Outcry grows over Lebanon’s World Bank-funded mega dam

Protesters rally in front of the World Bank offices in Beirut over the Bisri dam project, which they claim will ravage the region’s farmland and historic sites. (AFP)
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Updated 03 September 2020
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Outcry grows over Lebanon’s World Bank-funded mega dam

  • Critics say the $617m project is an ‘environmental crime’ that mirrors the country’s corrupt patronage system

BEIRUT: Lebanon’s Bisri Valley lies on a green fertile bed, a spot that has cradled civilizations dating as far back as the Bronze Age. Its expansive lands of pine, citrus trees and ancient ruins are threatened with being submerged by a controversial mega dam funded by the World Bank.

For years, activists and locals have voiced their opposition to it, describing it as an environmental crime and a project that mirrors Lebanon’s patronage system and bad governance.

The devastating explosion that rocked Beirut last month, killing more than 190 people and injuring thousands, has highlighted endemic corruption in Lebanon. It has also revived calls for investigations into mega-infrastructure projects proposed by politicians whose corruption and negligence the public blames for the disaster.

The Bisri dam project was approved by Lebanon’s government and parliament in 2015 and is funded through a $474 million loan by the World Bank, with a total cost of $617 million. It is supposed to store 125 million cubic meters of water, providing a solution for chronic water shortages to 1.6 million Lebanese living in Beirut and Mount Lebanon, according to the World Bank website.

But those opposed to the project, about 35 km south of the capital, say the dam is fraught with technical and corruption issues. Lebanon’s politicians are notorious for using projects to pass out lucrative positions to their supporters to skim off cash or otherwise profit.

“It represents everything we have been fighting against, it is a model of the confessional patronage system that has led to Lebanon’s demise,” says Roland Nassour, co-founder of the Save the Bisri Valley Campaign.

In a recent letter to the World Bank, the campaign organizers reiterated their call to cancel the project, drawing a parallel between failed dam projects in Lebanon and the explosion, describing both “as a major lack of integrity in the public sector.”

“This is one of the few projects left that the politicians and companies they hire can capitalize on and make money from,” said Elias Hankash, a parliament member who resigned after the blast and has opposed the project from the beginning. “Is it possible that today, a bankrupt country like Lebanon takes a multi-million-dollar loan to build a dam?” he said.

Lebanon is mired in an unprecedented economic crisis, with a collapsing currency, increasing inflation and hundreds of thousands thrown into poverty. The government defaulted on its foreign bonds commitment for the first time earlier this spring.

Activists have also voiced concerns that Bisri is on an active seismic fault line. Geologist Mohammed Khawlie says the dam won’t store the expected amounts of water. “The rocks are very porous, they absorb the water, the land is karstic,” he explains, referring to a terrain that is formed of soluble rocks and limestone.

“If you want to solve this problem by injecting cement into the dam structure, then you are incurring hundreds of millions of dollars in additional cost.”

Other recently built dams in Lebanon have failed for similar reasons, Khawlie said.

Environmental expert Paul Abi Rashed says the project will destroy more than 6 million square meters of green land, among Lebanon’s most scenic and pristine. “We are talking about vast agricultural lands, pine forests, the second largest roosting area for migratory birds in Lebanon,” he adds.

It also threatens the historic Mar Moussa church as well as Roman and Hellenistic ruins, though the World Bank says they will be preserved or moved.

The World Bank declined an interview request. On its website, it says, “an environment and social impact assessment was carried out in close collaboration with government agencies, civil society, the private sector and community members and has been approved by the Ministry of Environment.”

Abi Rashed says the assessment has not been updated since 2016.

It was also conducted by Dar Al Handasah, a consulting firm that is a stakeholder in the project and listed as the supervising entity to the construction of the project’s tunnel and pipeline.

“That is a clear conflict of interest,” says Nassour. “The World Bank says the assessment should not be done by an entity affiliated in any way to the project.”

The World Bank has heavily invested in mega-dam projects in developing countries in the past but not without controversy. It withdrew from contentious projects in India and the Democratic Republic of Congo, and faces complaints against its dam projects in places like Uganda.

Email exchanges between the regional World Bank director Saroj Kumar Jha and his staff in April show the World Bank recently changed its mind about the Bisri dam project and is offering to use the rest of the loan for “protecting the poor and most vulnerable.”

But Kumar mentions in his email that “the president prefers to proceed with the project,” referring to Lebanese President Michel Aoun, whose party has held the Energy Ministry for more than a decade.

The limited preliminary construction done so far on the dam has been suspended since the summer of 2019 under pressure from civil society.

Recently, the World Bank gave the Lebanese government the deadline of Sept. 4 to meet “the tasks that are preconditions to the commencement of construction of the dam.” But in the aftermath of the explosion, the deadline is unlikely to be met.

The World Bank has already paid around $320 million to Lebanon, including $155 million for expropriations of private land in the valley.

“There are many alternatives to using the land, the government can invest in agriculture or turn the land into a natural reserve and encourage eco-tourism,” suggests Hankach.

Beirut’s water shortages are primarily due to mismanagement, Nassour said. His group calls for parts of the loan to be redirected to support alternative water projects — and to rebuild lives and livelihoods of people affected by the Beirut blast.


Kingdom approves 2025 annual borrowing plan with SR139bn funding target

Updated 05 January 2025
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Kingdom approves 2025 annual borrowing plan with SR139bn funding target

  • Strategic road map to manage country’s funding needs

RIYADH: Saudi Arabia’s Minister of Finance Mohammed Al-Jadaan on Sunday approved the annual borrowing plan for 2025, outlining a strategic road map for managing the Kingdom’s funding needs.

The plan, which has been endorsed by the National Debt Management Center’s board of directors, detailed developments in public debt in 2024, initiatives to strengthen local debt markets, and the 2025 funding framework, including a calendar for Saudi riyal-denominated sukuk issuances.

The projected funding requirement for 2025 is estimated at SR139 billion ($37 billion), according to a statement issued on Sunday.

The total encompasses two primary components: covering a fiscal deficit of SR101 billion, as highlighted in the Ministry of Finance’s official budget statement, and meeting the SR38 billion in principal repayments for debts maturing during the year.

To achieve its funding objectives, Saudi Arabia plans to enhance its access to both local and international financing channels and pursue innovative financing opportunities to stimulate economic growth, the statement added.

Moves will include private transactions such as export credit agency-backed initiatives, financing for infrastructure development, and capital expenditure projects.

The Kingdom will also explore opportunities to access new markets and issue debt in diverse currencies, depending on market conditions.


Closing Bell: Saudi main index slips to close at 12,069

Updated 05 January 2025
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Closing Bell: Saudi main index slips to close at 12,069

 

RIYADH: Saudi Arabia’s Tadawul All Share Index fell on Sunday, shedding 32.73 points, or 0.27 percent, to close at 12,069.82.

The total trading turnover for the benchmark index amounted to SR4.21 billion ($1.12 billion), with 119 stocks advancing and 106 retreating.

The Kingdom’s parallel market Nomu registered a gain of 48.69 points, or 0.16 percent, closing at 31,054.38. Out of the stocks listed on Nomu, 38 advanced while 41 declined. The MSCI Tadawul Index also declined, dropping 7.32 points, or 0.48 percent, to close at 1,509.84.

Among the top performers of the day was Saudi Reinsurance Co., whose stock surged 9.94 percent to SR59.70. 

Salama Cooperative Insurance Co. also posted a strong performance, with its share price rising 8.44 percent to SR21.06, while Riyadh Cables Group Co. saw its stock climb 6.34 percent to SR151.00. 

However, National Medical Care Co. recorded the day’s steepest decline, falling 3.49 percent to SR160.40. Emaar The Economic City and the Power and Water Utility Co. for Jubail and Yanbu also experienced losses, with their share prices dropping 3.06 percent to SR18.38 and 2.93 percent to SR53.00, respectively.

In corporate news, Al-Yamamah Steel Industries Co. announced the signing of a SR97.5 million contract with the Saudi-based Trading & Development Partnership. The agreement involves the supply of steel towers for constructing a 380-kilovolt ultra-high voltage transmission line in the Eastern Region. 

The contract, which will commence in May 2025, is expected to reflect on the company’s financial results starting from the third quarter of 2025. 

Shares of Al-Yamamah Steel ended the session 6.25 percent higher at SR36.40.

The Saudi Industrial Development Co. disclosed that its subsidiary, Global Co. for Marketing Sleeping Systems, also known as Sleep High, has secured a Shariah-compliant SR9 million credit facility from Riyadh Bank. 

The financing, guaranteed under the Kafalah Program, will be utilized to support the subsidiary’s working capital needs. SIDC shares closed 0.67 percent higher at SR30.00.

Saudi Arabian Amiantit Co. signed a memorandum of understanding with the Libyan Development & Reconstruction Fund to collaborate on water technology transfer, sewage treatment, and pipe production. 

The one-year agreement aims to localize industries in Libya, create employment opportunities, and transfer manufacturing expertise. It also includes plans to establish joint factories specializing in fiberglass and polyethylene pipes, as well as valves, to support Libyan national projects. 

Shares of Amiantit rose 1.90 percent to close at SR29.40.

United International Holding Co. announced the extension of its memorandum of understanding with Nowpay Corp. for an additional two months. The partnership aims to establish a payroll administration and processing firm in Saudi Arabia. 

The venture, which will require an initial investment of SR75 million, will be 75 percent owned by United International Holding and 25 percent by Nowpay Corp. 

The company’s stock closed 0.75 percent higher at SR187.40.

National Gypsum Co. revealed that it has signed an Islamic financing agreement with Riyadh Bank valued at SR35 million. The funds will be directed toward expanding operations and upgrading production lines. The financing will last for one and a half years and is backed by promissory notes and a property mortgage. 

The company’s share price remained unchanged at SR22.16.


Saudi listed firms see growth in 2024 with ACWA Power and Al Rajhi as top performers

Updated 05 January 2025
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Saudi listed firms see growth in 2024 with ACWA Power and Al Rajhi as top performers

RIYADH: Saudi Arabia’s listed companies witnessed significant growth in 2024, with ACWA Power and Al Rajhi Bank emerging as the top performers on the Tadawul All Share Index.

ACWA Power Co. led the index, contributing 295 points, followed by Al Rajhi Bank with a 207-point increase, according to data from SNB Capital cited by Al-Ekhbariya.

ACWA Power’s stock surged from SR255.89 at the start of 2024 to SR401.4 by year-end, reflecting big growth. Similarly, Al Rajhi Bank’s stock rose from SR86.8 to SR94.6 during the same period. Other notable contributors included Saudi Research and Media Group, adding 44 points to the index, Elm Co. with 43 points, and Ma’aden with 40 points.

However, not all listed companies experienced gains in 2024. Saudi Aramco recorded a significant decline, losing 177 points on the index as its stock price dropped from SR140 to SR111.8. SNB Capital fell by 70 points, followed by SABIC with a 62-point decrease, Banque Saudi Fransi with 32 points, and Sahara International Petrochemical Co., or Sipchem, with 30 points.

The Kingdom’s initial public offering market also saw robust activity in 2024, with 14 IPOs raising SR14.21 billion ($3.7 billion), marking a 19 percent year-on-year increase.

Almoosa Health and Fakeeh Care Group led the IPO market in terms of size, with Fakeeh attracting the highest individual participation, drawing 1.34 million unique investors.

Despite overall success, individual subscriptions accounted for only 13 percent of the total IPO volume, amounting to SR1.94 billion.

Modern Mills Co. led in subscription coverage, achieving a rate of 21.9 times, while the average individual coverage for the year’s IPOs stood at 11.87 times.

The food production sector dominated IPO activity, contributing 26.9 percent of total listings in 2024, with successful debuts by companies such as Modern Mills, Al-Rabie, and Al Arabiya.

IPO valuations varied significantly, with an average price-to-earnings ratio of 34 times. United International Holding recorded the lowest P/E, while Nice One topped the charts with a P/E of 118 times, making it the year’s most expensive IPO.

Looking ahead, SNB Capital forecasts an 8 percent annual profit growth for companies listed on the Tadawul in 2025, with the petrochemical sector expected to lead the way with a 74 percent rise in profits.


Saudi Arabia records robust GFCF growth in Q3 2024, fueled by non-government sector investments

Updated 05 January 2025
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Saudi Arabia records robust GFCF growth in Q3 2024, fueled by non-government sector investments

  • Non-oil sectors grew by 4.3 percent year-on-year
  • Unemployment rate dropped to 3.7 percent

RIYADH: Saudi Arabia solidified its status as a regional investment leader with a 7.4 percent year-on-year growth in gross fixed capital formation in the third quarter of 2024, led by the non-government sector.

The Ministry of Investment reported an 8.3 percent increase in the non-government division, reflecting the Kingdom’s ongoing efforts to boost private sector participation in its diversifying economy.

Government-related entities contributed to the overall GFCF growth, with a 2.3 percent increase in the third quarter of 2024.

The non-government sector’s performance aligns with Saudi Arabia’s Vision 2030 objectives, which aim to shift the economy from oil dependency by fostering a vibrant private division. 

In line with these goals, the Ministry of Investment issued 3,810 investment licenses in Q3 2024, marking a significant 73.7 percent year-on-year increase.

Non-oil sectors grew by 4.3 percent year-on-year during the same period, further supporting the Kingdom’s economic diversification efforts.

Key sectors saw notable growth, including wholesale and retail trade, restaurants, and hotels rose 5.8 percent, and construction increased 4.6 percent. Transport and communication grew by 4.5 percent, and finance and real estate advanced by 4.2 percent, driven by consumer spending and a dynamic financial sector.

These expansions contributed to the Kingdom’s overall real gross domestic product growth of 2.8 percent year-on-year for the quarter, despite a marginal 0.05 percent increase in oil activities.

The real estate sector also played a pivotal role in the third quarter of 2024, with the Real Estate Price Index rising by 2.6 percent y-o-y. While residential property costs increased by 1.6 percent, commercial properties saw a more pronounced growth of 6.4 percent. However, agricultural real estate prices declined by 8.7 percent, reflecting sectoral disparities. 

Complementing these trends, real estate loans by banks witnessed a 13.3 percent year-on-year increase, showcasing heightened investor interest in property development and acquisitions. 

Saudi Arabia’s economic resilience is further evident in labor market improvements. The unemployment rate dropped to 3.7 percent in this period, a 0.5 percentage point decrease from the same quarter in 2023. The Saudi unemployment rate fell to 7.8 percent, a one percentage point decline year-on-year.


Global growth expected to reach 3.2% amid monetary easing: report

Updated 05 January 2025
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Global growth expected to reach 3.2% amid monetary easing: report

  • QNB forecasts US Federal Reserve to cut rates by 75 bps and the European Central Bank by 150 bps
  • It predicts growth of 2.2% in 2025, down from 2.6% in 2024

RIYADH: Global economic growth is set to accelerate in 2025 as monetary easing, US resilience, and recoveries in Europe and China drive momentum, with Southeast Asian economies benefiting from positive spillovers.

The Qatar National Bank projects a 3.2 percent global growth rate, outpacing Bloomberg’s consensus of 3.1 percent, the state’s news agency QNA reported.

In its latest commentary, QNB anticipates growth in major economies, driven by controlled inflation, eased financial constraints, and policy adjustments by central banks. Emerging markets, specifically the Association of Southeast Asian Nations economies, are set to benefit from these advancements.

The report said that analysts have consistently underestimated global economic performance, as initial projections for 2023 and 2024 fell short of realized growth by 80 and 40 basis points, respectively.

“Analysts and economists have been proving to be over pessimistic when it comes to forecasting major economies and global growth in recent years,” reported QNA.

The national bank added: “In fact, over the last two years, initial expectations for growth were 80 basis points and 40 bps below realized growth in 2023 and 2024, respectively.”

It forecasts the US Federal Reserve to cut rates by 75 bps and the European Central Bank by 150 bps.

“This should support further investment and consumption growth, as credit becomes cheaper, new investment opportunities become more attractive, and the opportunity costs of spending decrease,” it added.

In the US, QNB predicts growth of 2.2 percent in 2025, down from 2.6 percent in 2024 but still above the long-term average of 2.3 percent.

“The US economy is expected to remain on a strong footing as labor markets are resilient, productivity is growing rapidly with fast technology adoption, and households have robust balance sheets with the strongest financial position in decades,” QNB said.

Europe and China are expected to recover from extended periods of stagnation. Growth in the European area is forecast to rise from 0.7 percent in 2024 to 1.0 percent in 2025, supported by lower energy prices and a rebound in global manufacturing demand.

China’s growth is projected to increase from 4.8 percent to 5.0 percent, driven by policy easing and renewed economic momentum.

Emerging Asian nations, particularly ASEAN economies, are set to benefit significantly. “Stronger growth in China is likely to be a significant tailwind to emerging Asia in general and ASEAN economies in particular,” QNB said.

The region’s five largest markets, including Indonesia, Malaysia, the Philippines, Singapore, and Thailand, are forecasted to grow by 5.2 percent in 2025, up from 4.4 percent in 2024.

“All in all, we expect to see a moderate acceleration of global growth in 2025, with significant monetary easing, a resilient US economy, a cyclical recovery in Europe and China, and positive spillovers to ASEAN economies,” QNB said.