Lebanese banks swallow at least $250m in UN aid

Lebanese banks swallow at least $250m in UN aid
Palestinian children at Shatila refugee camp in Beirut.Over $250 million in U.N. humanitarian aid intended for refugees and poor communities has been lost to banks selling local currency at highly unfavourable rates. (Shutterstock)
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Updated 17 June 2021

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 TRSDC gets a boost with environmental ISO accreditation 

Saudi TRSDC gets a boost with environmental ISO accreditation 
Updated 25 January 2022

Saudi TRSDC gets a boost with environmental ISO accreditation 

Saudi TRSDC gets a boost with environmental ISO accreditation 

RIYADH: The Red Sea Development Co., achieved another milestone in its journey to develop the world's largest sustainable tourism project. 

The Saudi developer, known as TRSDC, was awarded the Environmental Management Standard, ISO 14001:2015 accreditation.

TRSDC’s Environmental Management System was developed as the company launched the EMS manual in January 2021, it said in a statement. 

With respect to the environment, the EMS aimed at guiding and managing TRSDC’s activities throughout design, construction, and operational stages of the project.

“We made a commitment to ourselves, our project and to the Kingdom to go beyond the current expectations of environmental best practice, to deliver a regenerative approach to tourism development,” CEO, John Pagano, said. 

“Achieving this certification is rewarding for our team, who work tirelessly to deliver against our commitments to the environment in which we are working,” said Raed Albasseet, the chief environment and sustainability officer.

TRSDC is developing an area over 28,000 square kilometres on the West Coast of Saudi Arabia. 

Recently, it closed a SR14 billion ($3.7 billion) term loan facility and revolving credit facility with four Saudi banks.

Last year, it was one of the first companies in the Middle East to achieve the ISO 9001:2015 certification for quality management for design and construction of assets, as well as a Green Financing accreditation.

Global mining group Rio Tinto restarts Mongolian copper project

Global mining group Rio Tinto restarts Mongolian copper project
Updated 25 January 2022

Global mining group Rio Tinto restarts Mongolian copper project

Global mining group Rio Tinto restarts Mongolian copper project

Rio Tinto, a Toronto listed mining group, is once again going ahead with its most important growth project, the Oyu Tolgoi copper mine in Mongolia.

The project began after the company reached an agreement with the government of Mongolia, and solved key issues hindering the $7 billion expansion of the project.

On Jan. 25, an underground caving process was launched, which means that the mine will start production in the first half of next year.

Rio Tinto had previously refused to start the undercut until it ended its dispute with the Mongolian government. Rio Tinto-controlled subsidiary company Turquoise Hill Resources, which owns the majority of the Oyu Tolgoi project, has been fighting with Ulan Batur for years over how to split the cost of an underground expansion that is more than $1 billion over budget and several years late.  

Rio Tinto and its subsidiary have agreed to write off $2.4 billion of loans and interest used by the Mongolian Government to fund its share of the development costs, according to the Financial Times. The government will let the company extend an existing deal to import power from China to at least 2026, followed by another extension until 2030 if a domestic energy source is not made available, according to the newspaper.

“The size and the complexity [of the project] requires an aligned way forward, and we haven’t had that for years, I have to admit,” Rio Tinto Chief Executive Jakob Stausholm said in an interview quoted by the Wall Street Journal. “So it is a big, big step forward.”

Rio has mined copper from an open pit mine at Oyu Tolgoi for a decade. Given that much of the deposit lies deeper below the Earth’s surface, it has been difficult for the company to reach the ore.

Once at full speed, the Oyu Tolgoi project will be one of the biggest copper mines in the world, producing at peak capacity 500,000 tons a year of the metal. It will also double Rio’s copper division output, according to the Financial Times

Tourism Development Fund to develop destination in Saudi city Taif

Tourism Development Fund to develop destination in Saudi city Taif
Updated 25 January 2022

Tourism Development Fund to develop destination in Saudi city Taif

Tourism Development Fund to develop destination in Saudi city Taif

RIYADH: The Tourism Development Fund will invest more than SR300 million ($80 million) in the Saudi city of Taif, which is located in the western part of the Kingdom, in a bid to attract visitors.

The TDF, a goverment-run organisation fund that aims to strengthen the tourism sector has formed a strategic partnership with the distinguished Al-Ameen Compan.

It will see the development of a hotel with approximately 150 hotel units, retail and entertainment facilities, with additional space for a large outdoor corridor and designated spaces for local and international shops in the area.

The 100,000 square kilometre project reflects a modern concept in shopping by integrating the retail sector and leisure activities.

The project reflects the Fund's commitment to developing emerging tourist areas within the framework of the National Tourism Strategy, Qusay Al-Fakhri, CEO of the Tourism Development Fund said.

He added that it will highlight Taif's distinct and promising potentials, including its mild climate and agricultural sector and enhance the region's attractiveness through world-class tourism facilities.

Saudi PIF selects PwC to implement 6 renewable energy projects, CNBC says

Saudi PIF selects PwC to implement 6 renewable energy projects, CNBC says
Updated 25 January 2022

Saudi PIF selects PwC to implement 6 renewable energy projects, CNBC says

Saudi PIF selects PwC to implement 6 renewable energy projects, CNBC says

RIYADH: Saudi Arabia’s Public Investment Fund, PIF, has selected the global consulting firm PwC as an advisor on six renewable energy projects, including wind and solar plants. 

The projects will be implemented in cooperation with the Ministry of Environment, Water and Agriculture, CNBC Arabia reported, citing banking resources. 

This comes in line with the sovereign fund’s plan to transform the Kingdom into a green economy and diversify its energy mix. 

With a total capacity of around 2.3 gigawatts, the PIF will start financing the second phase of renewable energy projects that it is working on in collaboration with local companies, CNBC Arabia reported. 

The new phase of projects includes the Shoaiba power plant, with two gigawatts of energy from renewable resources and a production capacity of 900 megawatts, CNBC reported citing an informed source. 

Established in 1988, London-based PwC is a one of the Big Four accounting firms that offers business advisory services. 


Leading Norwegian oil and gas producer Vaar Energi plans IPO   

Leading Norwegian oil and gas producer Vaar Energi plans IPO   
Updated 25 January 2022

Leading Norwegian oil and gas producer Vaar Energi plans IPO   

Leading Norwegian oil and gas producer Vaar Energi plans IPO   

Vaar Energi, the third biggest oil producer in Norway, is planning an Oslo stock market listing and to raise capital through two private placements.

The initial public offereing could, depending on its size and market value, be the largest oil and gas listing since Aramco raised $25.6 billion at a $1.7 trillion valuation during its IPO in 2019, according to the Financial Times, quoting data provider Dealogic.

The company, which is valued at between $10 billion-$15 billion, had an average production of 247,000 barrels per day during the third quarter.

The group, which is about 70 percent owned by Eni with the rest owned by HitecVision is looking at institutional investors but Eni intends to remain the majority shareholder after the listing. DNB, JPMorgan, Morgan Stanley and SpareBank 1 are acting as joint global coordinators for the IPO.

“We believe oil and gas will continue to be part of the energy mix for decades to come. The current gas market developments in Europe confirm our view that a reliable and safe supply of natural gas from Norway will be crucial,” said CEO Torger Roed.

Norway is western Europe’s biggest hydrocarbon producer. The company sees the Norwegian continental shelf as one of the most appealing regions for exploration and production globally, thanks to cost competitive and stable regulatory environments as well as low emissions.

Yet recent IPO have faced hurdles as investors insist on sustainability. Vaar Energi wants to achieve zero carbon emissions in its own production by 2030. It is also looking to boost its production to 350,000 bpd by 2025.