Nick Kingston in conversation with Sebastien Bernard, Head of Legal

Legal, Uncategorized

Get an inside look into the Middle East Utilities development and project finance industry with Sebastien, a seasoned expert with over 13 years of experience in the field. From structuring to finalizing water, energy, and waste infrastructure projects, Sebastien offers unique insights into the growth opportunities, challenges, and impacts of the recent pandemic on the industry. Explore the shift towards renewable energy projects and the increasing demand for waste-to-energy solutions in the region. Learn how the COVID-19 outbreak has influenced the industry and how businesses can adapt to the changing landscape to succeed in the competitive environment of the Middle East.


Nick: Give us an overview of yourself?

Sebastien: After gaining valuable experience in the finance industry and then in defence electronics, I joined the exciting world of utility infrastructure projects 13 years ago. Over the years, I have built up a strong understanding of structuring, developing and finalising water, energy and waste infrastructure projects, M&A deals, and commercial transactions in the Middle East, Turkey, Africa and Asia. I have comprehensive expertise in project finance, investment transactions and asset and share-based transactions, as well as a good knowledge of business development and financing, both in terms of equity and debt. I have played a role in the review and development of some of the most recent IWPs and ISTPs tendered in the region, including the Salalah IWP and the Jeddah Airport 2 ISTP (to name but a few), both of which have been successfully brought to a financial close.

Nick: How does the Middle East Utilities development & project finance industry compare to the international sector?

Sebastien: Following a period of relative calm, the number of non-recourse water and power projects in the Middle East began to increase once again in 2018, driven by economic and population growth and a commitment from local governments to develop more environmentally friendly water, wastewater, and power assets. The Saudi Water Partnership Company and Renewable Energy Project Development Office in Saudi Arabia have been particularly active over the past three years, tendering and closing almost a dozen projects, with the most recent being the Jeddah Airport 2 ISTP, which reached financial close in early 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 some extent in Qatar (Al Wakra & Al Wukair PPP) have followed suit. Nowhere else in the world has such rapid development of utility projects been seen. This significant portfolio of projects in the Middle East has attracted key international, regional, and local lenders, who have demonstrated a strong appetite for financing these long-term projects over the past few years.

It is worth mentioning that, despite the challenges posed by the COVID-19 outbreak and its impact on the global economy, all regional off-takers have been able to keep their tenders and projects on track.

Nick: What are the unique challenges that you face in the region?

Sebastien: The Middle East is growing and developing at an incredible pace, presenting a challenge for businesses to quickly and effectively adapt their strategies. Competition is a significant factor in the region, with international players, regional players, and local players all vying for a share of the market. Local players often have a distinct advantage over larger international players due to their agility and responsiveness.

Additionally, the recent proliferation of projects has resulted in some lenders, particularly international banks, becoming more selective in the projects they are willing to finance, the bidders they are willing to support, and the countries they are willing to invest in. The abundance of projects presents great opportunities for business development, but it also requires careful consideration and a well-thought-out strategy in order to succeed in the highly competitive and rapidly changing environment of the Middle East.

Nick: What are the areas of growth opportunities you see for the sector?

Sebastien: Despite the ongoing economic slowdown, the GCC countries are continuing to prioritize the development of additional potable water sources and wastewater treatment capacities. As a result, we can expect to see new desalination and wastewater projects being tendered in the coming months. On the power generation front, the focus is shifting towards renewable energy projects, with all GCC countries actively promoting and developing solar and wind projects.

There is also a growing opportunity for waste-to-energy projects in the region. The Emirate of Sharjah is currently developing a 300,000 ton per year waste-to-energy plant, and there are likely to be more projects in this sector in the near future, particularly in Abu Dhabi, Oman, and Saudi Arabia. This demonstrates the ongoing commitment of the GCC countries to a more sustainable and environmentally friendly energy mix.

Nick: How have you been affected by the recent pandemic and the economic slowdown?

Sebastien: From a personal perspective, the pandemic did not have a negative impact on my work. Like many others around the world, I had to adapt to new ways of working, including limited travel, reduced in-person interactions, and a greater reliance on video conferencing tools. However, I have to admit that I was busier during the lockdown period than I have ever been before.

Overall, the experience was a success. We were able to close financial deals without any in-person meetings and solely through the exchange of documents via email, which was something that we thought would not be possible at the beginning of the pandemic. This shows that even in difficult circumstances, we can still find innovative solutions and achieve our goals.

Nick: What will you do differently as a business as a result of the pandemic?

Sebastien: In the Middle East, where face-to-face interaction was a staple, the pandemic has opened up new methods of communication that many thought wouldn’t be possible. Though things will eventually return to normal, it’s unlikely that travel will be as frequent as it once was. Utilizing technology for meetings, such as MS Teams or Zoom, will not only help organizations reduce their SG&A, but also increase efficiency. Gone are the days of spending a full day traveling for brief meetings. These changes in communication may soon become a permanent fixture.

Nick: What advice or recommendations would you give to someone looking to enter the sector?

Sebastien: Doing what others are already doing, but in a cheaper manner, is generally not a good approach. I believe that innovation should drive the approach of anyone who wants to enter a market. And the utilities sector is no exception. The situation on the ground can sometimes be more complicated. Most, if not all, power and water projects are usually developed based on requests for proposals that contain very strict instructions for bidders. Most of the time, these tenders do not offer bidders the opportunity to propose alternative offers. However, despite this, there are always ways to innovate and offer opportunities for newcomers to penetrate a new market.

Nick: What is the best thing about expat life?

Sebastien: Answer: Interacting with different cultures broadens one’s perspective and offers a deeper understanding of the world.

Nick: What is the worst thing about expat life?

Sebastien: Being an expat can have its ups and downs. In my experience, I would say there’s a certain sense of frustration that comes with it. Regardless of whether you’ve lived in this region for 10 or 15 years, like myself, or only a year or two, the feeling remains the same. You always feel like an outsider. Some countries offer foreign residents the opportunity to apply for a permanent residency visa, but this isn’t the case here yet. However, things are rapidly changing and there’s always a chance for things to improve. For example, the recent introduction of retirement residency visas by the UAE authorities is a step forward.

Nick: Biggest passions or hobbies outside of work?

Sebastien: Surfing. In the UAE, surfing is not a common sport due to the limited opportunities. However, during the winter months, the swell can bring some waves suitable for surfing. The sport requires a combination of physical fitness, confidence, and self-control. It teaches the importance of assessing risks and making decisions in the moment, much like life itself. The thrill of riding a wave provides a sense of reward, but if you take on more than you can handle, the consequences can be significant. Overall, surfing is a great activity for those who love a challenge and are looking for an adrenaline rush.

Nick: Favourite holiday destination?

Sebastien: As a surfer, any destination that offers good waves would be preferable, whether it be Sri Lanka, the Maldives, Indonesia, or Australia, which is always at the top of my list due to its many offerings.

Nick: Who is your biggest inspiration?

Sebastien: Jacinda Ardern, the Prime Minister of New Zealand, is a prime example of modernity, adaptability and mindful responsiveness. In my opinion, she has shown exceptional leadership during the Christchurch terrorist attack, the Whakaari volcanic eruption and the COVID-19 pandemic.

Overall, the utility infrastructure industry in the Middle East has shown remarkable resilience and progress even in the face of challenges posed by the pandemic and economic slowdown. With a commitment to sustainable and environmentally friendly projects, and an abundance of opportunities for growth and development, the future looks bright for the sector and for businesses operating within it.