The German chancellor Angela Merkel accepts a report from Klaus Toepfer, the chairman of the Safe Energy Supply Ethics Commission, left, and Matthias Kleiner, the co-chairman, right. Germany is the first major industrialised power to agree to abandon nuclear power by 2022. John MacDougall / AFP
The German chancellor Angela Merkel accepts a report from Klaus Toepfer, the chairman of the Safe Energy Supply Ethics Commission, left, and Matthias Kleiner, the co-chairman, right. Germany is the fiShow more

Abu Dhabi's nuclear dream to get Japanese briefing



A member of Japan's nuclear commission is to meet officials in Abu Dhabi tomorrow as the future of nuclear energy returns to the spotlight after Germany's decision to end its use of atomic power by 2022.

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Japan is still trying to contain radiation from the crisis at the Fukushima Daiichi power plant that was triggered by an earthquake and tsunami in March. The government is preparing to pay millions of dollars of compensation to people affected by the crisis at the plant.

The episode has triggered a global rethinking of the safety of nuclear energy, and yesterday Germany became the biggest economic power to commit itself to giving up on nuclear power, announcing a phasing out of its plants over the next decade.

The UAE is eager to learn from Japan as the Emirates embarks on a US$20 billion (Dh73.46bn) plan to begin producing nuclear power by 2017 using reactors on the coast of the Western Region.

Akira Omoto, a member of Japan's atomic energy commission, the country's nuclear regulator, is to share information about the Fukushima disaster with officials at the separate headquarters of Emirates Nuclear Energy Corporation (Enec), the Abu Dhabi Government-owned company building the UAE's reactors, and the Federal Authority for Nuclear Regulation, the UAE's independent watchdog agency.

Last month, the nuclear regulator instructed Enec to submit the lessons it learnt from the Japanese crisis, and Enec officials say they are already revisiting matters such as how long to cool spent fuel in water in light of the events in Japan.

"It is a very important thing to share as early as possible to take into account both currently operating power plants and also nuclear power plants that are currently under construction," said Yanko Yanev, the head of the nuclear knowledge management unit at the International Atomic Energy Agency, the global nuclear watchdog based in Vienna. "Of course they will have to revisit the different safety components of the project, as all countries are doing now."

The UAE and other nations are keen to open nuclear plants even as western countries are closing such facilities or reviewing their use of them to appease fears sparked by the Fukushima crisis.

Yesterday, legislators in Germany confirmed that the country's 17 nuclear power plants would be shut down by 2022. Switzerland is to give up nuclear power by 2034, despite the high cost of replacing it, and all of the EU's 143 nuclear plants are to undergo stress tests starting tomorrow.

Those developments reflect a shift in the global nuclear industry, said Dr Ken Petrunik, Enec's chief programme officer.

"The growth rate [in countries in the Organisation for Co-operation and Development] will roughly match the plants being decommissioned," Dr Petrunik said during a presentation on nuclear power last month. "The nuclear renaissance will occur in countries like China, India and Russia, where they have strong demand growth.

"They will have to take more risks, and they will have to build their plants on time and on budget."

In the Gulf region, Saudi Arabia, Qatar and Kuwait are in the early stages of planning civil nuclear programmes.

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Saudi Arabia should not back away from nuclear power because of the disaster at the Fukushima plant, the head of the kingdom's electricity regulator said at a conference in Dubai yesterday.

Improved safety measures may make future nuclear power plants more expensive but would be worth the investment to meet growing electricity demand in the kingdom, said Dr Abdullah al Shehri, the governor of the kingdom's electricity authority. Saudi Arabia's installed electricity generating capacity will need to more than double from today's 52 gigawatts to 120GW by 2032, Dr al Shehri said.

"The ship Titanic . was designed with all the safety measures for a ship. And it failed," he said. "Japan gives us insight into looking at the safety measures rather than whether we should pursue nuclear power or not. What happened was worse than the worst case that we expected. What we can do is improve the safety measures. It will add to the cost - but I think nuclear power can be used throughout the world."

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Day 1 results:

Open Men (bonus points in brackets)
New Zealand 125 (1) beat UAE 111 (3)
India 111 (4) beat Singapore 75 (0)
South Africa 66 (2) beat Sri Lanka 57 (2)
Australia 126 (4) beat Malaysia -16 (0)

Open Women
New Zealand 64 (2) beat South Africa 57 (2)
England 69 (3) beat UAE 63 (1)
Australia 124 (4) beat UAE 23 (0)
New Zealand 74 (2) beat England 55 (2)