Abu Dhabi's Executive Council has given the green light for a large power plant to help meet the growing need for electricity in the capital and the Northern Emirates.
The plant, due to be completed in 2015, will be built in the town of Mirfa in the emiratewith the capacity to generate 1,500 megawatts of electricity and desalinate 53 million gallons of water per day.
"The project is targeted to satisfy the increasing demand for electricity, which escalates annually by 11 per cent, in addition to the commitment of [the Abu Dhabi Water and Electricity Authority] to satisfy the requirements of the Northern Emirates," said Abdulla Al Nuaimi, the authority's director general.
The Mirfa project was approved by the Executive Council at its last session, according to a statement released by the Abu Dhabi Water and Electricity Authority (Adwea).
Driven by industrial expansion, rising consumption and its role in supplying its northern neighbours with power and water, Abu Dhabi is under pressure to grow the utility sector.
Adwea supplied 2,000MW to the Northern Emirates alone last year, said Mr Al Nuaimi, a commitment that will almost double by 2015.
Abu Dhabi is spending billions of dirhams to improve living standards in the north. Apart from supplying growing amounts of water and power, it has also allocated funds to improve the electricity grid and roads there.
The added requirements from Abu Dhabi's power plantscan already be seen. Generation will soon surpass the 10,000MW mark, which the sector can accommodate comfortably with a capacity of more than 13,000MW.
But by 2015, when Mirfa comes online, Adwea will need to produce nearly 17,000 megawatts to meet peak demand, according to estimates by the Abu Dhabi Electricity and Water Company, which buys and distributes the electricity.
By 2020, peak demand is expected to reach almost 25,000MW.
The industrialisation of the emirate will result in increasing numbers of factories and plants connected to the power grid.
Some 200MW of Mirfa's output will be fed to the nearby Elixier nitrogen plant, a joint venture between Abu Dhabi National Oil Company and Germany's Linde.
In addition to a growing industrial base, subsidised utility bills in Abu Dhabi leave little incentive for households or businesses to restrict consumption.
The Mirfa plant will be the latest power project run as a public-private partnership between Adwea and overseas international power operators.
Under that model, Adwea will retain a 60 per cent stake in the plant through a subsidiary of Abu Dhabi National Energy Company, also known as Taqa, while a consortium of power companies will share the remainder.
Those companies will be responsible for constructing and operating the plant.
Some of the power in the new plant will be generated by four General Electric gas turbines, which had originally been purchased by the Federal Electricity and Water Authority for a power plant in Al Ain and handed over to Adwea in 2007.
An existing plant producing about 200MW in Mirfa will be demolished to accommodate the new project.
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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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