INTERVIEW: Saudi Arabia’s Red Sea project to set ‘new global standards in sustainability’, says CEO

INTERVIEW: Saudi Arabia’s Red Sea project to set ‘new global standards in sustainability’, says CEO
Illustration by Luis Grañena
Updated 20 October 2019

INTERVIEW: Saudi Arabia’s Red Sea project to set ‘new global standards in sustainability’, says CEO

INTERVIEW: Saudi Arabia’s Red Sea project to set ‘new global standards in sustainability’, says CEO
  • John Pagano tells of his plans to help save world’s corals by developing ‘amazing land’ on Saudi Arabia’s western shores
  • “What really caught my attention was the passion and enthusiasm of young Saudis for Vision 2030," says Red Sea Development Co's CEO

DUBAI: John Pagano has been involved in mega-projects around the world, but “none of them will have the impact this will have on Saudi Arabia,” he said.

“This” is the Red Sea Development Company, of which he is CEO. Along with the plan to build a futuristic metropolis at NEOM in the northwest of the Kingdom, and the Qiddiya leisure resort near Riyadh, it is one of the headline initiatives of the Vision 2030 strategy to diversify away from oil dependency.

The Red Sea project is special, Pagano said. Not only because Saudi Crown Prince Mohammed bin Salman fell in love with the area as a youth and was a frequent visitor, and not only because of the stunning natural beauty of the 28,000 square kilometer region of lagoons, archipelagos, canyons and volcanic geology between the two small towns of Al-Wajh and Umluj on the western coast.

Canadian-born Pagano told of how he was “sold” on the idea of running the Red Sea project when Saudi Arabia lured him out of a youthful retirement that mainly involved flying airplanes. “What really caught my attention was the passion and enthusiasm of young Saudis for Vision 2030. It was really quite intoxicating. I thought it could be quite a lot of fun to be part of the transformation of a country,” he said.

Opening up the tourism and leisure industries is a major part of the transformation. At the moment, the Kingdom derives between 3 and 4 percent of gross domestic product (GDP) from this sector, most of it religious tourism from Hajj and Umrah pilgrims. Globally, tourism represents 10 percent of GDP and accounts for 10 per cent of the world’s workforce.

The Red Sea project will eventually inject SR22 billion ($5.8 billion) into the Saudi Arabian economy and lead to the creation of 70,00 jobs directly and indirectly in the Kingdom’s workforce, Pagano said.

“You have this huge opportunity to contribute and help the diversification process by developing tourism and a tourism sector which to a large extent does not really exist,” he said.

The project is certainly tourism, but with a big difference. Definitely out are the package holidays and Costa-style beach frolics. It will not be “Club Med on the Red,” in the words of one of his aides. “We are not seeking to be Dubai,” Pagano said.


BIO

BORN - Toronto, 1959

EDUCATION - BSc in mechanical engineering, University of Toronto

CAREER

  • Managing director, Canary Wharf Contractors, London
  • President, Baha Mar Development Company, Bahamas
  • Managing director, Canary Wharf Group, London
  • Principal, Old Fort Capital Investments, London
  • CEO, Red Sea Development Company

“It will be a luxury tourism destination that sets new global standards in sustainability,” Pagano said. “The idea is not to build as much on it as possible, and make as much money as we can. The idea is to protect it for generations to come.”

Luxury tourism is the fastest-growing segment of the global market, and high-rolling tourists are willing to pay top dollar for one-of-a-kind experiences. Exclusivity will be set by limiting the number of visitors. Of the 90 islands in the region, only 22 are going to be developed, and annual visits will be capped at one million in 2030, when completion is scheduled.

Nine islands are deemed to be so crucial to the ecology that they will not be built on at all, and access will be carefully controlled. One, Al-Waqqadi island, looked like the perfect tourism destination, but was discovered to be the breeding ground for the rare hawksbill sea turtle. “In the end, we said we’re not going to develop it. It shows you can balance development and conservation,” Pagano said.

If you want to get him really excited, ask about coral. “The rest of the coral reef systems around the world are dying, but this one — the fourth largest in the world — is thriving. We’re trying to figure out why. We’re working very closely with King Abdullah University of Science and Technology (KAUST) and experimenting with coral growing, trying to understand the unique DNA of coral found in this part of the world.

“If you look at it, the Red Sea has warmer sea temperatures and higher salinity values, yet the coral thrives. We’re trying to work out why, and to the extent we solve that mystery, the ambition would be to export that to the rest of the world — help save the Great Barrier Reef or severely damaged Caribbean coral,” he said.




The Red Sea project is home to a number of endangered species, including the hawksbill sea turtle. (Courtesy: Red Sea Project website)

Sustainability is being built into the project’s structure. It will be 100 per cent carbon neutral and powered by renewable energy via solar and wind power, and will make use of advanced technology to solve the storage problems that have so far proved to be obstacles to renewable energy. “The technology is available but nobody has ever done it on this scale before,” he said, pointing to plans to use solar power to make ice by day and use it for cooling at night. There are even plans for “artificial trees” to aid the carbon-capture process.

Pagano is working on another project with KAUST — “Brains for brine” — that seeks to address the problem of excess salination of sea water resulting from the desalination processes widely used in the Kingdom.

But building what will eventually be 8,000 hotel rooms, an airport, a small town for the 10,000 workers on the project, on the coast of one of the busiest maritime navigation channels in the world, presents its own environmental challenges.

He was speaking the week after an Iranian tanker had leaked oil into the Red Sea, but said that commercial sea lanes were far away from the project, and big vessels could not enter the shallow lagoon system anyway.

On-site construction will be kept to a minimum by the use of prefabricated units built elsewhere in the Kingdom and then shipped to the Red Sea for assembly and installation on the islands. He will have to have 3,000 hotel keys by 2022, when phase one of the project is complete and ready to welcome the first of 300,000 annual visitors.

The technology is available, but nobody has ever done it on this scale.

Those guests are estimated to come roughly 50 percent from Saudi Arabia and other Gulf countries, and 50 percent from the rest of the world, with a big proportion from Europe and the experience-seeking markets of Asia.

A big draw of the Red Sea region is that all-year temperatures and humidity are lower than other parts of the region, notably the Arabian Gulf. “It’s much more like a southern European climate,” he said, allowing for year-round business.

Pagano promises visitors “a constellation of experiences,” but what kind of resort will they arrive at? “We had plans for a special visa-on-arrival procedure just for us, but of course we don’t need that now that there is a Kingdom-wide tourist visa,” he said.

When the tourists get there, the resort will feel different from the rest of Saudi Arabia. It will be treated as other “special economic zones” in the Kingdom, with more relaxed social norms and an environment attractive to international visitors, he said.

“There are currently no plans to serve alcohol, but that is not our call, it’s a broader issue. But even without alcohol, there are a potential 1.5 billion tourists in the world Muslim demographic,” he said.




The Red Sea Project is designed to enhance the natural environment for future generations. (Courtesy: Red Sea Project website)

A transformational project of such ambition obviously does not come cheap, and Pagano admits to “many billions of dollars” in total construction and development costs. So far, the bills have been met by the Public Investment Fund, which has committed all the equity capital.

But Pagano is now in the market for “conventional senior debt” in a package that could reach SR10 billion ($2.6 billion). With the big infrastructure project — bridges, roads, a new airport — currently under way and contracts being announced at increasing pace — a fresh batch are promised during the Future Investment Initiative in Riyadh later this month — those funds are needed, he said, and could be in place early next year.

“Plus, we are talking to a lot of investors and looking at the possibility of getting them into the project,” he said. French hotel group Accor is already involved, and he expects most of the leading global hospitality brands to play some part in it too. Contracts to build and operate the utilities on the development are currently out to tender to a number of consortia.

It is all part of the transformation under way in the Kingdom that appears to be unstoppable. By 2030, Saudi Arabia is aiming to attract 100 million visitors a year, with the elite heading to the Red Sea area to sample the “amazing piece of land” that Pagano is developing.

“It’s ambitious, but feasible. It’s starting from a low base and the vision is unprecedented,” he said.


International companies to invest in Egyptian green hydrogen projects, says minister

International companies to invest in Egyptian green hydrogen projects, says minister
Updated 17 June 2021

International companies to invest in Egyptian green hydrogen projects, says minister

International companies to invest in Egyptian green hydrogen projects, says minister
  • Egypt has signed MOU for 1GW green hydrogen project
  • Other EU companies set to partner with Egypt's private sector

RIYADH: International companies are interested in investing in green hydrogen production in Egypt, according to Minister of Electricity and Renewable Energy Mohamed Shaker.

“There are companies from the European Union that will enter into partnerships with the Egyptian private sector,” he said.

The Egyptian government has signed an MoU with Siemens for the first project to produce green hydrogen with a capacity of 1 megawatt, doubling to 2 megawatts over five years, he said.

“Green hydrogen will be the world’s fuel in the next few years, and I see that Egypt started early in this field,” he added.

Work is currently underway to develop and formulate a strategy for the hydrogen industry in Egypt through a ministerial committee in which the Ministry of Petroleum and Mineral Resources participates as a main member, according to previous statements by the Minister of Petroleum and Mineral Resources Tarek El Molla.

Egypt is planning to invest up to $4 billion in a project to generate green hydrogen gas through water electrolysis, Shaker said this week.

The project is currently in the feasibility studies stage, in consultation with the Sovereign Fund of Egypt and a group of concerned ministries, and will be presented next week, he said.

The United States is planning to increase funding to Egypt to help it convert to solar energy and move away from fossil fuels, US special envoy for climate John Kerry said in Cairo on Wednesday.

Egypt is planning to double the state’s funding for green projects to 30 percent of its overall investment plan during the fiscal year 2021/2022 and to raise it to 50 percent by 2024/2025.


Aramco completes issuance of international trust certificates for $6bn sukuk

Aramco completes issuance of international trust certificates for $6bn sukuk
Updated 17 June 2021

Aramco completes issuance of international trust certificates for $6bn sukuk

Aramco completes issuance of international trust certificates for $6bn sukuk
  • Launched on June 9, sale was Aramco’s first dollar-denominated sukuk.

RIYADH: Saudi Aramco said it completed issuing trust certificates for $6 billion of sukuk.
Aramco issued 30,000 sukuk with a par value of $200,000 each, it said in a filing to the Tadawul stock exchange.
“The outcome demonstrates further evidence of Aramco’s unique value proposition, which is underwritten by its operational and financial resilience,” said Aramco CEO and President Amin Nasser.
The securities were issued in three tranches, with the three-year notes paying 0.946 percent, 5-year notes at 2.602 percent and 10-year bonds 2.694 percent.
The sale, launched on June 9, was Aramco’s first dollar-denominated sukuk.
Aramco’s debut $12 billion bond deal in 2019 was followed by an $8 billion, five-part transaction in November last year, both used to fund its dividend.
The sale attracted orders exceeding $60 billion and added 100 new investors across the globe, Aramco said.


Lebanese banks swallow at least $250m in UN aid

Lebanese banks swallow at least $250m in UN aid
Updated 42 min 7 sec ago

Lebanese banks swallow at least $250m in UN aid

Lebanese banks swallow at least $250m in UN aid
  • Officials from donor countries confirmed that banks swallowed between a third and half of all direct U.N. cash aid in Lebanon
  • An internal assessment in February estimated that up to half the UN assistance programme's value was absorbed by Lebanese banks

BEIRUT: At least $250 million in UN humanitarian aid intended for refugees and poor communities in Lebanon has been lost to banks selling the local currency at highly unfavorable rates, a Thomson Reuters Foundation investigation has found.
The losses — described in an internal United Nations document as “staggering” and confirmed by multiple sources — come as Lebanon grapples with its worst ever economic crisis, with more than half the population living under the poverty line, according to the World Bank.
They stem from a plunge in the value of the Lebanese pound since the economy began to collapse in late 2019, sending prices soaring and forcing many Lebanese into poverty.
The unfavorable exchange rates offered by Lebanese banks have hit Syrian and Palestinian refugees and poor Lebanese particularly hard as they are able to buy far less with the cash handouts they receive from the UN
Pre-crisis, refugees and poor Lebanese received a monthly payout of $27, equal to about 40,500 Lebanese pounds, from the World Food Programme (WFP).
That has now risen to about 100,000 Lebanese pounds per person, but its real value is a fraction of what it was before — about $7 at the current rate.
“The buying power used to be very good, we could get an acceptable food basket,” said Abu Ahmad Saybaa, a Syrian refugee who runs a Facebook page that highlights the challenges faced by refugees in Lebanon.
“But now (the handouts) can’t get us more than a gallon of cooking oil. There’s a huge difference in purchasing power,” said the father of five, who has lived in a refugee camp in Lebanon’s rugged northeast since 2014.
“It’s weighing on all of our health — mental and physical.”
An aid official and two diplomats from donor countries confirmed that between a third and half of all direct UN cash aid in Lebanon had been swallowed up by banks since the outset of the crisis in 2019. All spoke on condition of anonymity.
During 2020 and the first four months of 2021, banks exchanged dollars for UN agencies at rates on average 40 percent lower than the market rate, the aid official said.
Lebanon maintains an official exchange rate of about 1,500 pounds to the dollar, but since the crisis has only been able to apply that rate to a handful of essential goods.
All other imports have to be bought at much higher exchange rates, resulting in soaring prices.
Most of the losses came from a 2020 UN assistance program worth about $400 million that provides around 1 million Syrian refugees in Lebanon with monthly funds for food, education, transport, and winter weather-proofing of shelters.
Lebanon is home to over 1 million Syrian refugees, nine in 10 of whom live in extreme poverty, according to UN data.
The country received at least $1.5 billion in humanitarian aid in 2020.
An internal UN assessment in February estimated that up to half the program’s value was absorbed by Lebanese banks used by the UN to convert donated US dollars.
The document, seen by the Thomson Reuters Foundation, said that by July 2020 a “staggering 50 percent” of contributions were being lost through currency conversion.
The Association of Banks in Lebanon (ABL), which represents the country’s commercial banks, denied using aid to raise capital.
It said the UN could have distributed in dollars, or negotiated a better rate with Lebanon’s central bank.
A central bank spokesperson did not respond to a request for comment on the rates provided to humanitarian organizations
The $400 million UN program, known as LOUISE, receives funding from the United States, the European Commission, Germany, the United Kingdom, Canada, the Netherlands and France among others, according to its website.
It comprises the WFP, the UN refugee agency (UNHCR) and the UN Children’s Fund (UNICEF).
The Thomson Reuters Foundation compared the rates at which the banks converted US dollars in 2020 and 2021 with the concurrent market exchange rates to calculate the amount of aid lost.
The losses amounted to about $200 million in 2019 and 2020 and at least $40 million so far in 2021.
The figures are in line with the UN internal assessment and were independently verified by an aid official.
A UNICEF spokesperson said the agency was “very concerned that recipients receive the full value of cash transfers” and had recently renegotiated to obtain a rate close to the market rate.
It is also testing disbursement in dollars for some programs, the spokesperson said.
Banque Libano-Francaise (BLF), which was contracted by LOUISE agencies to give out aid, declined to comment on the unfavorable conversion rates, saying it was bound by a confidentiality agreement with them.
It also said the agencies could have distributed the money directly in dollars.
WFP funding of monthly cash assistance to 105,000 vulnerable Lebanese people, worth some $23 million last year, used the same unfavorable exchange rates, a WFP spokesperson said, meaning up to half of funds were lost to banks.
The WFP and UNHCR referred the Thomson Reuters Foundation to the UN humanitarian coordinator’s office, which declined to comment on the reasons for the massive losses.
A spokesperson for the UN agency for Palestinian refugees (UNRWA) said between a third and half of the aid it distributed since October 2020 – up to $7 million — was lost through currency conversion. The agency has repeatedly warned of funding shortfalls.
The documented losses from the LOUISE, WFP and UNRWA programs amount to at least $250 million since October 2019.
Following pressure by the UN agencies, the discrepancies between the average market exchange rate and the rate offered by the banks have shrunk, but not disappeared.
Confronted with a financial system keen on sucking in as many dollars as possible, donors and UN agencies have struggled to develop a cohesive approach that maintains the full value of aid.
In May, a top World Bank official said Lebanon had agreed to disburse the aid from a $246 million World Bank loan to poor Lebanese directly in dollars, but the payouts have been delayed.
Dollarization of aid, which was recommended in the February internal assessment and lobbied for by donor countries and independent analysts, would keep the full value of the donations for beneficiaries regardless of fluctuations in currency rates.
But Lebanese authorities have resisted efforts to dollarize aid inflows as they seek to maintain control over one of the few remaining sources of hard currency.
Meanwhile, donor nations have grown increasingly impatient and fearful of reputational damage tied to the millions in taxpayer money absorbed by banks.
“We’ve been more than ready to invest in helping people, but we need a credible counterpart that’s not going to pocket money that we are ultimately accountable for at home,” said one Western diplomat on condition of anonymity.
Jad Chaaban, a professor of economics at the American University of Beirut, said international organizations operating in Lebanon often walked a tight line between making compromises in a difficult political environment and holding to standards of accountability.
“In this case, it’s unacceptable and there must be much higher standards. We effectively see the same dynamics as contractors or crony businessmen siphoning off money that they received to build a school or infrastructure project,” Chaaban said.
“Right now, every cent counts for Lebanon.”


Saudi B2B platform Sary facilitated $267m of purchases in two years, CEO says

Saudi B2B platform Sary facilitated $267m of purchases in two years, CEO says
Updated 17 June 2021

Saudi B2B platform Sary facilitated $267m of purchases in two years, CEO says

Saudi B2B platform Sary facilitated $267m of purchases in two years, CEO says
  • Sary facilitates 60,000 shipments per month
  • Startup raised $30.5 million in Series B funding in May

RIYADH: Saudi-based B2B platform Sary enabled SR1 billion ($266.6 million) of purchases for more than 30,000 SMEs in the past two years, Co-Founder and CEO Mohammed Aldossary told Al Arabiya on Thursday.

“Sary works on facilitating more than 60,000 shipments every month,” he added.

The company has multiplied its market share 10 times in 2020 compared to 2019, he said. The company’s current share of the public market is less than 1 percent, but it constitutes 80 percent in the modern wholesale market for the e-commerce business sector in the Kingdom, he said.

The company aims to expand in the Kingdom and the Middle East and expects to reach profitability in 2022, Aldossary said. Sary also plans to extend its business to categories beyond the consumer goods that it currently focuses on, he said.

Sary is a B2B marketplace that connects small businesses with wholesalers and brands in one place to procure supply efficiently, according to the company’s website.

It raised $30.5 million in Series B funding in May, leading Saudi Arabia’s total of $46.6 million and the MENA region’s $110 million, according to data from the Wamda entrepreneurship platform.


French tourism seeks new boost with Disneyland reopening

French tourism seeks new boost with Disneyland reopening
Updated 17 June 2021

French tourism seeks new boost with Disneyland reopening

French tourism seeks new boost with Disneyland reopening
  • Europe’s most frequented theme park in Marne-la-Vallee, east of the French capital, opened its doors on Thursday after nearly eight months of closure

PARIS: France’s tourism sector is taking a further step toward normality with the reopening of Disneyland Paris, two weeks after the country reopened its borders to vaccinated visitors from across the world.
Europe’s most frequented theme park in Marne-la-Vallee, east of the French capital, opened its doors on Thursday after nearly eight months of closure.
A crowd of smiling visitors was welcomed by Disney characters dancing to the sound of joyful music.
“Amazing,” said Debbie Tater. The Delaware resident traveled from the United States to visit her family, including her daughter and two granddaughters, who live in France and whom she hadn’t seen for a year and a half.
“Happiest place on earth,” she said, with tears in her eyes.
“We couldn’t miss the reopening,” said Elodie Piedfort, from Haute-Loire region in central France. “Because I’m a nurse it’s been a very difficult year and being here, together with my son, is great. And the reopening, moving on is great as well.”
Visitors must wear masks inside the park and other measures are in place, including a cap on visitor numbers to ensure distancing.
Pauline Baudouin, a Disney fan from Angouleme in western France, said: “We were missing the magic, because it was already a complicated period and we needed to recharge our batteries in this magical world.”
Prime Minister Jean Castex said Wednesday that France is returning to “a form of normal life again,” as he announced that people won’t have to wear masks outdoors any more, except in crowded places.
The government confirmed children can remove masks in school playgrounds — yet they remain compulsory in class for those aged 6 and above.
The 11 p.m. to 6 a.m. curfew will be lifted on Sunday.
On Thursday, Health Minister Olivier Veran said night clubs will be able to reopen in July under strict regulations — a first since the France’s initial lockdown in March last year,
The French tourist industry hopes to rebound over the summer as the country welcomes foreign visitors again — on condition they have received one of the four EU-approved vaccines. Travelers are banned from 16 countries, including India, South Africa and Brazil, that are wrestling with virus surges and worrisome variants.
France started gradually reopening its economy last month. Monuments and museums, including major sites like the Louvre and Versailles, are open, as well as hotels, cafes and restaurants.
Tourists will still have to wait for the Eiffel Tower, set to reopen on July 16 after major renovation work.
The government said the easing of restrictions is due to a drop in daily infections and to a vaccination campaign that has seen more than 59 percent of France’s adult population receive at least one shot. The country opened this week vaccination to those aged 12 to 18.
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