INTERVIEW: Metito lays out strategy to keep region watered

Illustration by Luis Grañena
Short Url
Updated 17 May 2021

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.


Saudi courier, delivery industry valued at $970 million

Updated 20 June 2021

Saudi courier, delivery industry valued at $970 million

  • A report says the sector is expected to grow by 6.5 percent annually until 2026 in KSA

JEDDAH: Saudi Arabia’s courier and parcel delivery market, now estimated to be worth $970 million, was expected to grow by an average 6.5 percent per year until 2026, according to new figures.

A report issued by Dublin-based ResearchAndMarkets.com has revealed that the Kingdom was a key Middle Eastern player in the booming sector.

“E-commerce is one of the major factors driving the market growth. With higher connectivity rates, a young working population, and advanced infrastructure, the country is one of the major markets in online retailing in the Middle East,” the study said.

A growing trend highlighted in the report was the popularity of pickup, drop-off (PUDO) points. At present, only about 15 to 20 percent of orders are collected at a physical location operated by courier companies or their delivery partners.

The increased investment by large operators in the e-commerce sector was likely to result in the development of more warehouse facilities and the growth of PUDO points, the research showed.

Global giant Amazon in March announced plans to add 11 buildings to its network in Saudi Arabia, boost its storage capacity in the Kingdom by 89 percent, and increase its geographical delivery network by 58 percent.

According to data produced by research firm Statista, e-commerce revenue in Saudi Arabia is set to reach $7.051 billion this year and grow at an annual rate of 5.38 percent to reach $8.697 billion by 2025.

At the same time, Dubai’s Majid Al-Futtaim recently told Arab News that the surge in demand for e-commerce had seen it expand its fulfillment and delivery network. A new 9,000-square-meter center in Riyadh operates 24 hours a day, seven days a week, handling up to 5,000 orders each day. More than 500 workers process the orders, which are delivered by a fleet of 150 refrigerated trucks, and the company plans to open more centers next year.

The courier and delivery report added: “Given the continuous growth in e-commerce and the fact that building one’s own network is very expensive, more partnerships are expected to happen in the market on the back of pressure on cost reduction.”

Technology will play a big part in changing the industry over the next few years, as a big challenge in Saudi Arabia was the country’s lack of postal codes. The report highlighted that delivery companies in the Kingdom regularly requested landmarks rather than addresses, with drivers often asking for locations to be identified via WhatsApp.

The rate of returns on e-commerce goods in Saudi Arabia was relatively low due to most transactions using cash on demand. However, the report predicted that as digital payments continued to rise, returns would become more common.


Laundry firm aims for 400% expansion across Saudi Arabia

Updated 20 June 2021

Laundry firm aims for 400% expansion across Saudi Arabia

  • It is the only laundry shop that has a franchise agency
  • Due to the pandemic, it uses UV machines that disinfect clothes, carpets, and such

JEDDAH: When Abdulkareem Rafeeq took over the family laundry business in Madinah six years ago he began implementing new modern technology.

And despite the coronavirus disease (COVID-19) pandemic denting his ambitions in the short term, he put in place major expansion plans and has set a goal to have 50 branches within five years and 500 throughout the region by 2050, catering to the private and public sectors, and the hotel industry.

His father Mahmoud started the business in 1982, with the first branch of the Princes Express Laundries providing services to residents in the Madinah area.

His son joined the company in 2015 and launched the first branch of the Rafco Laundry chain, which incorporated modern working and processing methods and also offered free home delivery and disinfection of clothes.

Rafco Laundry now has 10 branches covering the majority of neighborhoods in Madinah. Still a family business, with his father the chairman of the board of directors, Rafeeq told Arab News he had big plans for the future.

The company’s goal was to expand to 30 branches in Riyadh and 20 branches in Jeddah and other parts of the Kingdom.

He said: “We plan to have 50 new branches in five years in the Kingdom that reach different regions. During the past two years, we opened 10 branches in the Madinah region. “It is the only laundry shop that has a franchise agency. Most franchises are cafes and restaurants, we decided to think outside the box and create a laundry franchise. “We made eight contracts so far with more than SR6 million ($1.6 million) and established these laundry shops. It takes us two months to open a laundry shop with its key and trained staff,” he added.

However, the onset of the COVID-19 pandemic last year affected the company’s plans. “There was a decrease in growth, but the company fixed it and we saw the strengths and weaknesses in the market,” Rafeeq said.

His idea to offer free disinfection of clothing was a key component in helping the business to recover, as during the pandemic many customers were concerned about the spread of the virus, especially in the early days when little was known about it.

“We brought in consultants, and the solution was to bring equipment from the US — ultraviolet (UV) machines that disinfect clothes, carpets, and such.

“We began to wash, iron, and disinfect. The disinfection (service) was for free, and we did a lot of marketing for it — through social media and the posters we handed out along with the clean clothes. People started coming to us, we created an opportunity out of a crisis,” he added.

Rafeeq said the innovations his team introduced had earned Rafco Laundry a good reputation as a modern establishment that had expanded its service offerings.

“We provided a shoe washing division. We also wash women’s handbags and students’ schoolbags. We have UV disinfection machines and clothes and sheet fresheners,” he added. The company had been planning a mobile app in 2019, but the digital boom brought about by the global health crisis accelerated its development and growth. The number of app users rose quickly during the pandemic, and it currently has around 1,500 regular customers. Rafeeq said: “The electronic app was not active when we first launched it, but during the lockdown and when everyone was at home, we relaunched the app and we made very good sales and depended on it essentially during the pandemic.”


Property firms lead Tadawul trading surge

Updated 20 June 2021

Property firms lead Tadawul trading surge

  • Leading the pack was Red Sea International Co., which was trading 1,452 percent above its average

RIYADH: A total of 88 listed firms on the Saudi Stock Exchange (Tadawul) were trading above their three-month average when trading ended on Thursday, according to data compiled by financial information website Argaam.

Leading the pack was Red Sea International Co., which was trading 1,452 percent above its average.

The surge comes as the company reported last week that it had won a SR52.9 million ($14.1 million) contract to design and build a housing complex in AlUla, northwest Saudi Arabia.

In second place, but much further behind, was fellow property firm Saudi Real Estate Co. (Al Akaria), which on Thursday was trading at 893 percent above its three-month average. This was despite the fact that it reported a net loss after zakat and tax of SR4.6 million for the first quarter of 2021, up from a similar loss of SR2.9 million in the same period the previous year.

Retailer BinDawood Holding Co. reported a 50.8 percent decline in net profit after zakat and tax to SR62.1 million for the first quarter of this year, as revenue declined 20.4 percent. However, it was still third on the list, with a 583 percent surge in trading on Thursday.

Earlier this month, the company announced it plans to hold a general meeting on June 28 and shareholders will be asked to vote on contracts valued at SR135.96 million. With the two brands, BinDawood and Danube, BinDawood Holding Co. currently has a network of 74 stores in 15 cities throughout Saudi Arabia. In 2019, it announced plans to reach 100 stores by 2024, meaning an average of five to six stores per year.

Fourth on the list, trading 331 percent above its three-month average, was Saudi Re for Cooperative Reinsurance Co., which last month reported a net profit of SR16.2 million for the first three months of 2021, up from SR7.4 million the year before.

Rounding out the Top-5 and trading 309 percent higher was Saudi Cable Co., which a month ago reported a net loss after zakat and tax SR35.9 million for the first quarter 2021, 17 percent better than the SR43.2 million loss in the same quarter last year.

Among the other big Tadawul hitters, Saudi National Bank was trading 248 percent above its average, while energy giant Saudi Aramco was performing 149 percent higher.


China cracks down on cryptocurrency mining

Updated 20 June 2021

China cracks down on cryptocurrency mining

  • Authorities order closure of 26 suspected mining projects

SHANGHAI, HONG KONG: China’s crackdown on cryptocurrency “mining” has extended to the southwest province of Sichuan, where authorities ordered cryptocurrency mining projects closed in the major mining center.

Crypto mining is big business in China, accounting for more than half of global bitcoin production. But the State Council, China’s Cabinet, last month vowed to clamp down on bitcoin mining and trading as part of a series of measures to control financial risks.

Other popular mining regions, such as Inner Mongolia, have cited cryptocurrency mining’s use of electricity generated from highly polluting sources such as coal in orders targeting the industry.

Friday’s move in Sichuan — where miners mostly use hydropower to run the specially designed computer equipment used in verifying bitcoin transactions — suggests the crackdown is more broadly based.

The Sichuan Provincial Development and Reform Commission, and the Sichuan Energy Bureau issued a joint notice, dated Friday and seen by Reuters, demanding the closure of 26 suspected cryptocurrency mining projects by Sunday.

Sichuan is China’s second-biggest Bitcoin mining province, according to data compiled by the University of Cambridge. Some miners move their activities there in the rainy summer to take advantage of its rich hydropower resources.

The notice orders state electricity companies in Sichuan to conduct inspections and make corrections, reporting their results by Friday. They are to immediately stop supplying electricity to crypto mining projects they have detected. The authorities urged local governments in Sichuan to start combing for crypto mining projects and shut them down. It banned new projects.

Other regional mining centers including Xinjiang, Inner Mongolia and Yunnan have ordered crackdowns on bitcoin mining.

Friday’s notice appears to indicate that Beijing’s displeasure with cryptocurrency mining extends beyond cases where it uses electricity generated by burning coal. “Renewable power does not help,” said Winston Ma, NYU Law School adjunct professor and author of the book “The Digital War.”

“The four largest mining regions — Inner Mongolia, Xinjiang, Yunnan and Sichuan — have implemented similar crackdown measures, even though mining in the latter two are mostly based on hydropower, whereas the first two are on coal,” Ma told Reuters.

Some miners have been considering moving elsewhere due to the crackdown.


Boeing 737 MAX model takes off on maiden flight

Updated 19 June 2021

Boeing 737 MAX model takes off on maiden flight

  • The plane completed a roughly 2-1/2-hour flight over Washington State, returning to Renton Municipal Airport near Seattle

WASHINGTON: Boeing Co.’s 737 MAX 10, the largest member of its best-selling single-aisle airplane family, took off on its maiden flight on Friday, in a further step toward recovering from the safety grounding of a smaller model.

The plane completed a roughly 2-1/2-hour flight over Washington State, returning to Renton Municipal Airport near Seattle at 12:38 p.m.

The first flight heralds months of testing and safety certification work before the jet is expected to enter service in 2023.

In an unusual departure from the PR buzz surrounding first flights, the event was kept low-key as Boeing tries to navigate overlapping crises caused by a 20-month grounding in the wake of two crashes and the COVID-19 pandemic.

Boeing must also complete safety certification of the plane under a tougher regulatory climate following two fatal crashes of a smaller 737 MAX version grounded the model for nearly two years — with a safety ban still in place in China.

Boeing has carried out design and training changes on the MAX family, which returned to US operations in December.

Boeing Commercial Airplanes CEO Stan Deal said the company is producing about 16 737 MAX jets a month at its Renton factory.

Boeing is working on safety enhancements for the 737 MAX 10, including for its air data indication system and adding a third cockpit indication requested by European regulators of the “angle of attack,” a parameter needed to avoid stalling or losing lift. Deal’s comments were provided to the media via a pool reporter inside a Boeing aircraft delivery center.

“We’re going to take our time on this certification,” Deal said.

The flight showcased a revamped landing gear system illustrating an industry battle to squeeze as much mileage as possible out of the current generation of single-aisles.

It raises the landing gear’s height during takeoff and landing, a design needed to compensate for the MAX 10’s extra length and prevent the tail scraping the runway on takeoff.