Suhail Al Mazrouei, Minister of Energy and Infrastructure, said the UAE would enhance water sustainability. Reuters
Suhail Al Mazrouei, Minister of Energy and Infrastructure, said the UAE would enhance water sustainability. Reuters
Suhail Al Mazrouei, Minister of Energy and Infrastructure, said the UAE would enhance water sustainability. Reuters
Suhail Al Mazrouei, Minister of Energy and Infrastructure, said the UAE would enhance water sustainability. Reuters

Investments in new desalination projects in UAE valued at $2.08bn, minister says


Alkesh Sharma
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The value of investment in new desalination plants in Abu Dhabi, Dubai and Umm Al Quwain amounted to Dh7.6 billion ($2.08bn), Suhail Al Mazrouei, the UAE’s Minister of Energy and Infrastructure, has said.

The annual growth rate of the water desalination industry is 3 per cent and the UAE has rolled out various national strategic projects in the sector, Mr Al Mazrouei told the state-owned news agency Wam on Tuesday.

These projects will help the country achieve water security by providing supply and ensuring national sustainability, he said.

The UAE relies on desalination — the process of converting seawater — for drinking water and regularly uses cloud seeding to encourage rainfall as it only receives about 100 millimetres a year.

In the past, many reports have highlighted the pressure on the UAE's water reserves.

In 2019, the UAE was named as one of more than a dozen countries facing extreme pressure on its resources with groundwater reserves depleted though overuse.

Authorities in 2017 launched the Water Security Strategy 2036 to address the issue.

It set out how the UAE would reduce total demand on water resources by 21 per cent; increase the reuse of treated water to 95 per cent; reduce average consumption by each person by half; and develop a storage capacity for more than 45 days in extreme emergencies.

Mr Al Mazrouei said the UAE has prioritised the sixth sustainable development goal to enhance water sustainability and offer access to water in natural conditions and emergencies.

He said the ministry plans to upgrade the water supply sector and complete new desalination plants using reverse osmosis technology.

The rate of use of treated wastewater must be 95 per cent, according to indicators of the approved water security strategy, while demand management and rationalisation programmes will also contribute to reducing total water consumption rates by 21 per cent until 2036, Mr Al Mazrouei said.

Reverse osmosis is a low-energy method of purifying water using membrane technology. Renewable energy systems are also being used in these plants, creating greater efficiency.

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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.”

Updated: May 10, 2022, 6:17 PM