Adham Al Danaf, the mayor of Baalchmay, says the town's water woes are the result of Lebanon's electricity crisis. Jamie Prentis / The National
Adham Al Danaf, the mayor of Baalchmay, says the town's water woes are the result of Lebanon's electricity crisis. Jamie Prentis / The National
Adham Al Danaf, the mayor of Baalchmay, says the town's water woes are the result of Lebanon's electricity crisis. Jamie Prentis / The National
Adham Al Danaf, the mayor of Baalchmay, says the town's water woes are the result of Lebanon's electricity crisis. Jamie Prentis / The National

Lebanon's electricity crisis exacerbates water scarcity problem


Jamie Prentis
  • English
  • Arabic

The Middle East and North Africa is one of the most water-scarce regions of the world. Already plagued by a lack of freshwater resources, it also faces climate change, population growth and poor management, which threaten to affect the lives of millions.

The National’s correspondents across the region spoke to the people most affected to understand the extent of the issue and where hope for change may lie.

The thick maple tree in Baalchmay, a town carved into the hills of the Mount Lebanon region, almost acts as a dividing line on the road in the lower parts of the area. Perhaps about 200 years old, the tree is so broad that it is nearly as wide as the small cars passing by.

Only metres away is a spring. It is said the proximity of the water nearby allowed the maple tree and its thick branches to grow to such an extent, and survive previous conflicts that hit the area.

“In the past, the story goes that if you got a shovel and were just digging a little bit, water would come from the ground. That’s how rich the area was with water,” said Adham Al Danaf, the mayor of Baalchmay, a town of about 4,500 Lebanese residents and up to 3,000 refugees.

The thick maple tree in Baalchmy that sits next to a public spring. Jamie Prentis / The National
The thick maple tree in Baalchmy that sits next to a public spring. Jamie Prentis / The National

“What we always say about the village is that it’s like the human body,” added Jamil Al Danaf, a water specialist at the municipality.

“No matter where you take a small pin and poke it, blood comes out — that’s what water is in Baalchmay. Where ever you dig, you’re going to find water.”

But for the residents of the town, these anecdotes belie the current water crisis they face. In an area supposedly blessed with an abundance of water beneath the soil, why do the people of Baalchmay suffer — like many places in Lebanon — from a severe lack of water?

In Baalchmay, as is the case in much of the country, the lack of electricity is to blame. Lebanon’s dilapidated energy infrastructure, heavily damaged in the 1975-1990 Civil War, has for decades limped on, unable to supply the amount of electricity that is demanded.

But since the start of the economic crisis in 2019, described by the World Bank as one of the worst in modern history, the problem has been become more acute. State electricity typically is only available for a few hours a day, if that. Those who can afford it have to turn to expensive diesel-guzzling private generators.

“It’s linked directly to the electricity issue,” said the mayor. “You know the electricity problem in Lebanon. Whenever we don’t have electricity, we don’t have water.”

According to the mayor, about seven years ago public water would be pumped into a giant water tanker that sits at the top the village before being distributed among residents about twice a week. Today, this only happens once every other month.

Last summer, Unicef warned that the health of millions in Lebanon, a country of about six million, was as at risk because of its water crisis.

Baalchmay is a town of about 4,500 Lebanese residents and up to 3,000 refugees. Jamie Prentis / The National
Baalchmay is a town of about 4,500 Lebanese residents and up to 3,000 refugees. Jamie Prentis / The National

The UN agency said state providers were unable to supply enough water — “largely as a result of the power crisis” — but also because soaring inflation means it is prohibitively expensive to maintain infrastructure and afford parts.

In Baalchmay, residents have been forced to adapt. Typically they buy water from private sources but that is becoming increasingly difficult as Lebanon’s economic crisis tightens its grip.

“It’s not a well-off municipality. People can barely get by covering their other needs, let alone water,” the mayor said.

Resident Jamila Abi Merched has had to find ways to make the limited water she gets stretch further.

“To save water, I have used the water in many ways.” For example, the water she uses to do the laundry is also used to clean the floors of her home.

“I have no trust in any of the water quality that is coming. I wash the vegetables and I’m very worried about the water. But you don’t have a choice,” she said.

Her husband said many people in the town have been forced to cut down on showers — perhaps only showering once every four or five days now.

Born and raised in Baalchmay, Mr Abi Merched said the water situation has been degenerating steadily since 1995.

“Now things are going backwards not forwards,” he said.

In the best scenario, they get one hour of government water every 15 days — a rarity. To be able to live a “fair life”, Mr Abi Merched said the family would have to pay up to 2 million Lebanese pounds ($133) a week to private water suppliers. Instead, they have installed a rainwater collection system on the roof.

The town, however, may have a solution. A number of years ago, a well was built further down the hill to support Baalchmay. But with soaring fuel costs, limited electricity and the wider economic crisis, it has never been fully in operation.

The town of Baalchmay plans to install solar panels near its well (pictured) to cut its reliance on state-provided electricity to pump water to residents. Jamie Prentis / The National
The town of Baalchmay plans to install solar panels near its well (pictured) to cut its reliance on state-provided electricity to pump water to residents. Jamie Prentis / The National

The mayor had a private generator installed using his own money and donations from the local community but it has had limited effect so far because of the costs involved.

According to the mayor, it would take up the municipality's entire budget for the month to pay for the diesel needed to run the generator to provide sufficient water for the area — and that’s not accounting for maintenance and other related costs.

But now the town believes it has found an “alternative” solution: solar energy. It has purchased 230 solar panels using funding from the Japanese embassy and with support from the Environment Academy — a project at the American University of Beirut. The Environment Academy worked with experts, a team from the local community and the municipality to find the solution.

By installing the solar panels next to the well, it is hoped the resulting electricity will be sufficient to pump the water and supply the town.

The project is expected to get started in the coming months, and to become the town's main water source.

The concept has been replicated elsewhere, again with the support of the Environment Academy. In Bedghane, a village south-east of Beirut with a population of about 2,000, and where the last remnants of winter can still be seen, a wall of solar panels overlooks the valley.

Locals of Bedghane say the installation of solar panels has helped alleviate 90 per cent of their water problem. Jamie Prentis / The National
Locals of Bedghane say the installation of solar panels has helped alleviate 90 per cent of their water problem. Jamie Prentis / The National

The village previously suffered from the same water supply issues that plague much of Lebanon but today “around 90 per cent of water problems [have been] fixed because of the solar panels”, said Shayekh Raydan Shayya, who lives in Bedghane.

Residents say the installation of the solar panels has helped alleviate some of the problems they face amid the devastating economic crisis.

But, for now, these are very localised solutions in two relatively small and cohesive populations.

For most of the country, water shortages are just one of a litany of problems people are encountering every day.

“People are barely managing,” said Baalchmay's mayor. “They are managing their lives in order to survive in a difficult situation.”

More from our water scarcity series:

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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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The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000. 

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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Updated: May 02, 2023, 1:49 PM