INTERVIEW: Metito lays out strategy to keep region watered

INTERVIEW: Metito lays out strategy to keep region watered
Illustration by Luis Grañena
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Updated 17 May 2021

INTERVIEW: Metito lays out strategy to keep region watered

INTERVIEW: Metito lays out strategy to keep region watered
  • Rami Ghandour, managing director, explains why Middle East must realize ‘water is not free’

The Middle East’s water challenge is summed up in one stark statistic: The region is home to 6 percent of the world’s population but has just 1 percent of its fresh water.

Rami Ghandour, managing director of global water company Metito Utilities, knows these and similar figures by heart. He can tell you how much of the population of Egypt inhabits water-intensive cities (97 percent) and how much water the Gulf Cooperation Council (GCC) region consumes per capita compared to the US (significantly more).

“I think the first thing is a realization that water is not free. It is something which is quite costly. Therefore, people need to take care of it,” he told Arab News.

Metito has been taking care of water in the region, and the world, for more than 60 years, after its foundation in Lebanon in 1958 by the serial entrepreneurial Ghandour business family whose members are still big shareholders.

It is a world-leading company in the water infrastructure sector, operating sewage, water treatment, and desalination facilities in 46 countries, and is increasingly playing a leading role in the global drive toward more renewable and sustainable use of the world’s resources.

So, is Metito a utility, or an infrastructure company, or an environmental operation?

“You can check all the boxes if you like. Historically, I’d say we were an environmental company in that what we do is desalinate water, supply water to people, treat wastewater and recycle water, both industrial and domestic. Then also more recently we’ve expanded into the renewables energy sector,” Ghandour said.

The Metito group, backed by big investors such as Mitsubishi of Japan and the investment arm of the World Bank, is organized along three business lines: A design and build unit that covers the full spectrum of the engineering, procurement, and construction process, which to date has executed more than 3,000 projects around the world; the utilities and investments division offers project finance, consulting, and management services; while the chemicals unit develops environment-friendly chemicals and specialist treatment solutions for customers.

“We maintain an arm’s length arrangement between the different companies on purpose but are able to develop projects — that is at the heart of what we do — and deliver those to people to enable both environmental improvement and also basic human development and needs,” Ghandour added.

Water — cheap, free, or subsidized — has long been taken for granted in the Middle East, even as the pressure on its supply has increased with rising population, agricultural and industrial usage. Ghandour thinks that mindset has to change.

“There are obviously jurisdictions in the region, including here in the UAE, where full market price is being charged, full cost recovery and taxes are being charged. But there are other areas where there are heavy subsidies in place and that does result in encouraging wasteful behavior,” he said.


BIO

BORN: Beirut 1975

EDUCATION

  • Master’s degree in chemical engineering from the University of Cambridge
  • MBA in finance and entrepreneurial management from Wharton Business School

CAREER

  • Process engineer, Bechtel London
  • Management consultant, Boston Consulting Group, New York
  • Managing director, Metito Utilities
  • Director, Metito Group

Public education programs — such as encouraging people to turn taps off and wash the car less frequently — obviously play a part in public awareness, but the bigger challenges are more structural.

For example, the biggest consumer of water in the region is not personal domestic consumption, but agriculture.

Governments — including that of Saudi Arabia — have had some success in encouraging more efficient use of water for farming, and new technologies such as hydroponics and vertical farming can also encourage optimal use of water resources.

Some countries too have taken a more radical approach, buying farmland in other parts of the world with better water supply, growing food there, and then importing it back to the Gulf.

But Ghandour pointed out that there were other simple and effective ways to optimize water efficiency. Leakage and water theft were big problems in some countries. “People are just helping themselves and there isn’t the regulation and the enforcement to make sure that it’s not a problem,” he added.

Reuse of water was also an area of great potential. The example here was Singapore, which has made great strides toward reusing water in the domestic, industrial, and agricultural sectors.

In the Gulf, one of the sights that sets environmentalists’ nerves on edge was the liberal use of precious water on golf courses or green public spaces, in areas that would naturally be arid desert.

However, Ghandour noted that an increasing proportion of that was recycled water that may not be fit for human consumption, but which was perfectly acceptable for irrigation. Dubai, for example, has a groundbreaking wastewater recycling facility which offers users two taps for different water uses.

Metito is bidding in a project in Botswana in Africa where wastewater is directly recycled back into the consumption and drinking water systems, one of only two in the world that does that.

The company was also looking at the technology behind a pioneering project in California which recycles wastewater directly into the underground aquifers that feed water back into the consumption cycle.

But even if the region optimizes its usage, prevents leakages, and adopts efficient pricing mechanisms, there will always be a need for desalination in a part of the world as arid as the Arabian Gulf.

Desalination has been the mainstay of the basic infrastructure that has allowed the region to enjoy high rates of economic growth over decades, but it has also come under fire from environmentalists, for two reasons: The use of carbon fuels such as oil and gas in the expensive process of turning sea water into usable water; and the extra brine — salty water — expelled into the sea as a by-product.

Ghandour said the second objection was less of a significant factor, pointing out that the Arabian Gulf and Red Sea were open tidal seaways, and also that some desalination facilities in the UAE have been built on the Indian Ocean side of the country, allowing brine to disperse into a wider body of water.

The use of hydrocarbon fossil fuels to produce water was a different matter.

“I would decouple the power issue from the desalination. The good news is that the renewables business model has become much more competitive. Renewable power today is often below the cost of fossil fuels power,” he added.

The megaprojects of Saudi Arabia were the perfect testing ground for this new model. Metito is involved in two solar-powered desalination facilities in the NEOM development, which mix renewable power with sources from the national grid, and it has also won a contract for a huge desalination plant in the industrial zone at Jubail in the Eastern Province. Ghandour hinted that other big Saudi contracts were in the offing.

There are also huge Metito projects on the other side of the Red Sea, in Egypt, including an ambitious plan to irrigate the Sinai desert with treated water pumped under the Suez Canal.

Saudi Arabia’s need for clean, efficient, and reusable water was likely to increase exponentially over the next decade. For example, in addition to the megaprojects such as NEOM and Qiddiya outside Riyadh, there are massive plans to double the size of the Saudi capital by 2030, as well as an initiative to plant 10 billion trees in the Kingdom to help mitigate carbon emissions. Does Ghandour think these ambitious plans are feasible, from the viewpoint of a water expert?

He noted that the way Saudi Arabia and other Gulf countries had gone about the task was encouraging, with increasing private sector investment. “I would argue that is typically the most efficient way to deliver these projects with very strong environmental compliance standards in place,” he said, with one eye on the higher standards now required by international private sector investors in line with ESG (environmental, social, and governance) standards.

“It has put everybody in the mindset of the ESG priorities that are there, so everybody is looking at doing projects in a manner that is sustainable, and definitely the Saudis have been very much involved in that,” he added.

And does he think the Kingdom will have the capacity to water all those trees?

“I don’t have the specifics on the plan to irrigate those trees, but I’m sure as an outsider I would say yes. Additional desalination capacity is being implemented at a high rate with these public private partnership projects.

“So, additional sources of water are there, and I go back to the wastewater that can be reused, which is perfect for irrigating trees. There is today a lot of wastewater that is effectively thrown away in the Kingdom. So, it’s something where reuse would be of a significant environmental benefit,” he said.


Who are Americans on trial in Ghosn’s escape?

Who are Americans on trial in Ghosn’s escape?
Updated 14 min 32 sec ago

Who are Americans on trial in Ghosn’s escape?

Who are Americans on trial in Ghosn’s escape?
  • Ghosn led Japanese automaker Nissan Motor Co. for two decades before his arrest in Tokyo in November 2018. He was charged with falsifying securities reports in underreporting his compensation and with breach of trust

Americans Michael Taylor and his son Peter Taylor go on trial in Tokyo on Monday on charges they helped Nissan’s former chairman, Carlos Ghosn, skip bail and flee to Lebanon in December 2019.
HOW DID THE TAYLORS END UP IN JAPAN?
The Taylors were arrested in Massachusetts in May 2020 and extradited to Japan in March. They have not been released on bail and are not available for comment, which is standard in Japan. They were formally charged in March with helping a criminal escape. Michael Taylor, a former Green Beret, told The Associated Press while still in the US that Peter was not in Japan when Ghosn fled the country. The elder Taylor has helped parents rescue abducted children, gone undercover for the FBI and worked as a contractor for the US military in Iraq and Afghanistan.
WHAT HAPPENED WITH GHOSN?
Ghosn led Japanese automaker Nissan Motor Co. for two decades before his arrest in Tokyo in November 2018. He was charged with falsifying securities reports in underreporting his compensation and with breach of trust. He says he is innocent and the compensation he is accused of not reporting was never decided on or paid. Ghosn says he feared he would not get a fair trial in Japan, where more than 99 percent of criminal cases result in convictions. Japanese prosecutors say he paid at least $1.3 million to organize his escape. Ghosn is on Interpol’s wanted list, but Japan has no extradition treaty with Lebanon.
ESCAPE IN A BOX
Tokyo prosecutors say Michael Taylor and another man, George-Antoine Zayek, hid Ghosn in a large box meant to carry audio equipment, snuck him through airport security in Osaka, central Japan, and loaded him onto a private jet to Turkey. Peter Taylor is accused of meeting with Ghosn to help with the escape. Zayek has not been arrested. A US appeals court rejected the Taylors’ petition to put their extradition on hold.
COURT PROCEEDINGS
The Taylors will go through the Japanese equivalent of entering a plea before a panel of three judges. They may also give statements. They have said they didn’t break any laws because skipping bail is not technically illegal in Japan. But Ghosn was not supposed to leave the country. Deputy Chief Prosecutor Hiroshi Yamamoto said prosecutors will outline the charges, but he declined to comment specifically on the case. Japanese suspects are tried even if they plead guilty.
The Taylors are held at the Tokyo detention center on the city’s outskirts. Their lawyer can visit them, and they can receive snacks and books. Ghosn spent more than 100 days at the center before his release on bail. The cells are simple, with Japanese-style futon mattresses. The facility has an exercise area and clinic.
WHAT LIES AHEAD?
English translations will be provided and media coverage is allowed, but no filming or recording. If convicted, the Taylors face up to three years in prison and a fine of up to 300,000 yen ($2,900). They also could get suspended sentences and not serve time. In principle, people accused of crimes in Japan are presumed innocent until proven guilty. But the conviction rate is higher than 99 percent.
ANOTHER AMERICAN
Former Nissan executive Greg Kelly, also an American, is being tried on charges of falsifying securities reports in underreporting Ghosn’s pay. He says he is innocent and was trying to find legal ways to pay Ghosn, partly to prevent him from leaving Nissan for a rival automaker. Kelly’s trial began in September and a verdict isn’t expected for months. If convicted, Kelly faces up to 15 years in prison.
WHAT DOES GHOSN SAY?
During the interview in Lebanon in May, Ghosn told The Associated Press he was eager to clear his name. He declined to give details of his escape. Ghosn accuses other Nissan executives of plotting to force him out to prevent him from giving its French partner, Renault, more power in their alliance. Renault sent Ghosn to Japan in 1999 to rescue the automaker when it was on the verge of bankruptcy.
HOW IS NISSAN FARING?
Nissan, which makes the Leaf electric car, the Z sportscar and Infiniti luxury models, has struggled as sales slumped during the pandemic. It expects to remain in the red this fiscal year, the third straight year of losses. Ghosn’s successors have promised a turnaround.


Tax or no tax, UAE aims to remain magnet for investors

Tax or no tax, UAE aims to remain magnet for investors
Updated 24 min 48 sec ago

Tax or no tax, UAE aims to remain magnet for investors

Tax or no tax, UAE aims to remain magnet for investors
  • Hard-hit by the coronavirus pandemic, the UAE has already launched a series of reforms, including to allow foreigners full ownership of businesses, whereas before it was capped at 49 percent unless based in certain free trade zones

DUBAI: Tax advantages paired with a life of luxury have long drawn foreigners and multinationals to the UAE, which is aiming to remain attractive whether or not it signs up to a global tax initiative.
The Group of Seven wealthy powers this month endorsed an “unprecedented” agreement on a global minimum corporate tax targeting major companies seen as not paying enough, especially tech giants.
The objective is a minimum tax of at least 15 percent.
While the agreement is the first step in a long process before it can become a reality, caught in the crosshairs are tax havens that attract firms such as Amazon, Apple, Google and Facebook.
The United Arab Emirates entered the world’s top 10 tax havens for the first time in March, according to the Tax Justice Network.
Modestly called “jurisdictions with no or insignificant taxes” by the Organization for Economic Co-operation and Development (OECD), the havens include the Bahamas, the British Virgin Islands, Guernsey, Jersey, the UAE and many others.
Both the UAE capital Abu Dhabi and freewheeling Dubai, the biggest draw for investors out of the UAE’s seven emirates, are home to thousands of companies that have set up regional offices there.
UAE officials have yet to issue a statement on the G7 agreement and did not respond to an AFP request for comment.
But this week Dubai announced plans to reduce in the coming months government procedures as “part of efforts to reduce the cost of doing business and further boost economic growth in the emirate.”
Hard-hit by the coronavirus pandemic, the UAE has already launched a series of reforms, including to allow foreigners full ownership of businesses, whereas before it was capped at 49 percent unless based in certain free trade zones.
Economy Minister Abdulla bin Touq Al-Marri said the changes were a bid to boost the “competitive edge” of the country, currently 16th in the World Bank’s ease of doing business rankings.
The UAE, which relies on its image as an international hub, “will be keen to be seen as part of the global system rather than a tax haven,” said Scott Livermore of Oxford Economics Middle East.
“The upsides of remaining on the outside of the agreement is limited, especially if approved by the G20 and OECD countries,” the Dubai-based economist told AFP.
According to Livermore, even if businesses in the country see an increase in tax burden, the government was likely to “consolidate and simplify fees,” as is the case in Luxembourg and Malta, where multiple exemptions lower the final bill considerably.
“Already the authorities have realized the importance of broader business and social environment for attracting and retaining foreign investment and talent,” he said.
“This has been demonstrated by the raft of visa and business reforms announced over the past year.”
Many foreign executives are attracted to the lifestyle in Abu Dhabi and especially Dubai.
The two emirates are air hubs and offer a variety of luxury services that depend on a migrant labor force largely from South Asian countries.
The UAE’s low tax regime has been a “major carrot to dangle” before investors from abroad, said Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington.
“Emirati policymakers will have to get creative and consider restructuring various business-related fees,” he told AFP.
“But even with the envisioned impact of a minimum global corporate tax, the UAE will remain a relatively low-tax environment.”
And regardless of new taxes introduced in Gulf countries in the past years amid an economic slump due to a drop in oil prices, Mogielnicki believes the Emirates will remain competitive.
“The UAE’s commercial environment enjoys excellent connectivity to key global markets, a high standard of living, and a dynamic labor market with cost-effective, skilled expatriate labor,” he said.
“I don’t think the UAE government or its citizenry will truly miss any of the firms or investors who only care about preferential tax treatment over the long run — even if missing out on some business opportunities will sting over the short run.”


Egypt spent $100bn on govt projects in 7 years

Egypt spent $100bn on govt projects in 7 years
Updated 13 June 2021

Egypt spent $100bn on govt projects in 7 years

Egypt spent $100bn on govt projects in 7 years
  • The minister said these structural reforms could play a vital role in accelerating economic recovery from the coronavirus

CAIRO: Egypt’s infrastructure spending during the last seven years amounted to EGP1.7 trillion ($100 billion), according to the country’s Minister of Planning and Economic Development Hala El-Said.

The spending had a direct impact on Egypt’s ranking in the Global Competitiveness Index as it focused on improving the quality of roads and providing uninterrupted power to the private sector and citizens, she said on Saturday.

She also said the government was taking several measures to boost public-private partnerships to expedite economic growth, and that the government had founded the first Egyptian sovereign fund designed to carry out projects in partnership with the private sector.

The minister said that, to strengthen such partnerships, the government kept the private sector and other stakeholders in the loop while formulating economic policies and regulations.

One example was a recent investment law, which encouraged the participation of the private sector and its increased collaboration with the public sector.

The minister said these structural reforms could play a vital role in accelerating economic recovery from the coronavirus pandemic, as well as boosting overall growth.

El-Said said the government was proceeding with the implementation of structural reforms that would protect African economies from external shocks in the future.


Private sector partnerships created 400k jobs for Saudis since 2018

Private sector partnerships created 400k jobs for Saudis since 2018
Updated 13 June 2021

Private sector partnerships created 400k jobs for Saudis since 2018

Private sector partnerships created 400k jobs for Saudis since 2018
  • Saudi Arabia seeks to raise $54.5 billion over the next 4 years through its privatization program

RIYADH: Jobs have been created for about 400,000 Saudi nationals as a result of 11 Saudization agreements put in place since 2018, the Argaam website reported, citing information from Abdullah Abuthnain, vice minister of human resources and social development at the Ministry of Human Resources and Social Development.

Increased privatization and Saudization of roles are the key goals of the Kingdom’s Vision 2030 program.

Finance Minister Mohammed Al-Jadaan last month said that Saudi Arabia is seeking to raise about $54.5 billion over the next four years through its privatization program.

Al-Jadaan expects to raise $38 billion through asset sales and $16.5 billion through public-private partnerships, he told the Financial Times.

The Saudi government has identified 160 projects in 16 sectors, including asset sales and public-private partnerships through 2025.

Asset sales will include government-owned hotels, television broadcasting towers, and cooling and water desalination plants.

The plan does not include Public Investment Fund entities or the sale of other assets of Saudi Aramco. The new privatization law will be enacted in Saudi Arabia in July this year.

The National Privatization Center (NCP) in March also announced the creation of the Registry of Privatization Projects, a comprehensive central database of information and documents related to projects targeted for privatization.

According to the director general of Strategic Communication and Marketing at the NCP, Hani Al-Saigh, the new system seeks to enhance the existing privatization system. One of its most important roles will be to strengthen existing governance and ensure fairness and transparency.

“The law allows participants from the private sector to set up a committee to submit grievances related to the bidding and selection procedures of privatization projects and lay the regulatory basis to compensate the aggrieved in case the gap cannot be addressed,” he told Arab News.

A report by the National Labor Observatory issued in April this year indicated that the percentage of Saudization in the private sector rose to 22.75 percent in the first quarter of 2021 compared to 20.37 percent during the same period last year.

Recent data has shown that seven major job groupings in the private sector have achieved Saudization figures of more than 50 percent. While the rate across the private sector as a whole is around a quarter, Al-Eqtisadiah newspaper reported that the financial and insurance sector had achieved a rate of 83.6 percent, followed by public administration, defense, and mandatory social insurance (71.9 percent), mining, and quarrying activities (63.2 percent), education (52.9 percent), and information and communications (50.7 percent).

Saudi Arabia has the lowest dependence on foreign labor among Gulf Cooperation Council countries at around 77 percent, while Qatar has the highest, at about 94 percent, according to data from S&P Ratings.

While the Saudization figure is moving in a positive direction, some sectors face challenges. In December, the Saudi government added accountancy to the list of professions set to be Saudized, announcing that 30 percent of all accounting jobs at all local Saudi private sector companies with at least five accounting professionals must be filled by Saudi nationals. 

The ruling will come into effect on June 21 this year, and it is predicted that the move will create around 9,800 job opportunities for Saudi accountants.


Egypt launches KSA marketing drive to boost tourism

Egypt launches KSA marketing drive to boost tourism
Updated 13 June 2021

Egypt launches KSA marketing drive to boost tourism

Egypt launches KSA marketing drive to boost tourism
  • Saudi Arabia ranked among the top countries for travel to Egypt before the pandemic

RIYADH: Saudi Arabia is among the top markets for tourism in Egypt, and now that the Kingdom has opened its borders for international travel, the Egyptian Tourism Promotion Board (ETPB) is ramping up its marketing drive in the Kingdom.

Ahmed Youssef, chairman of the ETPB, told Arab News: “Revenues from tourism reached the highest point at $12.6 billion in 2019. Saudi Arabia ranked among the top countries for travel to Egypt before the pandemic. The Saudi market represents the first and most important Arab market, ranking fifth for visitors to Egypt. The trend continued into the first two months of 2020 that recorded 8 percent year-on-year growth in terms of numbers and revenues, with 2.4 million tourists visiting the country during this period.”

Tourism is a big revenue generator for Egypt, reaching $13 billion in 2019. About 3.5 million visitors traveled to the country last year, compared to 13.1 million in 2019. Although numbers are still below pre-pandemic levels, many establishments have resumed operations in a bid to kick-start the tourism sector, the chairman said.

Saudi Arabia is an important market for Egypt, which is why the ETPB is making significant investments in promotional activities.

“Now that the country has opened its borders for international travel, we plan to run promotions in partnerships with Saudi tour operators,” Youssef said. “In addition, we have incentive programs in place for the aviation industry, where airport landing and housing fees have been discounted by 50 percent. We also launched a digital campaign in the GCC, especially in Saudi Arabia, starting the last week of Ramadan (May 2021).”

“We are already seeing strong interest from travelers based in Saudi Arabia, especially Arab families. Our two countries share similar culture and values, which, in addition to the relative proximity, makes Egypt a highly attractive destination for Saudi tourists,” he said.

Wego, one of the biggest online travel marketplaces in the Middle East and North Africa (MENA) region, said in the run-up to the resumption of international travel on May 17 that Egypt topped the list of desired destinations.

Youssef said: “Our main goal now is not to measure the number of tourists but to reassure visitors that Egypt is a safe tourist destination. Saudi Arabia has now opened its borders for its nationals to travel again. We have also started receiving tourists from Saudi Arabia and we are hoping they will enjoy their time here.”

Egypt has adopted strict precautionary measures to limit the spread of COVID-19 while taking steps to support the economy, including the tourism sector.

The World Travel and Tourism Council (WTTC) granted Egypt its Safe Travels stamp, the ETPB chairman said.

“We have introduced the requirement for tourists to carry a negative COVID-19 PCR test certificate from their country issued up to 72 hours before the time of departure (96 hours for travelers arriving from Japan, China, Thailand, the US, Canada, South America, as well as London Heathrow, Paris and Frankfurt airports). Exceptions apply to travelers arriving by plane at the most frequented tourist destinations — Sharm El-Sheikh, Taba, Hurghada, and Marsa Alam — who can do a PCR test upon arrival at a cost of $30,” Youssef said.

The ETPB is targeting tourism revenue of $8 billion and aiming to attract 8 million overseas visitors in 2021. Demand is expected to stabilize and lead to a growth in reservation rates for the 2021-2022 winter season.

“We hope the numbers will return to pre-pandemic levels by fall 2022,” Youssef said.