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For this edition, our focus is on development and project financing of utilities and infrastructure in the Middle East.

For this edition, our focus is on development and project financing of utilities and infrastructure in the Middle East.

Construction & Infrastructure, Middle East, BWP...

Our "Industry Spotlight with BWP." Blog series continues with a focus on utilities development in the Middle East and we were lucky enough to interview Sebastien Bernard who is the Head of Legal at Veolia and an expert in infrastructure development and project financing.

The Professional:

NICK: Can you please introduce yourself to our readers and give a brief overview about your experience?
SEBASTIEN: After gaining some enriching experience in the finance industry and defence electronics industry, I joined utility infrastructure projects 13 years ago. I developed substantial expertise in structuring, developing and closing water, energy and waste infrastructure projects, M&A deals, and commercial transactions in the Middle East, Turkey, Africa and Asia. I also have in-depth knowledge in project finance, investments transactions, and asset and share-based transactions, complemented by a good understanding of business development and financing aspects, both equity and debt. I have been involved in the review and development of the most recent IWPs and ISTPs tendered in the region, including Salalah IWP and Jeddah Airport 2 ISTP (just to name them), both of which have reached successful financial close.

NICK: How does the Middle East utility development & project finance industry compare to the international market?
SEBASTIEN: The Middle East started to surge again in 2018, driven by the economic and population growths and the willingness of the local governments to develop more environmentally friendly power, wastewater and water assets.

Saudi Arabia's Saudi Water Partnership Company and Renewable Energy Project Development Office have both been active for three years. It closed almost a dozen projects including Jeddah Airport 2 ISTP which reached financial close in the early days of September 2020. The development of utility projects in Abu Dhabi (Taweelah IWP, Al Dhafra Solar IPP), Dubai (Mohamed Bin Rashid Solar Park, Hassyan IWP), Oman (Ghubrah 3, Barka 5, Ibri IPP, Sohar IPP), and to a certain extent in Qatar (Al Wakra & Al Wukair PPP) have followed the same trend. This significant portfolio of projects in the Middle East has also brought in its wake key international, regional and local lenders, which have shown across the past years a real appetite for financing those long-term projects. After the COVID 19 impact on the global economy, all the regional off-takers have managed to keep their tenders on track.

NICK: What are the unique challenges that you face in the region?
SEBASTIEN: The Middle East is growing and developing at a swift pace, and therefore it is a challenge to adapt a strategy in the most effective way. The factor of competition between international, local and regional players have led the latter to adjust capacity and a strength-giving a straight advantage over larger global players.

The multiplication of projects has recently pushed some lenders (especially international banks) to become more selective on the projects they are willing to look at, at the bidder's they are ready to support, and the countries they are eager to develop in.

NICK: What are the areas of growth opportunities you see for the sector?
SEBASTIEN: Despite the current economic slowdown, the GCC countries will continue to strive for additional potable water volumes and wastewater treatment capacities. Therefore, during the coming months' a new desalination and wastewater projects will be tendered by the main off-takers of the region. On the power side, the main trend is the development of renewable energy projects. All the GCC countries will now put all efforts to promote and develop solar and wind projects. For instance, The Emirate of Sharjah is setting a 3,00,000 tonnes waste-to-energy plant, and there are more projects to come in Abu Dhabi, Oman or Saudi Arabia.

NICK: How have you been affected by the recent pandemic and the economic slowdown?
SEBASTIEN: From a personal standpoint of view, the pandemic did not negatively affect me. Overall, it has been a success; what we once thought would not be possible, such as financially closing a project without meetings and only through the exchange of documents via emails, has turned out to be a total success.

NICK: With the pandemic accelerating the change in how we work, what will you do differently as a business?
SEBASTIEN:  In a region where meeting people in person was the norm, COVID-19 has brought some new ways of interacting with other that a many of us thought it would not be possible to do - until recently. Having meetings through tools such as MS Teams, Zoom will not only allow organizations to reduce their SG&A but will also increase efficiency. How many of us used to travel during a full day for meetings which turned out to last just a couple of hours? That could potentially become something of the past.

NICK: What advice or recommendations would you give to someone looking to enter the sector?
SEBASTIEN: Doing what others already do, but more cheaply is usually not the right approach. As per my belief innovation should drive anyone's strategy willing to enter any market. Most (if not all) power and water projects are usually developed based on a request for proposals which generally contain strict instructions to bidders. Most of the time, those tenders do not offer the bidders the opportunity to propose alternative offers. But despite this situation, there are always ways to innovate, therefore offering incomers to penetrate a new market.

The Person:

NICK: What is the best thing about ex-pat life?
SEBASTIEN:
For me, it is mixing with other cultures as it opens up your mind and gives you a broader, yet a real vision of the world.

NICK: What is the worst thing about ex-pat life?
SEBASTIEN:
In every ex-pat situation, you will find pros and cons. In my case, it's more like a sort of frustration. Whether you have lived 10 or 15 years in this part of the world (as it is my case), or only 1 or 2, your situation is comparable. You will remain a foreigner. There are some countries in the world which grants foreign residents with the right of applying for a permanent residency visa. But this is not currently the case here. However, things are moving fast, look at the retirement residency visas that the UAE authorities have recently introduced!

NICK: What are your biggest passion or hobbies outside of work?
SEBASTIEN:
Surfing. The UAE is certainly not the ideal place in the world for surfing, but the winter season usually brings a bit of swell from time to time. Surfing is a challenging and physical sport, which requires a dose of confidence and self-control. Surfing is comparable to everyday’s life: you have to analyze the actual conditions to assess the risks, you need to anticipate the oncoming wave and the way it will break, and it provides some risk and reward situation: take more risk, and you may surf the wave of your life. But if you overestimate your capabilities, then you may end up in big trouble.

NICK: What is your favourite holiday destination?
SEBASTIEN: Any surfing destination would have my preference: Australia is usually on top of my list along with Sri Lanka, to Maldives and Indonesia.

NICK: Who is your biggest inspiration?
SEBASTIEN:  Jacinda Ardern, prime minister of New Zealand. She embodies modernity, flexibility and thoughtful reactivity. I think she handled well the Christchurch terrorist attack, the Whakaari volcano eruption and the Covid-19 pandemic.

NICK: Brilliant, thanks Sebastien.

This brings us to the end of this interview. Thank you, Sebastien, for talking with BWP. It is our pleasure to have you.