60
55
50
45
40
35
Jun 2018 Jul 2018 Jan 2019 Jul 2019 Jan 2020 Jul 2020 Jan 2021
PMI=Purchasing Managers’ Index. Source: IHS Markit
shortfall across travel, tourism, hospitality, Both of the UAE’s PMI results compare
retail and real estate. poorly with that of Saudi Arabia, for which the
The Washington-based IMF’s October 2020 IHS Markit PMI has been strongly positive since
projection of a real GDP growth rate of just 1.3 November, hitting 57.1 and remaining at 53.9
per cent in 2021 – one of the weakest forecasts in February.
in the Middle East and North Africa region – is Given Saudi Arabia’s far weaker progress
a clear indication of the headwinds facing the on Covid-19 vaccination, this is indicative of
economy. And so far this year, other economic the confidence of investors and companies in
indicators are validating this assessment. anticipation of a ramp up in the kingdom’s
In February, the headline Purchasing Manag- megaprojects, as well as project activity related
ers’ Index (PMI) for the UAE compiled by IHS to the growth and development of the country’s
Markit slipped from 51.2 to 50.6, leaving it just broader leisure sector.
a whisker above the 50 mark that separates By contrast, the UAE’s PMI results suggest
growth from contraction. The Dubai-specif- far greater uncertainty and possible scepticism
ic PMI rose from 50.6 to 50.9 in a modest among investors and local companies over
improvement, reflecting rising output and the the prospects for the near-term recovery and
emirate’s second month in a row of better future growth.
employment figures.
In a positive trend, the negative readings Development plan
for both output prices and employment during It is perhaps no coincidence that Dubai Ruler
much of the past year in both the UAE and Du- Sheikh Mohammed bin Rashid al-Maktoum took
bai PMIs have been waning since August 2020. to Twitter on 13 March to announce the Dubai
Overall UAE employment figures also turned 2040 Urban Masterplan, which aims to further
positive in January as output prices for both develop existing business and leisure hubs
indices neared the neutral 50 mark. within the city. The plan’s main objectives are to
It is also worth noting that the improvement reduce infrastructure costs, stimulate property
in the Dubai index in February also came growth, and consolidate Dubai’s reputation as a
despite intensified Covid-19 restrictions, which business and financial hub.
largely reversed the initial rise in travel and Such confidence-boosting measures will be
tourism inflows in January. welcome for investors and businesses alike, but
Overall, however, while IHS Markit highlight- the UAE may also need much more of the same
ed the “growing confidence among firms for a if it is to improve its real GDP growth picture.
strong economic recovery in 2021”, the figures According to IHS Markit, the recovery is
so far this year have the makings of a more expected to gain momentum from the second
tentative outlook. quarter “as more people are vaccinated, global

Market Focus
travel restrictions are eased and Expo 2020 the UAE will see the borrower support measures
supports a rebound in tourism in the final quar- instituted one year ago expire.
ter of the year”. These measures, rolled out under the Central
For Dubai, a great deal hinges on the expo, Bank’s Targeted Economic Support Scheme
Read the latest and the question of how and in what form it (Tess), grant relief in the form of loan deferrals.
economic news
goes ahead, as many parts of the world main- Once that loan deferral holiday period is over in
on the UAE at
www.meed.com/ tain a sluggish pace of vaccination. three months’ time, banks will start to get a fuller
industries/finance As it stands, only 6 per cent of respondents picture of the extent of asset quality deterioration
in the survey carried out by IHS Markit for the that has been wrought through a combination of
UAE PMI in February expected their output to the pandemic and lower oil prices.
be higher in 12 months’ time.
John Bambridge Main threat
According to Fitch Ratings, the heightened risks
of asset quality deterioration constitute the main
threat to UAE banks. Potential problem loans (so-
Banking called stage two and stage three loans) are likely
to increase through 2021-22.
UAE lenders “We should start to see the impact on asset
quality after the half-year, which is when the
face up to post- forbearance measures are due to end,” says
Redmond Ramsdale, head of Middle East bank
Covid challenges ratings at Fitch Ratings.
“We have seen the sector average impaired
The country’s banks are loans ratio already go up by about 1 per cent.
bracing for the deterioration The expectation is it will probably go up another
1 per cent by the end of this year, once these pay-
of asset quality as stimulus ment holidays are over, and when the true extent
support measures near expiry of asset quality deterioration becomes clear and
banks fully recalibrate their models.
Deadline day is fast approaching for UAE lend- “Once the payment holidays end, you will see a
ers. By the end of June 2021 – assuming the reg- migration from stage one to stage two, and stage
ulatory authorities do not follow Saudi Arabia’s two to stage three loans.”
lead and extend forbearance measures – banks in Fitch expects to see a stage three sector aver-
age loans ratio of about 6.5 per cent by the end
of this year. Loan impairment charges in the UAE
UAE BANKS KEY DATA
AEDm will remain elevated this year – even if not quite
December December as high as they were in 2020.
2019 2020
Some of the smaller UAE banks have stage two
Total assets 3,082,934 3,188,014
loans ratios in excess of 20 per cent, which is rel-
Foreign assets (net) 91,113 133,471
Foreign assets 771,092 849,077
atively high; in contrast, says Ramsdale, some of
Foreign assets to total assets (%) 25.0% 26.6% the larger banks have a much smaller proportion
Foreign liabilities 679,979 715,606 as stage two loans, at about 5 per cent.
Foreign liabilities to total liabilities (%) 22.1% 22.4%
Deposits 1,870,184 1,884,545 Stable capital ratios
Residents 1,648,812 1,682,102 The weighted-average common equity tier one
of which: corporate 607,023 606,207 (CET1) ratio for the five largest UAE banks stood
Non-residents 221,372 202,443 at 14.4 per cent at the end of September 2020.
of which: corporate 87,964 72,250 However, as Fitch notes in a February 2021
Bank credit (domestic) 1,592,609 1,596,786 assessment of the UAE banking sector, banks
of which: credit to private sector 1,149,953 1,124,913 can apply a prudential filter allowing them to add
Source: UAE Central Bank back increases in specific stage one and stage

two IFRS 9 expected credit loss provisions from
the end of 2019 to the CET1 calculation and BANK CREDIT BY ECONOMIC ACTIVITY*
amortise the impact over five years. According- %
Financial institutions 30%
ly, Fitch expects stable capital ratios in 2021.
Transport, storage
“Capital levels are adequate for the risks we and communication 17%
see in the UAE,” says Ramsdale. Manufacturing 9%
“The average CET1 ratio is about 15 per Construction and real estate 7%
cent. Higher capital ratios and buffers are Trade 5%
important because of these asset quality and Total: Mining and quarrying 5%
concentration pressures – buffers are expected AED173bn Government 5%

Personal loans 5%
to remain adequate due to reasonable internal
Electricity, gas and water 4%
capital generation, muted loan growth and
Others 10%
some dividend flexibility.”
*=March 2020. Source: UAE Central Bank
Real estate exposure
Concentration risk will weigh on lenders’ minds. No surprise then that 2020 full-year financials
UAE Central Bank data shows that exposure to make for difficult reading. The largest UAE bank,
property developers made up 14 per cent of the First Abu Dhabi Bank, reported a more than
banks’ real estate portfolios at the end of 2019, 15 per cent drop in net profits to AED10.6bn
or about 3 per cent of total loans. This may un- ($2.9bn) in 2020.
derstate total exposure to the real estate sector. Emirates NBD, meanwhile, saw full-year
“Concentration risk is the key challenge, 2020 profit decline by 52 per cent to AED7bn
particularly large, single obligor loans, but also ($1.9bn), thanks mainly to higher provision-
high sector concentration; construction and ing. The Dubai lender’s impairment charge of
real estate is the number one risk here. And we AED7.9bn ($2.2bn) was 65 per cent up on 2019.
have seen price falls and rental falls at above ADCB was hit by large provisions related to its
30 per cent, so there is a lot of pressure there,” exposure to troubled corporates NMC Health and
says Ramsdale. Finablr. Net profits at ADCB were 27 per cent
Single obligor concentrations are not just down on the previous year. The largest sharia
a concern in real estate-focused Dubai. Last lender, Dubai Islamic Bank,
year, notes Ramsdale, Abu Dhabi Commercial showed a 38 per cent drop in
Bank’s (ADCB) impaired loans ratio, or stage net profits last year. “The
three loans ratio, increased by about 50 per cent Banks may not find it easy heightened
because of a few large single obligors. to reverse these performances
Lenders in the UAE are nonetheless well this year. Although they expect risks of
placed to maintain their generally robust cap- to see an increase in credit de- asset quality
italisation levels, supported by still reasonable mand, with a moderate increase
internal capital generation, muted loan growth in appetite for business loans,
deterioration
– which though negative for profitability, helps this is unlikely to be sufficient to constitute the
to beef up capital buffers – and flexibility in divi-
dend payments over the short to medium term.
generate substantial profits – not
least with interest rates crimping
main threat to
That does not mean there is nothing for UAE net interest margins. UAE banks”
banks to be concerned about, especially as oper- In fact, lending is likely to
ating conditions look set to remain challenging. be below last year’s level, which was artificially
Profit levels have been buffeted by the supported by government support measures.
headwinds of 2020-21. A combination of Fitch sees weaker credit conditions causing loan
lower interest rates – UAE interest rates were growth in the UAE to slow down to 3 per cent in
reduced by 125 basis points in March 2020 – 2021, from 5 per cent in 2020.
and higher impairment charges have reduced James Gavin
banks’ ability to reproduce the earnings growth
of previous years.

Market Focus
Upstream schemes are also understood to be among the

company’s top priorities.
Abu Dhabi After months of planning execution strategies
and conducting clarification meetings with con-
Read the latest

makes headway in tractors following the receipt of technical bids,
Adnoc received revised prices in late February
news on the UAE’s
upstream sector at upstream segment for the estimated $1.65bn Dalma offshore sour
www.meed.com/ gas field development, as well as commercial bids
industries/oil-
and-gas
After a year lost to the for the $15bn Hail and Ghasha offshore sour gas
pandemic, Adnoc is starting field development project.
The submission of new prices is understood to
to push through crucial be the third round of commercial bids received
offshore and onshore projects from contractors for the Dalma sour gas project.
According to the original project scope, the
It may be a contract worth only an estimated offshore and onshore EPC works on the Dalma
$80m, but the award of the Umm al-Dalkh project had been segregated into two main pack-
offshore field development project has instilled ages. Adnoc is understood to have downsized the
optimism in the market that Abu Dhabi National scope of work on the packages with the intention
Oil Company (Adnoc) could be starting to push of reducing the capital investment.
ahead with its upstream projects in 2021.
Local contractor National Petroleum Construc- Hail and Ghasha
tion Company has been selected by Adnoc Off- Similarly, since September 2020, Adnoc had been
shore to execute engineering, procurement and considering downsizing the overall scope of the
construction (EPC) works on the Umm al-Dalkh Hail and Ghasha development to reduce the total
early production facility project. expenditure required to develop the asset, and
Completion of the EPC works could stretch eventually issued a revised scope of work in the
beyond 2022, but according to the original plan, form of a new tender bulletin. Contractors sub-
the project aims to raise production from the mitted revised technical bids in December, in line
Umm al-Dalkh field to 20,000 barrels a day (b/d) with the recalibrated scope of work on the four
by 2022. It is therefore vital to Adnoc’s goal of main EPC packages of the megaproject.
raising oil production potential to 5 million b/d Adnoc intends to produce an additional 1.5
by 2030. billion cubic feet a day of sour gas by 2025 from
Umm al-Dalkh is understood to be one of sev- the entire Ghasha offshore sour gas concession,
eral upstream projects that Adnoc’s new board of which in addition to the Dalma and Hail and Gha-
directors has been tasked with making progress sha fields also includes the Nasr, Sarb, Bu Haseer,
on this year, industry sources say. Shuweihat and Mubarraz fields.
Megaprojects such as the Dalma and Hail and Additional gas output from fields in the Ghasha
Ghasha offshore sour gas field development concession will be crucial if the company is to
TOP FIVE ADNOC PROJECTS IN PRE-EXECUTION

Project Award Completion
Project Industry value ($m) Project status due due
Main
UZ1000 expansion: development of surface facilities (Adnoc Offshore) Oil 7,000
contract PQ
2021 2024
Hail and Ghasha sour gas development: package four Gas 5,000 Bid evaluation 2021 2024
Hail and Ghasha sour gas development: package one Gas 3,000 Bid evaluation 2021 2024
Lower Zakum long-term development plan: phase one (Adnoc Offshore) Oil 3,000 Study 2022 2025
Hail and Ghasha sour gas development: package three Gas 2,000 Bid evaluation 2021 2024
PQ=Prequalification. Source: MEED Projects

achieve its objective of becoming self-sufficient in
gas production by the end of this decade.
“Through the currently adopted track, the UAE
has the potential to become a net gas exporter
during 2025-30,” analysts at Rystad Energy say.
Onshore developments
In addition to making progress with its planned
offshore schemes, Adnoc is also focusing on ad-
vancing its onshore project development plans.
Onshore oil production currently accounts
for about half of Abu Dhabi’s total crude output
capacity of 4 million b/d and almost 60 per cent
of its total gas production of 12 billion cubic
feet a day. The bulk of Abu Dhabi’s hydrocarbon The project is understood to be a modified
reserves are located onshore, with the emirate scheme of an earlier project that Adnoc Onshore Adnoc is
containing 11 producing oil and gas fields in its had undertaken last year at the Bab field. continuing its
land area. exploration
programme
Contractors are preparing commercial bids Exploration drive
for the second stage of the Asab full field devel- Adnoc continues to make progress with its ex-
opment second phase project. Adnoc Onshore ploration campaign, currently manifested in Abu
received technical bids for the project, estimat- Dhabi’s second upstream licensing round. The
ed to be worth $150m, in August last year. state enterprise has so far awarded two of the
The project scope covers modification works five acreages offered in the exercise.
on three processing trains, replacement of gas US energy company Occidental Petroleum
compressors and laying of flow lines and pipe- (Oxy) won exploration rights for Abu Dhabi’s
lines on the Asab field. onshore block five, while a consortium of Italian
Meanwhile, Adnoc Onshore is understood to energy major Eni and Thailand’s state hydrocar-
be close to awarding the main contract for a bons producer PTTEP was awarded the explora-
project to sustain the Al-Dabbiya field’s long- tion rights for offshore block three.
term production potential. Local contractor In November, Abu Dhabi’s erstwhile Supreme
Robt Stone has reportedly emerged as frontrun- Petroleum Council also announced the discovery
ner to win the estimated $250m Al-Dabbiya field of 22 billion stock tank barrels (STB) of recov-
sustainability project. erable unconventional oil resources located
The Al-Dabbiya field is part of Abu Dhabi’s onshore, and an increase in conventional oil
Northeast Bab (NEB) cluster of onshore oil reserves of 2 billion STB in the emirate.
fields, which includes the Rumaitha and Shanayel Following the announcement of the additional
fields. The project’s scope involves EPC work resources, Abu Dhabi’s conventional oil re-
on additional oil production and water injection serves base increased to 107 billion STB, based
wells, flowlines, well bays and a pipeline corridor. on the figure announced in November 2019.
Adnoc Onshore is also moving ahead with a Regarding natural gas resources, conventional
key onshore project to upgrade infrastructure gas reserves stand at 273 trillion cubic feet,
at its Bab field, with shortlisted contractors while the unconventional gas reserves base is
currently preparing technical bids for the main 160 trillion cubic feet.
EPC contract, estimated to be worth between “Abu Dhabi has abundant unconventional oil
$150m and $200m. and gas recoverable resources that will support
The scope of work on the project mainly Adnoc’s drive towards gas self-sufficiency for
covers the provision of systems to perform wa- the UAE, and provide long-term energy security
ter, carbon dioxide and polymer-based enhanced to the UAE and our global partners,” Mohamed
oil recovery to sustain long-term production al-Zaabi, Adnoc’s senior vice-president for uncon-
from the Bab field. ventional and exploration, tells MEED.

Market Focus
“As we continue to appraise our unconvention- it is placing more emphasis on boosting its
al recoverable resources, we see very promising downstream segment than its upstream one,
results, with production potential comparable to according to some industry experts.
the most prolific North American shale oil and This view is supported by the $45bn capital
gas plays,” Al-Zaabi says. expenditure budget and ambitious projects and
Read the latest “Over the past 18 months, we have announced growth plans that Adnoc announced in May
news and analysis
on the UAE’s petro- significant unconventional recoverable resource 2018, with the aim of creating “a downstream
chemicals sector at discoveries, enabled through our exploration Silicon Valley” in Abu Dhabi.
www.meed.com/ and appraisal activities covering 25,000 square Almost three years on, Adnoc continues to
industries/
petrochemicals kilometres onshore,” he adds. work towards developing the schemes outlined
“The volume of these resources and the in the downstream blueprint, although pro-
promising prospects beyond this area and in our gress on each of those projects is varied.
tight oil and gas reservoirs – which we are also
exploring and appraising – will reinforce the Refining capacity boost
UAE’s long-term energy security.” Pre-front-end engineering and design (pre-
Indrajit Sen feed) works continue, albeit slowly, on Adnoc
Refining’s planned new refinery project, an
estimated $15bn megaproject that Adnoc has
undertaken to raise its overall refining capacity
Downstream by some 65 per cent from 922,000 barrels a
day (b/d) to 1.5 million b/d.
Abu Dhabi pursues Adnoc Refining awarded the pre-feed
contract to UK-based engineering firm Wood
downstream Group in February 2019. ILF Consulting
Engineers (Austria/Germany) was awarded
growth plans a contract in April 2019 for the provision of
project management consultancy services for
Adnoc moves ahead with the the pre-feed works.
refining and petrochemicals However, it is understood that Adnoc is
rethinking the way it approaches the project,
schemes outlined in its with the aim of reducing the scheme’s overall
downstream growth agenda cost, particularly in light of how the Covid-19
pandemic has reduced global demand for crude
Abu Dhabi National Oil Company (Adnoc) is oil and refined products.
committed to augmenting Abu Dhabi’s down- The target to increase refining output by
stream energy potential. In fact, the energy 600,000 b/d remains in place. Adnoc Refin-
major’s downstream growth blueprint suggests ing has yet to release details of its modified
project plan, but, according to sources, instead
of achieving all of the additional output from
UAE DOWNSTREAM PROJECT AWARDS the new refinery alone, the company is now
$m
looking to increase the capacity of its existing
4,000
3,500
Oil Ruwais refineries.
3,000
Gas Adnoc Refining operates two refining units
Chemicals in the Ruwais downstream complex – Ruwais
2,500
2,000
Refinery East (RRE) and Ruwais Refinery West
1,500
– which have an output capacity of 420,000
1,000 b/d and 417,000 b/d, respectively. The compa-
500 ny also operates the Abu Dhabi refinery, which
0 has a capacity of 90,000 b/d.
2015 2016 2017 2018 2019 2020 Adnoc Refining has already kicked-off pro-
Source: MEED Projects jects to modify and upgrade its existing assets

in the Ruwais refinery complex, in a bid to works on the estimated
increase output capacity and to broaden the $4bn scheme. PLANNED UAE
range of its product offering. The project’s EPC works DOWNSTREAM
Consultants are currently preparing bids for are understood to have SCHEMES BY PRE-
the front-end engineering and design work on been separated into five EXECUTION STAGE
a project to debottleneck and upgrade conden- packages, according to in- $m
sate refining trains at RRE. With this project, dustry sources. Installation Stage Value
Adnoc Refining aims to raise the condensate of an ethane cracker is the Study 30,775
refining capacity of four processing trains at centrepiece of the project, Bid evaluation 8,650
RRE by up to 161,000 b/d each. and is therefore the main
Design 3,600
The units need to be upgraded to handle package, estimated to be
condensate feedstocks of 125,000 b/d from the worth more than $2bn. Main contract bid 1,000
Thammama onshore field and 27,000 b/d from The Borouge 4 project was Feed 650
the Hail and Ghasha offshore field. The trains originally planned to feature Main contract PQ 300
must also be equipped to potentially handle up a mixed-feed cracker, which
to 25,000 b/d of liquids from the Upper Zakum was to have an overall ca- Feed=Front-end engineering and
design; PQ=Prequalification.
field, or Murban development, or other cate- pacity to produce 3.3 million Source: MEED Projects
gories, with 8,000 b/d of Upper Zakum crude tonnes a year (t/y) of olefins
being the base case scenario. and aromatics, including 1.8
Meanwhile, progress on engineering, pro- million t/y of ethylene output. “Adnoc is
curement and construction (EPC) work on It was intended to use a
Adnoc Refining’s estimated $600m waste heat variety of feedstocks, such as moving
recovery project at the Ruwais refinery has ethane, butane and naphtha, ahead with
surpassed 60 per cent. from Adnoc’s refinery and
Adnoc Refining awarded South Korean gas processing facilities.
construction
contractor Samsung Engineering a $473m Borouge later altered the of a planned
contract in March 2018 to execute EPC works
on the project. The project is scheduled for
scope of the project, as part
of which the planned Borouge
derivatives
completion by the middle of 2023. 4 will feature a simplified park in Ruwais,
Upon completion, the project will produce ethane cracker plant that will along with its
62,400 cubic metres of distillate water a day have a capacity to produce
and boost the power available by an additional 1.5 million t/y of ethylene, in partner ADQ”
230MW by capturing waste heat, which is cur- addition to associated ethyl-
rently vented into the atmosphere. This process ene derivatives.
reduces reliance on additional power from the In parallel with proceeding with the Borouge
national grid. 4 scheme, Adnoc is moving ahead with con-
Separately, Adnoc recently announced it has struction of a planned derivatives park in Ru-
added white spirit and solvents to its refined wais, along with its partner ADQ, Abu Dhabi’s
products portfolio, and has started producing industrial holding company.
the commodities at the Ruwais complex. These Adnoc has said Taziz, its 60:40 JV with
specialty products have various industrial and ADQ, will be the vehicle for investing $5bn in
household applications and are used to pro- developing a large petrochemical derivatives
duce products such as varnish, adhesives, inks, ecosystem in Ruwais.
paint thinners and cleaning agents. Taziz is currently exploring several deriva-
tives projects with third-party investors, which
Potential expansion could require investments of about $3bn. In
Borouge, the 60:40 joint venture (JV) of addition, Adnoc and ADQ will spend about
Adnoc and Austria’s Borealis, took a leap $2bn on building industrial support facilities,
forward with its planned fourth petrochemicals including a new port.
plant megaproject, Borouge 4, in December Adnoc recently announced that land sur-
2020, when it issued the tender for the EPC veys for the estimated $5bn petrochemicals

Market Focus
derivatives complex are now complete, with financial close on the project five months later
construction works set to begin in early 2022. – in the middle of the Covid-19 pandemic – is a
Indrajit Sen significant feat, especially in light of a retreating
global energy market.
Similarly, in September last year, Saudi utilities
Read the latest company Acwa Power signed financing agree-
news and analysis
on the UAE’s power Power ments for the 900MW Shuaa Energy 3 solar
photovoltaic (PV) project, which forms the fifth
UAE stays
sector at
www.meed.com/ phase of the Mohammed bin Rashid al-Maktoum
industries/power
(MBR) solar park in Dubai.
the clean Equally significant, the first 1,400MW reactor
at the Barakah nuclear power plant was linked to
energy course the UAE electricity grid in August, and reached
full production capacity in December. Com-
The country’s energy system missioning and tests are also under way for the
will become increasingly second reactor, which will contribute a further
1,400MW to the grid.
diversified this year, with more These projects are in line with the UAE Energy
clean fuels added to the mix Strategy 2050, launched in 2017 to increase the
contribution of clean energy in the total energy
In July 2020, Abu Dhabi’s Emirates Water & mix to 50 per cent while reducing the carbon
Electricity Company (Ewec) signed the power- footprint of power generation by 70 per cent.
purchase and shareholders agreements with the Notably, Dubai Electricity & Water Authority
developer con- (Dewa) last year exceeded its 2022 carbon abate-
sortium that will ment target of 16 per cent by three percentage
ELECTRICITY GENERATION implement the 2GW points, thanks in large part to the 1GW active
BY FUEL IN THE UAE Al-Dhafra solar solar PV capacity from the first three phases of
Terawatt-hours independent power MBR solar park. The share of renewables also
Fuel 2017 2018 2019 project (IPP), the rose from 1 per cent in 2018 to 3 per cent of
Oil 1.6 0.05 0.05 emirate’s second the country’s overall power generation output in
Natural gas 132.4 134.7 133.9 and the world’s 2019, according to the UK’s BP.
largest single-site
Renewables 0.5 1.3 4.2
solar plant to date. Waste-to-energy interest
TOTAL 134.5 136.05 138.15
Signing the con- Waste-to-energy (WTE) schemes, which offer
Source: BP Statistics Review 2020 tract and reaching a non-variable form of renewable energy, have
gained traction over
the past few months.
SELECTED UPCOMING UAE POWER PROJECTS Dubai Municipal-
Budget ity’s $1.16bn WTE
Project Client ($m) Status
scheme in Warsan
Subsea power transmission network Adnoc/Taqa 2,000 Bid evaluation
is expected to reach
Abu Dhabi PV3 Ewec 1,125 Study
financial close soon,
Solar PV IPP, Umm al-Quwain Fewa 370 Main contract PQ following the signing
Jebel Ali K power station: phase three Dewa 300 Main contract bid of commercial agree-
Abu Dhabi waste-to-energy plant (Al-Dhafra) Ewec 350 Main contract PQ ments in January.
Al-Ain waste-to-energy plant Ewec 200 Study
The special project
vehicle that will im-
Emirates Waste to
Al-Sajah solar landfill plant 110 Study plement the project
Energy Company
will be owned by
PV=Photovoltaic; IPP=Independent power project; Adnoc=Abu Dhabi National Oil Company; Japan’s Itochu (20
Ewec=Emirates Water & Electricity Company; Fewa=Federal Electricity & Water Authority;
Dewa=Dubai Electricity & Water Authority. Sources: MEED Projects, MEED per cent), Switzer-

land-headquartered Hitachi Zosen Inova (10 per
cent) and Dubai Holding (31 per cent). The other
In recent
shareholders – Besix, Dubai Aluminium and Tech
months,
Group – will maintain the remaining shares. Abu Dhabi
In January, Abu Dhabi’s Department of Energy has
rolled out the emirate’s waste-from-energy policy. announced
two new
Ewec and Abu Dhabi Waste Management Centre IWPs
(Tadweer) issued the expression of interest request
for Abu Dhabi’s first WTE IPP a few days later.
According to Ewec’s CEO Othman al-Ali, devel-
oping the plant is a crucial next step in the drive
to significantly reduce waste to landfill, stimulate
the economy and cut carbon dioxide emissions. Water
Dozens of developers, contractors and inves-
tors submitted interest for the contract in Febru- Abu Dhabi plans
ary. To be developed near the Al-Dhafra landfill
in Abu Dhabi, the plant will have a treatment desalination
capacity of 600,000-900,000 tonnes annually. A
second WTE is planned in Al-Ain. capacity drive
Project completions Increasing water demand,
The next two years will see the completion of signif- especially for agriculture,
icant independent power capacity across the UAE.
In addition to the 3.8GW of solar and hybrid-solar
requires an integrated
capacity now under construction in Dubai and management strategy
Abu Dhabi, the 2,400MW F3 gas-fired scheme in
Fujairah is expected to be completed in 2023. Abu Dhabi’s 10-year integrated water resourc-
The first 600MW of Dubai’s 2,400MW Hassyan es management plan will play a significant role
clean coal plant is due to come online this year, in the UAE capital’s economic development
as is the first WTE plant in Sharjah, which has a plan until 2030. It addresses major issues that
power generation capacity of 30MW. threaten the emirate’s water sector, including
This means the UAE expects to have a truly the prospect of depleted groundwater reserves
diversified energy system this year, with energy over the next few decades.
from coal, nuclear and waste being added to MEED understands annual water demand in
existing gas and solar plants. the emirate has reached 2.1 billion cubic me-
Over the next 10-12 months, projects for tres, driven primarily by the expansion of the
which contracts are expected to be awarded in- agricultural sector, which uses 65 per cent of
clude Abu Dhabi National Oil Company (Adnoc)
and Taqa’s estimated $2bn high-voltage, direct
ABU DHABI WATER RESOURCES
current subsea transmission system that will
%
connect Abu Dhabi’s onshore electricity grid to
Adnoc’s offshore production facilities, as well as
the planned upgrade of the Taweelah B independ-
ent water and power project in Abu Dhabi.
Other notable projects include Abu Dhabi’s Groundwater 60
third utility-scale solar PV scheme and a 400MW Desalinated water 30

solar scheme in Umm al-Quwain, although both Treated wastewater 10
are still in the early planning phase.
Jennifer Aguinaldo
Source: Environment Agency – Abu Dhabi

Market Focus
water resources. This demand level is 20 times The Shuweihat 4 IWP will have a capacity
the quantities available from the natural feed- of 50 million imperial gallons a day (MIGD),
ing of underground reservoirs in the emirate. while the Mirfa 2 IWP, which will cater to
To make matters worse, 79 per cent of water agricultural farms in Liwa, will have a design
reserves have become highly saline and 18 capacity of 150MIGD.
Read the latest per cent are brackish, with only the remain- A third IWP is also being planned in Ruwais,
news and analysis
on the UAE’s ing 3 per cent considered fresh groundwater, with a design capacity understood to be up to
water sector at according to Sheikha Salem al-Dhaheri, sec- 50 per cent larger than the under-construction
www.meed.com/ retary-general of Environment Agency – Abu 200MIGD Taweelah IWP.
industries/water
Dhabi (EAD). The pace of new IWP developments in Abu
As things stand, groundwater represents Dhabi reflects the emirate’s energy-efficiency
about 60 per cent of the total water resources programme, which aims to renew the exist-
used in Abu Dhabi. Desalinated water accounts ing desalination fleet and decouple water and
for 30 per cent and treated wastewater ac- power production, says Corrado Sommariva,
counts for no more than 10 per cent. founder and CEO of Abu Dhabi-based Sustaina-
Measures being considered under the 10- ble Water & Power Consultants.
year water management plan include expand- It also shows that – despite the impact of
ing the use of reverse osmosis (RO) techniques the Covid-19 pandemic – investor appetite for
in seawater desalination, increasing the use of IWPs in the region remains unabated, with low
treated wastewater, employing solar ener- interest rates for senior debt continuing to fuel
gy technologies to prevent dam water from these investments.
evaporating, producing energy and developing
technologies for water harvesting systems, and World-record-low tariffs
developing agriculture technology systems. Indeed, the region has been witnessing a
steep decline in water production tariffs since
New projects 2018 due to a combination of the scale of the
The integrated water resources management planned seawater desalination plants and lower
plan helps explain the nearly business-as-usual capital and power costs.
mode for desalination projects in the UAE, Saudi Arabia’s Yanbu 3A IWP holds the most
regardless of the Covid-19 pandemic. recent world record low in terms of levelised
In the past few months, Abu Dhabi has cost of water at 0.413 $cents a cubic metre
announced two new independent water pro- ($cents/cm). However, Dubai’s first IWP in
jects (IWPs). Hassyan is expected to beat this record.
Last year, a team led by UAE-based devel-
oper Utico offered 0.277 $cents/cm for the
UPCOMING WATER DESALINATION 120MIGD Hassyan IWP scheme, which is
AND TREATMENT PROJECTS nearly 33 per cent lower than the price offered
Estimated for Yanbu 3A.
budget
Project Client ($m) Status
While there is general agreement that the re-
Two seawater treatment gion could continue to see declining water pro-
Main
plants and 450 kilometre Adnoc 2,300
contract PQ duction tariffs in years to come, opinions vary
transmission pipeline
in terms of the feasibility of lower-than-0.4
Ruwais SWRO IWP Ewec 950 Study $cents/cm water, let alone lower-than-0.3
Main $cents/cm water.
Al-Mirfa 2 IWP Ewec 400
contract PQ
“It would be interesting to see if the market
Sharjah SWRO plant Sewa 350 Bid evaluation
can sustain prices at that level going forward,”
Hassyan water reservoir Dewa 200 Bid evaluation a region-based consultant tells MEED.
Shuweihat 4 IWP (SWRO) Ewec 150 Study MEED understands that Utico reached the
Adnoc=Abu Dhabi National Oil Company; PQ=Prequalification; SWRO=
price for the Hassyan scheme in part due to
Seawater reverse osmosis; IWP=Independent water project; Ewec=Emirates the Dubai government offering power at 0.245
Water & Electricity Company; Sewa=Sharjah Electricity & Water Authority;
Dewa=Dubai Electricity & Water Authority. Sources: MEED Projects, MEED $cents a kilowatt hour (kWh), compared with

0.5 $cents/kWh offered in 2018 by Saudi Water lic-private partnership model. By involving
Partnership Company for Yanbu 3A. the private sector, Adnoc expects to optimise
the project structure and allocation of risks,
Solar and RO nexus minimise the levelised cost of water, deliver the
The decoupling of power and water production project on schedule and, crucially, minimise the
across the region has resulted in a growing impact of project liabilities on its balance sheet
trend to adopt captive solar photovoltaic (PV) and credit rating. A decade
after the
plants, which is expected to drive water pro- The same can be said for most future water
global
duction costs down further. and wastewater projects in the UAE, if the financial
“Since energy from solar PV plants can be country is to meet its economic and sustainabil- crisis, the
self-produced in the desalination plant at a cost ity objectives for the next 10 years and beyond. construction
sector is in
as low as 0.2 $cents/kWh, developers have an Jennifer Aguinaldo
the midst
interest in covering desalination plants with PV of another
panels to self-generate energy for the desali- downturn
nation process, [especially] if the energy from
the grid is priced at 0.5 $cents/kWh or above,”
explains Sommariva. “This enhances their com-
petitiveness and generates lower power tariffs.”
Sommariva notes that seawater reverse osmo-
sis (SWRO) plants can become an indirect form
of energy storage in an electricity grid increas-
ingly powered by solar PV, where energy produc-
tion often outstrips demand during the day.
“In future, electricity from the grid may be
charged at different rates according to the grid
demand … boosting desalination plant produc-
tion when electricity tariffs are low and reducing
production when electricity production are high,”
he explains, adding that this mechanism could be
introduced in the future “to take full advantage of
the development of solar PV and RO technologies Construction
and further decrease water tariffs”.
UAE contractors
must avoid the
Expanding PPPs
In March, Abu Dhabi National Oil Company
(Adnoc) initiated the procurement process
for Project Wave, which includes two seawa- pitfalls of the past
ter treatment plants (STPs) with a combined
capacity of 210MIGD and a new 450-kilometre UAE construction companies
pipeline infrastructure. need to steer clear of the
The two STPs and pipeline infrastructure will
be implemented using a build, own, operate mistakes made during the
and transfer contract, making it one of the first last economic downturn
projects of its kind in the region’s oil and gas
sector. The project, which is estimated to cost Construction is a cyclical industry and, for the
up to $2.4bn, will replace the current aquifer UAE, the sector finds itself in familiar territory
water injection systems used for maintaining this year.
reservoir pressure in all onshore oil fields in Ten years after the global financial crisis, com-
Abu Dhabi. panies are in the midst of another downturn, with
The project points to Adnoc’s – and Abu limited work as contractors and suppliers search
Dhabi’s – increased confidence in the pub- for opportunities in other markets.

Market Focus
According to regional projects tracker MEED developing infrastructure and buildings for new
Projects, there were $13bn-worth of construc- residential communities.
tion and transport contract awards in the UAE There are also several real estate schemes
in 2020. moving ahead, although these projects tend to
The concern is that while the economic un- either be for niche luxury developments, or, at
Read the latest certainty caused by the Covid-19 pandemic has the other end of the scale, for the affordable
news and analysis
on the UAE’s con- slowed down awards, the decline could be part housing segment.
struction sector at of a longer-term trend that began in 2016, when “Developers in Dubai have continued to sell
www.meed.com/ awards peaked at $33bn. Since then, there were properties off-plan,” says a project manage-
industries/
construction marginal declines in 2017 and 2018, and then a ment consultant working in the UAE. “They are
larger step down to $27bn of awards in 2019. sold at lower price points than in the past, but
To determine whether 2020 was a blip caused they continue to sell.”
by the pandemic or a longer-term structural While these projects progress, they may be
trend will depend on new work moving ahead in bucking the trend. Consultants say there are
2021 and 2022. few new projects in the pipeline that are of the
scale or complexity that the UAE has become
New projects renowned for.
The good news is that some new projects are “There are a few new projects that we are
moving forward. The most notable building tracking at the moment, but they are isolated
schemes are the museum projects in Abu Dhabi. projects,” says another consultant based in
Contractors are competing for the contract the region.
to build the Guggenheim Museum on Saadiyat “The large programmes of work on master-
Island. Abu Dhabi is also understood to be close plans that we were chasing in the past are not
to signing a deal with a contractor to complete around anymore.”
the construction of the Zayed Museum project on
the same island. Painful adjustment
Further down the line, Abu Dhabi’s Miral As the demand for contractors’ services dimin-
has been appointing consultants to work on an ishes, supply is undergoing a painful period
upcoming natural history museum. Like the other of adjustment.
two museum schemes, it will be built on Saadiyat The most high-profile adjustment is the
Island and is expected to move towards tendering pending liquidation of Arabtec Holding. Share-
a main construction package late in 2022, once holders voted to liquidate the contractor on 30
design work has been advanced. September last year, after Arabtec’s first-half
Another category of building project that net loss of AED794m ($216m) in 2020.
is progressing is housing for UAE nationals. The contractor is now selling subsidiaries
Abu Dhabi is pushing ahead with a number Target Engineering and Arabtec Engineering
of schemes across the emirate that involve Services before the rest of the company is
expected to be wound down.
UAE CONSTRUCTION AND TRANSPORT ACTIVITY At its peak, Arabtec was the largest con-
40 15 tractor in the UAE, with a workforce of about
35 10
50,000 people.
30 Other major players have also downsized.
5
25 In mid-February, Australian contractor Cimic
0
20 Group signed a share purchase agreement with
-5
15 UAE-based Sald Investment to sell its business
10
-10
interests in the Middle East, marking the final
5 -20 step in its decision to exit the region.
0 -25 While the contractor is expected to remain
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
operational, it will not return to its previous
Awards ($bn) Completions ($bn) Net change (%) heyday, when it employed about 40,000 people
Source: MEED Projects in the UAE.

Another company that has downsized is Abu
Dhabi-based Al-Jaber Group. Once the largest
player in the emirate, it remains a shadow of
its former self after grappling with a decade of
financial woes.
As local entities downsize, international busi-
nesses such as UK-based Balfour Beatty, Neth-
erlands-headquartered Bam and South Africa’s
Murray & Roberts have either withdrawn from
the region or are in the process of exiting.
For the local companies that remain, geo-
graphical diversification is now a priority. For
example, ASGC has expanded its operations in
Egypt, Alec is tendering for work in Saudi Ara-
bia, and Unec recently secured work building a
hotel at the Diriyah Gate development in Riyadh.
Outside the region, the African market is also Dubai is estimated by US ratings agency S&P
creating an increasing number of opportunities Global to have recorded a population decline of Dubai
for UAE construction companies. 8.4 per cent during 2020, far deeper than the Marina’s
apartment
A change in geographical focus is nothing regional average of 4 per cent.
market was
new. During the last downturn, UAE players About 92.1 per cent of Dubai’s population particularly
such as Arabtec and Drake & Scull Internation- is comprised of expatriates, and a reduction in badly hit in
al secured work on large projects overseas, their numbers will compound the challenges 2020
however while those schemes maintained those facing the retail, aviation and real estate sectors.
companies’ orderbooks in the short term, many Tourism activity is not expected to return to
ultimately became loss-making burdens. pre-pandemic levels in 2021, and challenges
As history appears to be repeating itself, the in the retail and hospitality sector are likely to
challenge for the UAE’s construction companies persist due to depressed discretionary spending
in 2021 will be avoiding those pitfalls of the past. caused by a slow economic rebound and low
Colin Foreman consumer confidence.
Residential resilience
In contrast, residential real estate is anticipated
Real Estate to chart a more robust road to recovery. In
Dubai, S&P says this must be led by a reduc-
UAE real estate to tion of new supply and fewer new launches
by developers.
make a comeback Research by Knight Frank shows 35,808
units were delivered in Dubai last year. Due
with time lag to continued supply and existing vacancies in
the market, average rents dropped by 12.2 per
Recent mixed performance cent in 2020, up from the 8.1 per cent decline
has not stalled the progress registered a year earlier, according to the firm.
Market performance was fragmented, how-
of residential construction ever, with apartment rents during the year to
in the Dubai market December 2020 shrinking by 13.3 per cent,
and villa rents softening by 4.4 per cent.
The UAE’s real estate industry is expected In the sales market, price falls were largely
to face a tougher road to recovery in 2021, concentrated in the apartments segment, aver-
following a record decline in Dubai’s expatriate aging a drop of 8 per cent, whereas villa prices
population due to Covid-19 last year. were relatively stable.

Market Focus
This mixed market performance has not “a more affluent one”. This is likely to further
stalled residential construction progress in fuel the demand for villas in the city.
the city. Contractors have been confirmed
for Emaar Properties’ Vida Residences Creek Developer lessons
Beach and for Majid al-Futtaim’s Elan town- This medium to long-term optimism also extends
Read the latest houses at the Tilal al-Ghaf development in to real estate developers and owners. Rated
news and analysis
on the UAE’s real recent months. Dubai-based real estate companies “still have
estate sector at The latter contract alone will see the devel- good liquidity and access to funding”, according
www.meed.com/ opment of 916 three- and four-bedroom town- to S&P Global.
industries/
construction houses in the Dubailand neighbourhood. Developers have also been offered new oppor-
These awards may seem counterintuitive tunities as a result of the social evolution that
given the reported 8.4 per cent decline in has taken place during the pandemic, says P P
Dubai’s population last year, but Taimur Khan, Varghese, partner for strategy and consulting at
associate partner at Knight Frank Middle East, Cavendish Maxwell.
tells MEED that the contraction is likely a “Once things return to normal, I expect that
short-term trend affecting specific segments of the portion of the population that had to leave
the real estate market, rather than a structural will be quickly replaced,” he tells MEED.
change in demographics with sweeping effects “The pandemic has provided some great les-
on overall market fundamentals. sons to developers though,” he adds. “The emer-
“From the forecasts we are looking at, the gence of townhouses and villas as a preferred
expectation we have is that population growth asset type, an understanding of the price per unit
will increase marginally over the next 10 that will allow for quicker absorption by end-
years,” he adds. “From a global perspective as users as opposed to investors, and the adoption
well, we are seeing changes in taxes in markets of a work-from-home culture that will change the
such as the EU and the US.” nature of traditional office spaces, are among the
As a result, Khan explains, Dubai’s legal examples of the lessons learned.”
system and reforms may attract people from
high-end demographics to the city, replacing Cities within a city
some of the recently reduced population with Data from Cavendish Maxwell shows price
declines in eight of 12 Dubai apartment markets
between the fourth quarter of 2019 and the same
DUBAI RESIDENTIAL REAL ESTATE PRICES* period in 2020, with Dubai Marina noting the
Percentage change worst year-on-year decline at 9.8 per cent.
7.7% In contrast, three of seven tracked villa and
Al-Furjan
-0.8% townhouse markets recorded price hikes during
Arabian Ranches 2 2.1% the period, with Dubai Properties’ The Villa com-
-6.6%
munity noting growth of 10.7 per cent between
Dubai Silicon Oasis 11.4%
2.5% the third quarters of 2019 and 2020. These
4.4% figures underscore the dynamism of a real estate
Jumeirah Golf Estates
-13.4% market catering to investors and end-users with a
Jumeirah Islands 9.8% wide range of asset and budget preferences.
“Dubai is not one city, in my opinion; it is
4.9%
Jumeirah Park 5.5% multiple cities within a city, so each of its micro
6% markets deserves its own analysis,” Khan says.
The Villa 10.7%
“There are certain markets that are heavily
2.5%
Town Square -7.7% oversupplied … but there are other areas where
demand is high, and the right quality of product is
-14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12
not available yet. There are developers that have
Quarterly Q3 2020-Q4 2020 Yearly Q4 2019-Q4 2020 benefited from such trends, have invested in them
and are making substantial returns as a result.”
*=Villa and townhouse purchase prices. Note: Some quarterly/yearly perfor-
mance figures not provided due to insufficient data. Source: Property Monitor Neha Bhatia

UAE metrics point to stable, but slow recovery
Sharp decline in projects and modest GDP growth constrict economic outlook
NOMINAL GDP & REAL GDP GROWTH INFLATION, AVERAGE CONSUMER PRICES
$bn Nominal GDP ($bn) Real GDP growth (%) % %
440 6 5
420 4 4
3
400 2
2
380 0
1
360 -2
0
340 -4
-1
320 -6 -2
300 -8 -3
13
14
15
16
17
18
19
20
21
22
13
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
ACTIVE PROJECTS BY SECTOR PROJECT MARKET ACTIVITY

$bn $bn
Energy & 60 15
industry Construction
13.6 60.7 50 7.5
94.0 88.1
40 0
30 -7.5
Power & 20 -15

water Transport
22.0 16.9 10 -22.5
29.0 41.1 0 -30

11
12
13
14
15
16
17
18
19
20
20
20
20
20
20
20
20
20
20
$113.2bn Execution Pre-execution $252.3bn Awards Completions 20

Net change
PUBLIC DEBT CURRENT ACCOUNT & FISCAL BALANCE

% of GDP % of GDP
40 20
Current account
35
15
Fiscal balance
30
10
25
20 5
15
0
10
-5
5
0 -10
13
14
15
16
17
18
19
20
21
22
13
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Sources: IMF, MEED Projects, MEED

Market Talk
native to fossil fuels over the past two
Region eyes years. Besides, the GCC relies on desal-

inated water and certain electrolysis can
green hydrogen run on saline water. Currently, water elec-

trolysis is the only feasible method for
as future fuel large-scale hydrogen production without

any carbon dioxide emissions.
The annual global export market for hy-
Gulf countries may be able
drogen is projected at $300bn by 2050.
to export much of their green With the GCC’s high export potential,
hydrogen while still having given its strategic location, high solar
ample supply for domestic use radiation and very low cost of renewable
energy among others, Gulf countries may
be able to export much of their green hy-
Deployment and investments in drogen while still having ample, low-cost
hydrogen have accelerated rapidly in volumes for domestic use.
response to government commitments Spain is hosting two of the EU’s stra-
to deep decarbonisation, establishing tegic green hydrogen projects. The first
hydrogen as a key component in the pilot project in Spain is ‘Power to Green
ongoing energy transition. Hydrogen Mallorca’ -- in joint venture
According to the European Union (EU), with Enagas -- where the hydrogen will
green hydrogen is an essential tool to be used in the city’s gas network and for
Jesus Sancho, decarbonise the industry and to cater for public transport. The plant will produce
ACCIONA Middle East long-haul transport as Europe seeks to 300 tonnes of renewable hydrogen from
managing director achieve a net-zero carbon economy by 14MW of photovoltaic energy originating
2050. By this year, the demand for green from two plants in Mallorca. The project
hydrogen worldwide will top 530 million is part of the ‘Hydrogen Road Map: a
Key takeaways:
tonnes, equivalent to around 7 per cent commitment to renewable hydrogen’
■ Green hydrogen produc- of the global primary energy consump- approved by the Spanish government
tion in the Middle East tion, displacing roughly 10 billion barrels and supported by the Balearic govern-
has the potential to be
more cost-competitive of oil equivalent a year, approximately a ment and EU. It will position Spain as a
than in other regions third of the total production right now. technological reference in the production
More than 30 countries have hydrogen and usage of renewable hydrogen. The
■ The annual global export
market for hydrogen road maps, with 85 per cent located in second project is ‘Ocean H2’, which pio-
is projected to reach Europe, Asia and Australia. If all projects neers a stand-alone offshore generation
$300bn by 2050
come to fruition, total investment will facility on a gravity-based structure. Both
■ The GCC’s hydrogen reach over $300bn in spending by 2030. projects are led by ACCIONA.
export advantages lie in Governments worldwide have committed We believe that local governments
its strategic location, high
solar radiation and very more than $70bn in public funding. must take decisive action in order to
low cost of renewable capitalise on the market, or they risk
energy, among others
Scalable alternative losing ground to hydrogen producers and
■ ACCIONA is leading In the Middle East, hydrogen is gradu- exporters in other markets.
two of the EU’s strategic
green hydrogen projects ally gaining awareness. Good examples
in Spain are the announcements made by ADQ,
Mubadala and Adnoc in the UAE and the
In partnership with megaproject at Neom in Saudi Arabia.
Green hydrogen production could
potentially be more cost-competitive than
in other regions due to available low-cost
renewables in the GCC. It has begun
gaining momentum as a scalable alter- ACCIONA’s Ocean H2 project
PARTNERSHIP PUBLISHING
62
Round-up
65
Finance
67
Oil & Gas
71
Construction
75
Power & Water
Riyadh rejects US Move to pull bonds Abu Dhabi takes Plans for Riyadh, Adnoc’s Project Wave
report on murder on the Midfield administrative steps Dubai and Bahrain will test investor
of journalist Jamal terminal building to strengthen Adnoc’s to enhance their appetite beyond
Khashoggi; Dubai project in Abu Dhabi position as the competitiveness Abu Dhabi’s
launches 2040 is expected to start main engine of the this year are a boon traditional power
urban masterplan tit-for-tat bond pulls emirate’s economy to contractors and water projects
BUSINESS
OUTLOOK
Analysis of the outlook for
contracts and deals in the
Middle East and North Africa
STORY OF THE MONTH

Manama launches
procurement for metro
public-private partnership
Read full story on page 72

Business Outlook
SAUDI ARABIA
MEEDonline
Read online
Scan the QR code with
your phone camera for
Riyadh rejects US report on
more news on meed.com
murder of Jamal Khashoggi
US intelligence says Saudi Crown Prince Mohammed bin Salman
likely approved the operation to capture or kill the journalist
R
iyadh has rejected a US volvement of a key adviser and members
intelligence report that says of Mohammed bin Salman’s protective
Crown Prince Mohammed detail in the operation, and the crown
bin Salman bin Abdulaziz prince’s support for using violent
al-Saud likely approved measures to silence dissidents abroad,
the operation that resulted in the murder including Khashoggi.”
of Saudi citizen Jamal Khashoggi
in Istanbul. Criminal act
The US report, which was declas- Saudi Arabia’s Ministry of Foreign
sified by the Directorate of National Affairs responded to the report, saying
Intelligence, said: “We assess that Saudi that the government “completely rejects
Arabia’s Crown Prince Mohammed the ... assessment in the report” and not-
bin Salman approved an operation in ing that it “contained inaccurate infor-
Istanbul, Turkey to capture or kill Saudi mation and conclusions”. The statement
journalist Jamal Khashoggi. added that the murder was carried out
“We base this assessment on the by group of government officials who are
crown prince’s control of decision- being tried by the local judicial system.
making in the kingdom, the direct in- Colin Foreman
UAE
Dubai launches 2040 masterplan

Dubai has launched a plan to guide Residences; the Expo 2020 district that
the development of the city until 2040. will be focused on exhibitions, tourism
The Dubai 2040 Urban Masterplan was and logistics; and Dubai Silicon Oasis, as
announced by UAE Vice President and a hub for science and technology.
Prime Minister Sheikh Mohammed bin Targets to improve quality of life in the
Rashid al-Maktoum in March. city were also revealed. Nature reserves
The launch of the plan referenced stud- and rural natural areas will constitute 60
ies that said the population of the emirate per cent of the emirate’s total area. The
is expected to be 5.8 million people by land area used for hotels and tourist ac-
2040 – up from 3.3 million in 2020. tivities will increase by 134 per cent and
that used for commercial activities will
3.3 million
Dubai population in 2020
Areas covered
The masterplan is focused on five cen-
increase to 168 square kilometres.
The masterplan will also increase the
tres. They are the historic urban centres land area allocated to education and
5.8 million
of Deira and Bur Dubai; the business and health facilities by 25 per cent, while the
financial centre of Downtown and Busi- length of public beaches will increase by
Anticipated population ness Bay; the tourism and leisure centre as much as 400 per cent by 2040.
of the city by 2040 of Dubai Marina and Jumeirah Beach Colin Foreman

BAHRAIN
Chinese firm to open UAE emerges as

data centre in Bahrain data centre hotspot
UAE ranked as seventh best market
Tencent in which to develop data centres
Cloud to
T
enter the he UAE has been network” helped the
region’s ranked as the country to score highly,
public cloud seventh most while the ease of obtain-
infrastructure favourable market for data ing construction permits
market centre development in the and “new smart city initia-
world by Dutch tives make it an emerging
consultancy Arcadis. The location for data centre
UAE follows the US, investment”, Arcadis said.
Chinese company Tencent Cloud has teamed up with Bah- Singapore, Japan, “The UAE is centrally
rain’s Economic Development Board (EDB) to launch an Sweden, Norway and located in the Middle East,
internet data centre (IDC) in the Gulf country. Denmark in the firm’s ensuring good proximity
A memorandum of understanding marks the Chinese Data Centre Location to submarine cables con-
firm’s entry into the Middle East and North Africa (Mena) Index 2021, a list of 50
region’s public cloud infrastructure market. The agree- optimal markets for data
ment is also expected to allow Tencent Cloud to leverage
EDB’s connectivity with local and regional stakeholders,
centre development.
Other Middle Eastern
64.6%
The UAE’s score in the
such as Bahraini wealth fund Mumtalakat. markets in the index Arcadis Data Centre
Under the terms of the memorandum, Tencent Cloud include Saudi Arabia, Location Index 2021
will establish the IDC in Bahrain by the end of this year, Egypt and Tunisia in the
and EDB will join public and private sector stakeholders 27th, 40th and 47th posi-
to encourage the adoption of cloud services.
Tencent Cloud, in collaboration with local government,
tions, respectively.
The index is based on
100
Number of UAE mobile
will also explore the potential for the company to establish each market’s perfor- broadband subscriptions
training programmes and initiatives in Bahrain’s universi- mance across eight crite- per 100 population
ties and other educational institutions. ria, including GDP per
capita, dealing with con-
Tech cluster struction permits, price necting it to the rest of the
Bahrain’s Transportation & Telecommunications Minister of electricity, energy secu- world. That said, the
Kamal bin Ahmed Mohammed said that the IDC would rity, cybersecurity, domes- energy and carbon costs
“create a clustering effect, as other global providers turn tic market size, the num- to cool servers in such a
their attention to the increasingly attractive region”. ber of mobile broadband hot climate needs to be
Poshu Yeung, Tencent Cloud International’s senior vice- subscriptions and mean considered,” according to
president, said the IDC in Bahrain would “provide better download speed. Arcadis the consultancy.
coverage all over the Mena region along the Belt and said its data specialists “The country is working
Road”, as well as support Bahrain’s “cloud-first” strategy. divided these factors into to address energy security
Bahrain is already home to US-based Amazon Web Ser- supply and demand crite- and cybersecurity. In
vices’ three data centres, which upon launch in 2019 ria, which were combined response, the government
marked the American company’s foray into the Middle with equal weighting. is looking to introduce a
East region. The country announced its cloud-first policy new data protection law to
in 2017 to drive the adoption of cloud-based technology UAE benefits support its national cyber-
across state entities and cut information technology costs In the UAE, a “well-estab- security strategy.”
by up to 90 per cent. lished fiber broadband Neha Bhatia
Neha Bhatia

Business Outlook
SAUDI ARABIA
MEEDonline
Read online
Saudi Arabia eases
Royal decree replaces
contractual restrictions
on expatriate workers.
To read the whole story,
Hajj and Umrah minister
go to www.meed.com/
saudi-arabia-eases- Several ministers and organisational heads have been
sponsorship-system changed following royal orders issued by King Salman
A
royal decree issued by A separate royal order was issued
Saudi Arabia’s King appointing Abdulaziz bin Abdullah
Salman bin Abdulaziz al-Duailej as president of Gaca, at the
al-Saud has relieved rank of minister.
Mohammed Saleh bin Al-Mansouri has been appointed
Taher Benten of his duties as Saudi assistant for executive affairs to the
Arabia’s Hajj and Umrah minister. Saudi minister of foreign affairs, at the
Issam bin Saad bin Saeed will take rank of minister.
over as acting minister of Hajj and Ibrahim bin Suleiman bin Abdullah
Umrah, in addition to his roles as al-Rasheed, president of the Supreme
minister of state and member of the Administrative Court, was also re-
Saudi cabinet. moved from his post and replaced by
Ali bin Suleiman bin Ali al-Saawi.
Further changes In addition, Abdulaziz bin Abdulrah-
Another decree, issued on 12 March, re- man bin Abdulaziz al-Arifi was appoint-
lieved Abdulhadi bin Ahmed al-Mansouri ed as Saudi Arabia’s assistant minister
of his post as president of the General of transport.
Authority of Civil Aviation (Gaca). Neha Bhatia
QATAR
Doha forms artificial intelligence board

Qatar plans to set up an artificial intel- ■ Hamad bin Khalifa University
DOHA’S AI STRATEGY ligence (AI) committee under the coun- ■ Qatar National Research Fund
try’s Ministry of Transport & Communi- ■ Qatar Development Bank
Launched in 2019,
cations (MoTC). The country’s cabinet
Qatar’s national AI
strategy comprises approved the draft decision establishing Committee remit
six pillars: the committee in March. The committee will help establish
It will comprise three representatives follow-up mechanisms and implement
1.
1 TALENT from MoTC, one of whom will head the Qatar’s national AI strategy, which was
2.
2 DATA ACCESS committee. The following entities will launched in 2019. It will supervise the
also be represented: programmes and initiatives related to
3.
3 EMPLOYMENT ■ Qatar Computing Research Institute AI launched by the state and coordinate
(representative will be a committee with the ministries and relevant authori-
4.
4 WEALTH CREATION
vice-president) ties in developing plans and programmes
5.
5 EMBRACING AN ■ Interior Ministry “for preparing human cadres in the field
AI+X FUTURE ■ Education & Higher Education of AI applications”.
6.
6 THOUGHT Ministry Qatar’s national AI strategy focuses
LEADERSHIP ■ Commerce & Industry Ministry on education, data access, employment,
IN AI ETHICS ■ Qatar Science & Technology Park business, research and ethics.

FINANCE
The move to pull
bonds on the
Midfield terminal
building project in
Abu Dhabi is
expected to start a
series of tit-for-tat
bond pulls
Domino-effect bond pulls likely
T
he decision by Abu Dhabi Rather than drawing a line under the
Airports Company to pull the problem with liquidation, the problems
contractors’ performance are getting worse.
guarantees for the Midfield Over the past six months, there has
terminal building project at been a string of bond pulls on Arabtec
Abu Dhabi International airport has fur- projects, and the Midfield terminal build-
ther highlighted the fact that the UAE’s ing bonds are the latest example of this
construction sector is now in the midst – Arabtec is the main contractor along
of a full-blown crisis. with its joint-venture partners Turkey’s
Colin Foreman The crisis has been brewing for the TAV and Lebanon’s Consolidated Con-
past five years, which have seen a trend tractors Company (CCC).
Follow ‘@MEEDColin’
on Twitter and stay towards international contractors exiting Bond pulls have domino effects and
informed on the the market after sustaining financial loss- companies working on the Midfield
latest in the region’s es, and several regional heavyweights terminal building project now expect
teetering on the brink of bankruptcy. tit-for-tat bond pulls down through the
The most high-profile contractor to be supply chain as companies scramble to
affected is Dubai-listed Arabtec Holding. protect their positions.
Its shareholders voted to liquidate the As banks struggle to keep up with
contractor last year. events, they will become increasingly
The construction crisis is now an wary of any new exposure. Starved of
issue for the financial sector. The cash, more projects will stall and more
Arabtec liquidation has left banks firms will fail. The construction crisis will
smarting with billions of dirhams of get worse before it gets any better.
exposure to the company. Colin Foreman

Business Outlook
UAE FURTHER READING
Abu Dhabi moves to pull Read more
airport contractors’ bonds

finance news
on www.meed.com/
industries/finance
A joint venture of TAV, Consolidated Contractors Company and
Arabtec is main contractor for the Midfield terminal building Shareholders approve
Saudi bank merger
A
Shareholders of Sau-
bu Dhabi Airports Company then, work on the project has been de- di’s National Commer-
(Adac) has moved to cash layed and costs have spiralled. Although cial Bank and Samba
bonds provided by contrac- no official comment has been made about Financial Group have
tors working on the Midfield the cost overruns, it is widely expected to approved the merger
terminal building project at cost about AED20bn to complete. of the two banks to
Abu Dhabi International airport. According to sources close to the pro- form the biggest bank
According to sources close to the ject, the work is 98 per cent finished. in the kingdom.
project, the bonds total about AED3bn Adac did not respond to a request
($817m) and were to guarantee the to comment. Real estate financing
performance of the main contractor firm issues sukuk
– a joint venture (JV) of Turkey’s TAV, Further setback Saudi Real Estate
Lebanon-based Consolidated Contractors The bond pull is the latest setback for Refinance Company
Company (CCC) and the local Arabtec Dubai-listed Arabtec Holding. Last has completed its dual
Construction. It is understood that the year, shareholders voted to liquidate tenor SR4bn ($1.07bn)
bonds had been provided by local banks the contractor. sukuk issuances. The
Abu Dhabi Commercial Bank, First Abu It is now selling subsidiaries Target seven and 10-year
Dhabi Bank and Mashreq Bank. Engineering and Arabtec Engineering tenors were oversub-
The JV was awarded the AED10.55bn Services before the rest of the compa- scribed 2.15 times.
($2.85bn) contract to build the Midfield ny is expected to be wound down.
terminal building in June 2012. Since Colin Foreman Streaming platform
to list on Nasdaq
Music streaming
JORDAN platform Anghami will
become the first Arab
Talks continue for Jordan rail funding technology firm to list
on Nasdaq, following
Jordan is continuing negotiations with The tenders will be released after its merger with publicly
potential private sector investors for its investment negotiations have been com- traded Vistas Media
planned national cargo network. pleted. Jordan is expected to issue both Acquisition Company.
The project is expected to be devel- tenders during the first half of this year.
oped as a public-private partnership Saudi firms buy stake
scheme through a build-operate-transfer Phase one in UK online retailer
or similar arrangement. The first phase of the cargo network will Saudi Arabia’s Fawaz
MEED understands the project cover 400 kilometres from Aqaba to Am- Abdulaziz Alhokair and
investor will be tasked with tendering man. Designs and feasibility studies have Arabian Centres Com-
the civil works for the railway network’s been fully updated for this component. pany plan to acquire
first phase, as well as with overseeing Phase 1 is designed to link Aqaba’s a combined 51 per
its implementation. The government, ports and industrial areas with Amman, cent stake in the UK-
through Jordan’s Transport Ministry, will and is expected to grow rail container based online fashion
manage the transaction advisory tender traffic by 5 per cent until 2050. store Vogacloset.
for the project. Neha Bhatia

OIL & GAS
Administrative
measures taken
by the Abu Dhabi
government
reflect the need
to strengthen
Adnoc’s position
as the main
engine of the
emirate’s
economy
Powering Abu Dhabi’s economy
T
he UAE presidential decree of government entities such as the UAE
establishing a board of Energy Ministry and Abu Dhabi’s sover-
directors to lead Abu Dhabi eign wealth fund Mubadala. In charge of
National Oil Company the overhauled Adnoc governance struc-
(Adnoc) is more than just a ture will be group CEO Sultan Ahmed
senior management reshuffle. al-Jaber, whose role and control over
For the first time in its history, Adnoc Adnoc has been significantly increased.
is set to be run by such a structure, In addition to the formation of the
Indrajit Sen in line with the corporate governance board, the presidential decree has also
models of international and regional created an executive committee, which
Follow @insentweets
on Twitter for comment energy majors such as Saudi Aramco and it is understood will manage Adnoc’s
on the region’s oil and Petroleum Development Oman. day-to-day affairs. Al-Jaber will lead the
gas sector The establishment of Adnoc’s new body as the company’s new managing
board of directors has been a two-stage director, alongside his existing role.
process. Abu Dhabi took the first step These administrative measures reflect
in December, merging the Supreme Abu Dhabi’s move to strengthen Adnoc’s
Petroleum Council, which has governed position as the main engine of the
Adnoc since 1988, with the newly emirate’s economy. They also align with
formed Supreme Council for Financial the intention to decide the company’s
and Economic Affairs. strategic policies, plans and programmes
A decree issued in late February has according to the objectives of the wider
now led to the creation of a board of Abu Dhabi economy.
directors for Adnoc drawn from leaders Indrajit Sen

Business Outlook
QATAR
MEEDonline
Read online
Adnoc prohibits Petrofac
QP awards contract for North
from bidding on new pro-
jects until further notice.
To read the whole story,
Field East gas storage facilities
go to www.meed.com/
adnoc-bars-petrofac- Qatar Petroleum has awarded a $2bn contract for the
from-bidding-on- second onshore package of the North Field East project
new-projects
Q
atar Petroleum (QP) has tanks and one LNG berth for the planned
awarded South Korea’s North Field South project.
Samsung C&T Corporation “This contract provides for the expan-
a $2bn contract for the sion of existing infrastructure required
execution of engineering, to ensure the safe loading and on-time
procurement and construction (EPC) delivery of LNG cargoes to international
works to expand the liquefied natural gas customers,” QP said.
(LNG) storage and loading facilities in
Qatar’s Ras Laffan Industrial City. Project progress
The contract was awarded on a In February, QP also awarded a $13bn
lump-sum basis and is the second major contract to a consortium of Japan’s Chi-
onshore EPC contract awarded by QP yoda Corporation and France’s Technip
as part of the $28.8bn first phase of Energies for EPC works on four LNG
the North Field LNG expansion project trains – the NFE project’s main package.
known as North Field East (NFE). “Both contracts represent the culmina-
The contract’s scope of work covers tion of front-end engineering and design
three LNG tanks and three LNG loading work that began in early 2018,” QP said.
berths for NFE, and options for two LNG Indrajit Sen
SAUDI ARABIA
Frontrunners emerge for offshore work

Frontrunners have emerged for a Contractors submitted bids for CRPOs
number of key offshore engineering, 63, 64 and 65 in September 2020 and
procurement, construction and instal- bids for CRPO 69 were submitted in
lation (EPCI) works that Saudi Aramco November. Aramco has been “evaluating
tendered to its Long-Term Agreement bids for these CRPOs for months, and
pool of contractors last year through its is presumably in a position now to go
$700m
Contracts Release and Purchase Order ahead with the contract award process”,
(CRPO) system. a source said.
Estimated combined Italian contractor Saipem is under-
value of CRPOs for which stood to be in line to win three offshore Further awards
frontrunners have emerged contracts, CRPOs 63, 64 and 65, ac- Aramco is expected to make further
cording to sources. These contracts are CRPO awards this year. Bid evaluation
15
Number of CRPOs Aramco
estimated to be worth $350m-$400m.
Separately, Aramco is understood to
for CRPOs 62, 67, 68, 70 and 71 is “also
understood to be in an advanced stage”,
is estimated to have have awarded the letter of intent to Abu another source said, adding: “Favourites
tendered to its Long-Term Dhabi-based National Petroleum Con- for those contracts are likely to emerge
Agreement pool of struction Company for CRPO 69, which in the coming days and weeks.”
contractors in 2020 has a contract value of $300m. Indrajit Sen

KUWAIT
Technip awarded Hydrocarbon revenues

Kuwait oil contract projected to crash
Carbon Tracker report says Bahrain and
Consultancy Oman could face 40 per cent shortfall
contract
G
is valued lobal government for low-carbon demand.
at $223m revenues from The SDS is a scenario
hydrocarbons will where there is a major
be $13tn lower over the transformation of the
next two decades – a drop global energy system to
of 51 per cent – under a deliver on three main
modelled “low-carbon goals: securing global
demand” scenario access to energy, reduc-
French engineering company Technip has been developed by think-tank ing air pollution and
awarded a consultancy contract for project engineer- Carbon Tracker. tackling climate change.
ing and management services by state-owned Kuwait In the model, which The low-carbon
Integrated Petroleum Industries Company (Kipic). assesses the vulner- demand scenario is
The value of the signed contract is KD68m ability of different
($223m). The scope of the contract covers consul- economies to declining
tancy work for project engineering and management
services for several projects at Kuwait’s Al-Zour
oil and gas demand,
Bahrain and Oman are
$13tn
Projected fall in global
refinery, Al-Zour petrochemicals complex, the nearby expected to be among hydrocarbons revenue
liquefied natural gas import facilities and other facili- the worst affected, with over the next 20 years
ties belonging to Kipic. a projected 40 per cent
In November, MEED reported that Technip had shortfall in revenue
submitted the lowest bid for the contract, beating the
three other companies that submitted bids.
being compounded by
their heavy reliance on
40%
Expected shortfall in oil
The four companies that submitted bids were: oil and gas as a source and gas revenues in
■ Technip (France), KD68m ($223m) of government revenue. Bahrain and Oman
■ KBR (US), KD73m Much of the rest of
■ Worley (Australia), KD84m the Middle East and
■ Wood Group (UK), KD98m North Africa (Mena) compared to a contrast-
region is expected to ing “industry expecta-
Al-Zour facilities show relative resilience tions” scenario based on
Kipic was created on 18 October 2016 to operate Ku- and continue spending the IEA’s Stated Policies
wait’s Al-Zour refining and petrochemicals complex, on projects. Scenario and assumes
as well as associated facilities. a long-term oil price of
Kuwait’s $16bn Al-Zour refinery is expected to Low-carbon scenario $60 a barrel.
come online this year. Carbon Tracker’s model The Mena region as a
In July, MEED reported that Kipic was considering uses the International whole is expected to see
repeating feasibility studies for the planned $10bn Energy Agency’s (IEA) an average 43 per cent
Al-Zour petrochemicals complex, which is due to be Sustainable Develop- drop in oil and gas rev-
integrated with Al-Zour refinery. ment Scenario (SDS) enues in the low-carbon
It is understood that the feasibility studies could be and an assumed flat real demand scenario, com-
repeated to evaluate how the project’s profitability long-term oil price of pared with the industry
could be affected due to the long-term impact of the $40 a barrel up to the expectations scenario.
Covid-19 pandemic on markets. year 2040 as a model Wil Crisp
Wil Crisp

Business Outlook
UAE FURTHER READING
Adnoc LNG awards Das Island Read more oil
engineering design contract

and gas news
on www.meed.com/
industries/oil-and-gas
Australia’s Worley will undertake front-end engineering
and design work on a project to rejuvenate two LNG trains Kuwait tenders
consultancy contract
A
State-owned down-
dnoc LNG, a subsidiary ing underground piping, major machin- stream operator Kuwait
of Abu Dhabi National Oil ery and seawater intake. National Petroleum
Company (Adnoc) Group, The two trains hold more than half of Company has tendered
has awarded a contract to Adnoc LNG’s current production capacity. a contract for consul-
Australia-headquartered tancy and engineering
Worley to perform front-end engineering Feed progress services at Mina Abdul-
and design (feed) works on a project UK-based contractor Petrofac has lah refinery.
to rejuvenate two liquefied natural gas performed the pre-feed works on the
(LNG) trains. project, according to a source. Shell to sell onshore
The trains are part of the LNG facili- Worley is understood to have beaten assets in Egypt
ties located on Das Island, the centre of bids from rivals Petrofac, TechnipFMC UK/Dutch Shell Group
storage and export operations for oil and (France) and Tecnicas Reunidas (Spain) has agreed to sell
gas extracted from the offshore fields of to win the feed contract. upstream assets in
Abu Dhabi, Adnoc said. The feed contract is the first of a two- Egypt’s Western Desert
The rejuvenation project will allow step award. Once feed work is com- to Cairo-based Cheiron
Adnoc LNG to extend the life cycle of plete, an engineering, procurement and Petroleum Corporation
trains one and two at the facility, enhanc- construction contract award will follow, and UK-based Cairn En-
ing efficiencies through the replacement dependent on the results of the feed ergy for up to $926m.
and maintenance of operational elements study, Adnoc said.
within the LNG processing units, includ- Indrajit Sen Kuwait awards
upstream contract
Kuwait-based Com-
LIBYA bined Group Contract-
ing Company has been
Technology sought for gas projects awarded a $138.4m
contract for external
Libya’s Mellitah Oil & Gas (MOG) is in port. Once it is completed, the combined works for Jurassic pro-
talks with companies about technology gas production capacity from both duction facilities in the
licensing for its project to construct two structures will be 760 million cubic feet north of the country.
offshore structures known as A and E, of natural gas a day.
according to industry sources. The main project contracts for the Well encounters
Structure A is located in the cen- wider development are expected to be hydrocarbons in Oman
tral-western part of Libya’s NC 41 block, worth more than $1bn in total. Swedish energy com-
approximately 80 kilometres from the MOG has recently invited companies pany Tethys Oil has
Libyan coast. Structure E is located to prequalify for several contracts for the encountered hydrocar-
in the central-eastern part of the area, structure A and E project. bons with its latest
about 130km from the coast. These include a contract for sealines Thameen-1 exploration
and subsea production systems as well well in Oman’s block
Gas production as a contract for the onshore portion of 49. Well testing is ex-
The project is being designed to provide the project. pected to start soon.
gas for domestic use as well as for ex- Wil Crisp

CONSTRUCTION
Riyadh, Dubai
and Bahrain have
all announced
plans to
enhance their
competitiveness
this year
Gulf rivalries boost construction
C
ompetition among the create opportunities for companies work-
region’s commercial centres ing on the project, but more importantly,
rose to the top of the agenda once completed, it will alleviate traffic
in mid-February when Saudi congestion in Manama, create develop-
Arabia said it expects to is- ment opportunities, and make the city a
sue regulations this year for plans to cease better place to live and for companies to
contracting with companies headquartered be based in.
outside the kingdom from 1 January 2024. Dubai then made a similar move in
Colin Foreman While the announcement has caused mid-March, when it announced its 2040
confusion among the business commu- masterplan, which included a population
Follow ‘@MEEDColin’
on Twitter and stay nity, the potential disruption could be forecast of 5.8 million people – up from
informed on the outweighed by the positive benefits that 3.3 million people in 2020.
latest in the region’s competition brings. In the weeks follow- As with Bahrain’s metro, the masterplan
ing the news from Riyadh, both Dubai not only promises to make Dubai a better
and Bahrain have made major public place to live and work, but also gives com-
announcements that will improve the panies confidence that there will continue
competitiveness of their cities. to be project opportunities at a time when
In late February, Bahrain said it was the real estate market is oversupplied.
starting the procurement process for the With project activity the lifeblood for
Bahrain metro scheme, which will involve many of the international companies that
the development of the first phase of its operate in the region, the injection of
planned urban rail scheme on a public- regional competition is a healthy one.
private partnership basis. The project will Colin Foreman

Business Outlook
BAHRAIN
MEEDonline
Read online
Contractors submit
Manama launches procurement for
revised bids for UAE client
RAK Properties’ Northbay
Residences project. Read
metro public-private partnership
more at www.meed.com/
revised-bids-submitted- The first phase of the urban rail scheme will comprise
for-uae-scheme two lines totalling 28.6 kilometres with 20 stations
B
ahrain’s Ministry of Trans- and provide the best value for money for
portation & Telecommuni- this project. This approach [reflects] our
cations (MTT) has launched leadership’s commitment to enabling the
the procurement process for private sector’s active participation in
the construction of the Bah- the economy with the government acting
rain Metro scheme on a public-private as a facilitator and regulator,” said Kamal
partnership (PPP) basis. bin Ahmed Mohamed, minister of trans-
The ministry is seeking to partner portation and telecommunications.
with international and regional industry
players on a PPP basis and hosted a Phased delivery
global market virtual sounding forum The multibillion-dollar project involves
in March to introduce the project and delivering a 109 kilometre rail-based
engage in dialogue with key players in urban transit network using driverless
the construction industry. Tendering for technology in a phased manner, compris-
the project will start later this year. ing four transit lines.
“The ministry is looking to collaborate The first phase comprises two lines
with the private sector on a PPP basis to with an estimated length of 28.6km.
encourage innovation, create efficiencies Colin Foreman
SAUDI ARABIA
Riyadh plans $3bn Asir tourism project

Saudi Arabia’s Public Investment Fund Soudah and Rijal Almaa will be devel-
(PIF) plans to invest $3bn in develop- oped into a repeat, year-long sustainable
ing a luxury tourism destination in the destination for residents and visitors that
mountainous Asir region in the south- will contribute an estimated $8bn to the
west of the kingdom. kingdom’s cumulative GDP by 2030.
Prince Mohammed bin Salman bin SDC plans to achieve that goal by part-
Abdulaziz al-Saud, Crown Prince, Deputy nering with the local community and pri-
$3bn
Prime Minister and chairman of the vate sector to build a robust and diverse
PIF, announced the launch of Soudah network of year-long offerings across the
Value of PIF’s planned Development Company (SDC) to lead hospitality, residential, commercial and
investment in the Asir the project. entertainment sectors.
tourism development Once complete, the project aims to
Development plans attract more than 2 million visitors a
$8bn The plans for Soudah and parts of Rijal
Almaa Governorate include the devel-
year, which will create 8,000 direct and
indirect permanent jobs by 2030.
Estimated value of the
tourism destination’s opment of 2,700 hotel rooms, 1,300 SDC is a closed joint stock company
contribution to Saudi’s residential units, and 30 commercial and that is fully owned by PIF.
GDP by 2030 entertainment attractions. Colin Foreman

SAUDI ARABIA FURTHER READING
Local contractor wins contract Read more
for Red Sea Project bridge

construction news
on www.meed.com/
industries/construction
The Red Sea Development Company is tendering and
awarding contracts for a range of construction work Contractor named
for Jeddah scheme
T
Saudi Arabia’s Al-Saad
he Red Sea Development General Contracting
Company (TRSDC) is con- has been confirmed
tinuing to tender and award by the local Al-Murjan
contracts as it moves towards Group to deliver the
opening the first elements of structural package for
the Red Sea Project on the west coast of the Delta mixed-use
the kingdom by the end of 2022. Shurayrah Island’s Coral Bloom hotel project in Jeddah.
A major award was recently secured
by local contractor Mofarreh al-Harbi & get revised pricing. We will then move Orascom wins Egypt
Partners (Harbico) for the construction into commercial negotiations.” hospital contract
of a 1.1 kilometre bridge connecting Bids for a smaller contract covering Magdi Yacoub Heart
Shurayrah Island with the mainland. the delivery of the airport’s fuel farm are Foundation has award-
The company is “up and running and also being evaluated by TRSDC. ed the local Orascom
building a precast yard on site”, said Ian Construction the
Williamson, chief project delivery officer, Hotel progress main contract to build
TRSDC. “There are quite big spans being TDRSC is also making progress on the a 300-bed cardiac
made for the bridge that are difficult to hotel buildings. “We have four hotels healthcare facility in
move on the roads, so it makes sense to opening in December 2022 – two on Egypt’s 6 October City.
manufacture on site.” Umamhat al-Shaykh islands, one on
The bridge is the final part of a perma- Shaybarah Island and the inland South- Egypt awards museum
nent 3.3km-long crossing that consists ern Dunes hotel,” said Williamson. services contract
of causeways at either end. The project For Ummahat al-Shaykh, Switzerland’s A Hassan Allam-led
is essential for providing access to hotel Blumer-Lehmann has been appointed to consortium will
construction sites on the island. carry out timber construction planning operate services and
A contract for land raising Shurayrah and fabrication for the Kengo Kuma-de- facilities at the $1.5bn
Island by 8.5 million cubic metres has signed hotel. Bids have been submitted Grand Egyptian Mu-
also been awarded to Belgium’s Dredg- for a second hotel that will also be made seum, which is being
ing International. The 4 square-km island using timber, and TRSDC is waiting for built adjacent to the
will host a range of hotels, including the contractors to submit revised prices. pyramids in Giza.
recently launched Coral Bloom hotel. TDRSC is evaluating mock-ups of the
“There are SR10bn of contracts still offsite manufactured structural elements Dubai sets contractor
to let,” said Williamson, noting that the for the Shaybarah Island hotel, and is de- payments deadline
airport landside package is “the single big- ciding how to package the construction. Dubai has issued an
gest contract, behind the utilities [PPP]”. The contract to build the back-of- update to legislation
Negotiations are under way for the house accommodation on the Ummahat covering government
airport landside construction contract. al-Shayk and Shaybarah islands has been payments and expendi-
“We got six bids back,” said William- awarded to UAE-based Speedhouse. For tures. It states that
PHOTOGRAPH: TRSDC
son. “We have done the technical evalu- the Southern Dunes hotel, the local Al- suppliers and con-
ation, have met all the bidders, and done Bawani has been selected to deliver civil tractors must be paid
extensive rounds of interviews. We have and structural works for 40 hotel villas. within 90 working days.
sent post-tender clarifications and will Colin Foreman

Business Outlook
QATAR
MEEDonline
Read online
Dubai’s urban masterplan
Doha seeks contractors for
comes at a challenging
time for the emirate.
Read Colin Foreman’s
next phase of schools project
comment at www.meed.
com/dubai-focuses- Phase three of the schools public-private partnership
on-long-term-with- programme entails the development of 14 schools
2040-masterplan
Q
atar’s Ministry of Commerce er Education, the main contracting
& Industry and the Public authority for the projects, appointed
Works Authority (Ashghal) Ashghal to represent it in the procure-
have invited firms to express ment process.
an interest in the contract to
develop the third phase of Qatar’s QR4bn Local support
($1.1bn) schools public-private partner- The local Barwa Real Estate Group will
ship (PPP) programme. develop eight schools under the pro-
The third phase involves the develop- gramme’s first phase. The developer
ment of 14 new schools: four second- reached financial close on the project
ary schools, five middle schools, four last year.
primary schools and a school catering Barwa will develop and maintain the
to special educational needs. schools for a period of 25 years.
Qatar’s schools PPP programme The schools will be directly leased to
entails the development of 47 schools the government after construction is
using a design, build, finance, opera- complete, thereby securing guaranteed
tion, maintenance and transfer model. rental income for Barwa.
The Ministry of Education & High- Jennifer Aguinaldo
JORDAN
Aqaba to tender exhibition centre

Jordan’s Aqaba Development Corpora- which is scheduled to take place on 31
tion (ADC) is expected to issue the civil October-3 November 2022. AIECC is set
works tender for a planned exhibition for overall completion in early 2024.
centre close to King Hussein Internation-
al airport between the third and fourth Sector development
quarters of 2021. The project is part of ADC’s long-term
20 hectares
The tender issuance is expected to fol- programme to expand Aqaba’s aviation
low ADC’s confirmation of a consultant and related sectors following progress
Size of the site allocated for the Aqaba International Exhibition & on seaport development in the Jordanian
to the Aqaba International Convention Centre (AIECC) project. port city.
Exhibition & Convention The planned events facility, which has ADC is expected to tender the main
Centre facility been allocated a 200 dunam (20 hectare) construction package for a planned royal
site, will feature exhibition, retail, food air museum in Aqaba in the third quarter
Q3 2021
Expected timeframe for
and beverage, and leisure areas.
MEED understands the first phase of
of this year.
ADC is also evaluating consultancy
the main construction AIECC will be completed in time to host bids for its planned expansion of King
package of the Aqaba air the 13th iteration of the Special Opera- Hussein International airport.
museum to be tendered tions Forces exhibition and conference, Neha Bhatia

POWER & WATER
Adnoc’s Project
Wave will test
investor appetite
beyond the
emirate’s
traditional power
and water
projects
PPP role in Abu Dhabi expands
A
bu Dhabi National Oil Wave, Adnoc expects to optimise the
Company’s (Adnoc) plan project structure and allocation of risks,
to procure two of the three minimise the levelised cost of water, and
components of its multibil- minimise the impact of project liabilities
lion-dollar Project Wave as on its balance sheet and credit rating.
a build, own, operate and transfer (BOOT) The project will test investor appetite
contract marks a significant milestone. beyond the emirate’s traditional power
The first component entails the develop- and water projects. It will also test the
ment of seawater treatment plants in Mirfa readiness of the water sector to serve the
and Nouf, each comprising a seawater Abu Dhabi economy beyond traditional
Jennifer Aguinaldo intake, outfall, filtration and sulphur domestic water supply. Equally important,
reduction plant. The second component the project is an endorsement of increased
Follow ‘@MEEDJen’
on Twitter for comment entails the development of 450 kilometres private sector participation by Adnoc.
on the region’s power of pipelines to transport treated, filtered, The company, in partnership with Abu
and water sector low-sulphate seawater for injection into Dhabi National Energy Company (Taqa),
Adnoc’s onshore fields. The BOOT pro- is expected to award another PPP project,
ject’s estimated budget is $2bn-$2.5bn. the estimated $2bn Project Lightning,
The final component, to be procured soon. The high-voltage, direct current sub-
separately as an engineering, procurement sea transmission system will connect Abu
and construction contract, covers the Dhabi’s onshore electricity grid to Adnoc’s
development of a centralised pumping offshore production facilities.
station and in-field distribution network to These developments suggest the role of
supply water injection wells. PPPs in Abu Dhabi, beyond the power and
By pursuing the public-private partner- water sectors, is about to expand quickly.
ship (PPP) route for the bulk of Project Jennifer Aguinaldo

Business Outlook
UAE
MEEDonline
Read online
Dhofar Desalination Com-
Abu Dhabi receives expressions
pany reaches commercial
operation on the Salalah
IWP in Oman. Read more
of interest for seawater project
at www.meed.com/oman-
independent-water- The two seawater treatment and transmission schemes will
project-begins- have a capacity of about 210 million imperial gallons a day
operation
A
bu Dhabi National Oil kilometres of new pipeline infrastruc-
Company (Adnoc) has ture. Each seawater treatment plant will
received interest from consist of a seawater intake, outfall,
developers for a contract filtration and sulphur reduction plant.
to develop two seawater
treatment and transmission pipeline Project Wave
schemes in the emirate. The contract covers two components
The project will replace the current of Adnoc’s Project Wave, which aims to
aquifer water injection systems used utilise seawater as an additional source
for maintaining reservoir pressure in all for enhanced oil recovery-based injec-
onshore oil fields in Abu Dhabi. tion into Abu Dhabi’s onshore fields. The
The two standalone greenfield sea- project will be implemented on a build,
water nanofiltration plants will have a own, operate and transfer basis.
combined treatment capacity of about A project company consisting of
210 million imperial gallons a day. Adnoc and the successful bidder will
The project also involves the develop- implement the project. Adnoc will be the
ment of pumping stations and transmis- sole off-taker of treated seawater at the
sion pipelines to transport treated water battery limit of the Adnoc Onshore fields.
to onshore fields, requiring about 450 Jennifer Aguinaldo
SAUDI ARABIA
Riyadh plans concentrated solar scheme

SAUDI RENEWABLE
ENERGY TARGET Saudi Arabia is in discussions to devel- power by using mirrors to concentrate
2030 op a concentrated solar power (CSP) a large area of sunlight onto a receiver.
GW scheme as part of its target to generate Concentrated light is converted to heat
27.3GW of renewable energy by 2024 to generate electricity.
and 58.7GW by 2030, according to an In 2017, state utility Dubai Electrici-
industry source. MEED understands ty & Water Authority (Dewa) appointed
the project is at an early stage of Saudi Arabia’s Acwa Power to develop
discussions, with the potential capacity the $3.8bn hybrid CSP/solar photo-
and location yet to be disclosed. voltaic (PV) plant at Mohammed bin
The scheme is at a less advanced Rashid Solar Park.
stage than the planned wind independ- Acwa Power will develop the CSP
Installed capacity
ent power project in Yanbu, which is for a levelised tariff of 7.3$cents a
Solar photovoltaic 40 expected to be tendered this year. kilowatt hour ($c/kWh), which was the
Concentrated solar
power 2.7 lowest unsubsidised tariff in the world
Wind 16 CSP technology for a utility-scale CSP solar project at
CSPs, also known as concentrated the time.
Source: Renewable Energy Project
Development Office (Repdo) solar thermal systems, generate solar Jennifer Aguinaldo

EGYPT FURTHER READING
Cairo awards agricultural Read more power
wastewater treatment contract

and water news
on www.meed.com
El-Hamam agricultural wastewater treatment plant will have

the capacity to treat 6 million cubic metres of water a day Big interest in waste-
to-energy scheme
A
Up to 80 internation-
joint venture of Metito and Delta area. The project forms part of the al companies have
local contractors Hassan government’s strategy to expand Egypt’s expressed interest
Allam, Arab Contractors agricultural area and develop the West- in the contract to
and Orascom Construc- ern Desert region. develop Abu Dhabi’s
tion has been awarded the first waste-to-energy
contract to design, build and operate Bahr al-Baqar plant project, according to
the El-Hamam agricultural wastewater Another major wastewater treatment industry sources.
treatment plant in Egypt. project is under way in Egypt. In Janu-
MEED Projects estimates the contract ary, the Egyptian government allocated Saudi Arabia reopens
to be valued at $640m. £E236m ($15m) for the provision of water privatisation
The plant will have the capacity to electricity to the $1.8bn Bahr al-Baqar Saudi’s National Water
treat 6 million cubic metres of water a wastewater treatment project. Company has reopened
day (cm/d). Its delivery capacity will be In July 2019, MEED reported that the prequalification
achieved by “collecting and transport- the Kuwait Fund for Arab Economic process for the project
ing agricultural drainage water from Development signed an agreement with to privatise the man-
the north of the Nile Delta to the plant the Egyptian government to provide agement, operation and
through a 120-kilometre-long course”. a $170m loan for the construction of maintenance of the wa-
The treated water will then irrigate the project. ter distribution sector.
up to 500,000 feddans west of the Nile Jennifer Aguinaldo
Barakah second
reactor gets licence
IRAQ The UAE’s Federal
Authority for Nuclear
Iraq to tender Erbil sewerage plant Regulation has issued
a 60-year operating
The Ministry of Municipalities & Tourism all of Japan, has completed the project’s licence for the second
(MOMT) in Iraq’s Kurdistan Region is detailed design, according to an industry reactor at Abu Dhabi’s
expected to tender the main contract for source. The project involves the con- Barakah nuclear ener-
the construction of a sewerage facility in struction of a wastewater treatment plant gy plant.
the southwestern area of Erbil city. with a capacity of 210,000 cubic metres
The project budget is estimated at of water a day. Abu Dhabi receives
$778m, with the Japanese Official It also involves the construction of Mirfa 2 interest
Development Assistance providing a trunk sewer pipes, primary and second- Dozens of international
¥34.417bn ($317m) loan for the project ary as well as house connection pipes, developers and inves-
through the Japan International Cooper- and the installation of private discharge tors have expressed
ation Agency. facilities and relay pumping stations. interest in Abu Dhabi’s
The project includes a three-year op- planned reverse osmo-
Design completed eration and maintenance contract once sis independent water
A team of Unico International, Yachiyo construction works are completed and project in Mirfa, 110km
Engineering, Japan Techno, Asia Engi- the plant is commissioned. west of the capital.
neering Consultant and Water Agency, Jennifer Aguinaldo

HOSPITALITY HIT HARD
Covid-19 had a devastating impact on the region’s hoteliers in 2020,
with North Africa suffering the worst from the collapse in tourism
TUNISIA JORDAN
2019 2020 Change 2019 2020 Change
61.3 22.1 -63.9% 56.4 26.8 -52.5%
65.7 61.5 -6.4% 116.5 101.0 -13.3%
40.2 13.6 -66.2% 65.7 27.1 -58.8%
MOROCCO
2019 2020 Change
60.3 25.1 -58.4%
96.1 90.2 -6.1%
58.0 22.6 -61.0%
ALGERIA
2019 2020 Change EGYPT
44.5 19.6 -56.0%
2019 2020 Change
108.0 92.1 -14.7%
68.0 27.9 -59.0%
48.0 18.0 -62.5%
72.1 66.4 -7.9%
49.0 18.5 -62.2%
HOTEL INDUSTRY PERFORMANCE

Middle East North Africa
OCCUPANCY (%) AVERAGE DAILY RATES ($) REVPAR ($) OCCUPANCY (%) AVERAGE DAILY RATES ($) REVPAR ($)
141.7 90.7 86.2

117.2
93.3 62.6
56.8
65.8
45.9 53.7
26.1 22.5
-30.2% -17.3% -43.4% -58.3% -5.0% -60.4%

LEBANON KUWAIT
2019 2020 Change 2019 2020 Change
52.2 22.9 -56.1% 51.6 28.6 -44.6%
146.9 192.3 -30.9% 179.9 181.2 -0.7%
76.6 44.0 -42.6% 92.9 51.8 -44.2%
BAHRAIN
2019 2020 Change
55.5 28.8 -48.1%
146.5 124.9 -14.7%
81.4 36.0 -55.8%
QATAR
2019 2020 Change
66.4 56.6 -14.8%
91.5 85.2 -6.9%
60.7 48.2 -20.6%
UAE
2019 2020 Change
73.1 51.7 -29.3%
SAUDI ARABIA 122.1 99.5 -18.5%
2019 2020 Change 89.2 51.4 -42.4%
58.8 39.5 -32.8%
OMAN
145.0 111.5 -23.1%
85.2 44.0 -48.4% 2019 2020 Change
55.8 27.1 -51.4%
141.5 106.5 -24.7%
78.9 28.8 -63.5%
KEY
Occupancy (%) 2019
Average daily rates ($) 2020
Revpar ($)
Revpar=Revenue per average room. Source: STR Global

Gulf Projects Index
Gulf projects market continues to decline

Index records 11th consecutive monthly drop after contractions in five of eight markets
GULF PROJECTS INDEX

Value of projects planned or under way ($bn)
1,600
1,400
1,200
1,000
800
600
400
200
0
11 12 13 14 15 16 17 18 19 20 21
20 20 20 20 20 20 20 20 20 20 20
ar ar ar ar ar ar ar ar ar ar ar
M M M M M M M M M M M
Saudi Arabia UAE Iraq Kuwait Iran Oman Bahrain Qatar Source: MEED Projects
T
he value of the Gulf pro- power plant in Andimeshk, worth
jects market declined 0.83 $240m, and National Petroleum Compa-
per cent from $3.48tn on ny’s $363m West Islamabad petrochem-
11 February to $3.45tn on icals complex in Kermanshah.
11 March 2021.
The drop marks the 11th consecu- Regional decline
tive monthly decline in the value of the The decline in the index was led by con-
tracker, which last grew by a marginal tractions of 3.14 per cent, 1.28 per cent,
0.2 per cent in April 2020. 0.59 per cent and 0.4 per cent, respec-
Only three of eight markets tracked tively, in the UAE, Qatar, Bahrain and
recorded slight growth in the month to Kuwait. Cumulatively, the GCC projects
GULF PROJECTS
11 March 2021. Iran, Saudi Arabia and market shrank by 1 per cent between
MARKETS,
Oman expanded by 0.13 per cent, 0.05 February and March.
11 MARCH
per cent and 0.03 per cent, respectively. The value of the UAE projects market
Growth in Saudi Arabia was led by dropped from $803.9bn to $778.6bn Value ($bn)
upward revisions to the budgets of during the period following a status Saudi Arabia 1,379
schemes such as the Housing Ministry’s revision for phase 2 of Dubai Aviation UAE 779
North Obhur Park and Mogan Village Engineering Projects’ planned expansion Iraq 379
Housing projects in Jeddah and Saudi of Al-Maktoum International airport.
Kuwait 238
Aramco’s Juaymah offshore platform Stages 1 and 2 of the expansion’s
Iran 233
(CRPO 69) bypass system, which second phase, respectively budgeted at
have net values of $480m and $380m, $15bn and $17bn, were both marked as Qatar 223
according to regional projects tracker being on hold by MEED Projects. Oman 155
MEED Projects. The size of the Iraqi projects market Bahrain 65
Iran’s market expanded during the meanwhile declined by a more modest
Gulf total 3,451
month due to the addition of the Energy 0.12 per cent.
Ministry’s 546MW combined-cycle Neha Bhatia Source: MEED Projects

Contract Awards
North Field contracts buoy February awards

Qatar’s gas goals give the regional projects market a much-needed lift after slow start
MIDDLE EAST CONTRACT AWARDS TO FEBRUARY 2021*

($m)
20,000
15,000
10,000
5,000
0
20
20
20
Ju 20
20
Au 20
Se 20
No 20
20
20
21
21
02
20
20
20
20
20
20
20
20
20
20
20
r2
l2
b
ar
p
b
ay
ct
ec
Ju
Ap
Ja
Fe
Fe
O
M
D
*=Countries covered include GCC states, Iran, Iraq, Jordan, Lebanon, Syria, Yemen and Egypt. Source: MEED Projects
A
mid the Covid-19 pandem- appears to have secured. The firm said it
ic and decline in global had received the letter of intent from Qa-
energy demand during targas for the estimated $1bn package.
2020, Qatar appeared to Egypt came second in the February
pause its plans for the contract awards ranking, trailing Qatar
giant North Field gas megaproject. by a huge margin. The country recorded
The new year, however, has bought $2.8bn of deals, compared with Qatar’s
new hopes and Doha has resumed its gas $14.9bn. The largest contract signed in
plans. A $13bn contract award by state- Egypt during the month was a $1.9bn
owned Qatargas for work on the North deal awarded by the Ministry of Housing
Field lifted the regional contract awards Utilities & Urban Communities to China
value for February to $19.2bn, compared State Construction & Engineering Corpo-
with $2.8bn in January. ration for work on tower projects within
the El-Alamein New City development.
Gas field expansion Saudi Arabia took third place, with
The deal, awarded on 8 February to Ja- $463m of deals signed compared with
pan’s Chiyoda Corporation and France’s $1.5bn in January. The largest contract
CONTRACT AWARDS Technip Energies for the main onshore inked in the kingdom in February was
BY COUNTRY package of the first phase of the North a $180m deal awarded by The Red Sea
Field expansion scheme, was just the Development Company to Swiss Blum-
Award ($m)
start. On 22 February, Italy’s Saipem was er-Lehmann for the execution of timber
Qatar 14,886
officially awarded the main package of construction planning and fabrication, as
Egypt 2,793 the $3bn North Field production sustaina- well as supply works for a resort on the
Saudi Arabia 463 bility (NFPS) project. Saipem has said its Red Sea Ummahat al-Shaykh island.
Kuwait 412 contract is worth $1.7bn. Sneha Abraham
397
Saipem’s deal is the bigger of two
Oman
engineering, procurement, construction For a detailed list of all contract awards
UAE 284 in February, visit www.meed.com/
and installation packages for the NFPS
middle-east-awards-february-2021
Source: MEED Projects project, the second of which Saipem also

Download sample pages
or purchase these reports
through this link
buy.meed.com
Shearman & Sterling is a global
elite law firm that provides legal and
industry insight to major corporations,
financial institutions, governments and
state-owned enterprises across the
world. We help clients navigate the most
complex energy, infrastructure and
renewables projects and transactions
in the region. With a long standing
presence in Riyadh, Abu Dhabi and
Dubai, we are at the forefront of the
region’s legal services industry.
shearman.com

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MEED UAE: Optimism builds as oil

recovers and vaccines roll out

BUSINESS TOURISM: Regional hoteliers

Richard Thompson is editorial director www.youtube.com/user/

MEED Business Review / 3

“To become a global centre for

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MEED Business Review / 5

BUSINESS Visit buy.meed.com

Cover by Rey Delante

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MEED SUBSCRIPTIONS MEED PROJECTS INTELLIGENCE REPORTS

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SAUDI ARABIA OMAN

MEED Business Review / 9

ISRAEL LIBYA FURTHER READING

10 \ MEED Business Review

Governments environment consensus

quantification ure it,” UN chief econo-

MEED Business Review / 11

CONFIRMED COVID-19 CASES IN THE MENA REGION

FOUR-WEEK COVID-19 CASE RATE PER MILLION*

ALGERIA BAHRAIN EGYPT IRAN IRAQ JORDAN KUWAIT LEBANON

Tunisia Lebanon Syria

VACCINATION DOSES ADMINISTERED PER 100 PEOPLE Yemen

LIBYA MOROCCO OMAN QATAR SAUDI SYRIA TUNISIA UAE

14 \ MEED Business Review

gaining prominence by making And China has its equivalent

MEED Business Review / 15

eras are more the norm and

in western countries.” 2016

16 \ MEED Business Review

$320bn $135.2bn 13.6% 20-34%

CONTRIBUTION OF AI TO GDP IN 2030

(12.4% of GDP) Oman (13.6% of GDP)

CONTRIBUTION OF AI IN 2030 BY INDUSTRY Contribution Share

Construction and manufacturing $99bn 12.4%

CAGR=Compound annual growth rate. Source: PwC

UAE LEADS REGION’S

18 \ MEED Business Review

MEED Business Review / 19

20 \ MEED Business Review

MEED Business Review / 21

LIBYA ELECTIONS COULD

22 \ MEED Business Review

MEED Business Review / 23

TUNISIA LEBANON SYRIA IRAQ KUWAIT IRAN

DEFENCE BUDGETS STAY

24 \ MEED Business Review

MEED Business Review / 25

KUWAIT BUDGET HIGHLIGHTS

26 \ MEED Business Review

MEED Business Review / 27

28 \ MEED Business Review

MEED Business Review / 29

30 \ MEED Business Review

MEED Business Review / 31

TRAVEL INDUSTRY GEARS

32 \ MEED Business Review

MEED Business Review / 33