Sharjah creating positive environment for further industrial growth

 

Concentrated in two free zones and 19 industrial zones, Sharjah’s industry and manufacturing sector benefits from the emirate’s low cost base, developed infrastructure and connectivity, and proximity to facilities in Dubai. As a result, Sharjah is one of the most important industrial and manufacturing centres of the UAE and the wider GCC region.

The contribution of the oil and gas sector to Sharjah’s diversified economy is relatively small compared to the rest of the UAE, and is gradually declining in the lower oil price environment. In terms of meeting its own needs, the emirate is working to secure more reliable energy supplies, while expanding and modernising its electricity generation and water desalination capacities.

Major Contributor

Manufacturing is the largest sector of the economy, contributing Dh15.7bn ($4.3bn) to GDP in 2017, according to Sharjah’s Department of Statistics and Community Development (DSCD). This equalled 16.9% of the emirate’s total GDP that year and 18.1% of non-oil GDP. Manufacturing may become even more important in the years ahead, with the government estimating that it will account for around 25% of GDP by 2025.

The contribution of the manufacturing sector to total UAE GDP has been fairly constant in recent years, remaining at around 11-12%. In 2016 the sector accounted for 9.2% of GDP and 11.1% of non-oil GDP, according to the latest available figures from the UAE’s Federal Competitiveness and Statistics Authority (FCSA). In real terms, however, sectoral GDP increased by roughly 6% in 2016, which was well ahead of the overall GDP growth rate of 3% and non-oil GDP expansion of 2.7%. Based on DSCD and FCSA figures for 2016, Sharjah manufacturing accounted for 12.8% of the UAE’s entire Dh118.4bn ($32.2bn) manufacturing sector.

The largest industrial segment in Sharjah based on the number of active licensed factories as of 2016 is metal products, which had 309 out of the total 1657 industrial licences. This was followed by “other manufacturing” operations, which had 187 licences; non-metallic mineral products with 183; and plastic products with 118 licences. Metal products also led the way in terms of investment volume, attracting around Dh1.3bn ($353.9m), followed by non-metallic mineral products with Dh1.1bn ($299.4m) and wood products with Dh590m ($160.6m).

Investment

The federal government is increasingly prioritising the development of industry as part of broader efforts to lessen the country’s economic dependence on hydrocarbons. In March 2017 Sultan bin Saeed Al Mansoori, the minister of economy of the UAE, announced that the federation was seeking to attract $75bn of investment into industrial manufacturing by 2025. To help bolster such investment inflows, the Ministry of Economy has announced plans to amend the Commercial Companies Law so that foreign companies are allowed to wholly own onshore companies in the UAE. Under the existing legislation, there is a 49% cap on foreign ownership of local companies. Mansoori said that work on drafting such changes to the law were nearly complete and would come into effect in 2018.

Despite these remaining constraints, foreign investment in the sector has continued to rise for over a decade. According to the FCSA, manufacturing received some Dh45.6bn ($12.4bn) worth of foreign investment in 2016, equivalent to 4.4% of total foreign investment for the year. This was a moderate increase over the Dh44.7bn ($12.2bn) invested in 2015 and the Dh41.7bn ($11.4bn) of 2014. However, these figures are significantly higher than the investment levels of 2007, which amounted to Dh17.3bn ($4.7bn), representing 3.3% of total foreign investment at that time. The steady increase of foreign investment signifies growing international interest in the UAE as a manufacturing destination.

Total investment in Sharjah’s manufacturing activities – from both domestic and foreign investors – totalled Dh6.4bn ($1.7bn) in 2016, according to the DSCD. The majority of this came from UAE investors with Dh4.9bn ($1.3bn), while Dh652.3m ($177.6m) was sourced from other GCC nations and Dh810.5m ($220.6m) originated outside of the region.

Free Zones

Sharjah is home to two industry-focused free zones: the Hamriyah Free Zone (HFZ) and the Sharjah Airport International Free Zone (SAIF Zone). The two are under the same state-backed management and together account for a large proportion of industrial activity in the emirate.

Such zones have a number of unique advantages, including the allowance of 100% foreign ownership; full repatriation of profits; and exemptions from taxes, such as the newly introduced value-added tax (VAT), on the condition that commercial activity is primarily export-oriented.

The Sharjah authorities are in the process of developing other non-industrial free zones, with plans to have areas that will specialise in publishing, media, health, and research and development. “The building of new and more specialised free zones will add value and positively effect exports,” Abdelaziz Mohamed Shattaf, director at the Sharjah Exports Development Centre – part of Sharjah Chamber of Commerce and Industry – told OBG. “It will give us the opportunity to develop new products and increase the percentage of exports, which is currently around 40% of Sharjah’s total manufacturing output.”

Hamriyah Free Zone

HFZ is the largest industrial free zone by area in the emirate and one of the largest in the UAE. It was launched in 1998 and built in two phases. The first phase, which has since been completely filled, covered some 15 sq km. The second phase spanned 8 sq km and was approximately 60% occupied as of early 2018. HFZ’s main infrastructure facilities include a port with a draught of 14 metres, a 7-metre inner harbour and an 80-MW power station.

Activity in HFZ is dominated by industrial and manufacturing businesses, though some other sectors are present as well. Oil and gas, and steel-related businesses are the industries that are most heavily represented within the zone. There are companies of all sizes working in HFZ, ranging from small operations to large manufacturing and heavy industrial facilities, with a fairly even split between the two.

Although the first two phases have concluded, there are new expansions under way at HFZ. For example, a third phase that aims to add 7 sq km of space is in the pipeline. According to Rakesh Ranjan, chief development officer of the Hamriyah Free Zone Authority, there are hopes that this expansion will be fully approved by the end of 2018. “The area for the third phase has been identified and we are currently in the process of building the infrastructure and obtaining the necessary approvals,” Ranjan told OBG.

Also of note, HFZ launched the Sharjah Food Park in March 2017, a 1-sq-km zone specialising in food production, processing and packing. The park is separate from other parts of HFZ to prevent food contamination. The park will consist of 136 warehouses, 68 of which were already complete by early 2018, with the remainder scheduled to be ready for tenants by the end of April 2018. More than 100 companies had already commenced operations in the park as of February 2018.

The zone’s authorities have embarked upon other initiatives to improve HFZ’s offerings. For instance, a new department was created to provide a range of services for firms in the zone, including coordination with the municipality on issues such as product and layout approaches, laboratory and testing services, and halal certification on behalf of businesses. Expanding the capacity of Hamriyah Logistics Village – the logistics and distribution centre for companies in HFZ – is another priority for the authorities. As of early 2018, the logistics hub was around 80% full.

The construction of new worker accommodation facilities within HFZ in 2017 increased its housing capacity by 6000 labourers, and in the third quarter of the year a new road connecting the zone to the Sheikh Mohamed bin Zayed Road – the main link between Sharjah and Dubai – was also completed. The zone’s authorities have further plans to develop a shopping mall inside HFZ.

Airport Zone

The SAIF Zone, located adjacent to Sharjah International Airport, hosts industrial activity, though the sector represents a minority of operations in the zone. Most companies based in the SAIF Zone are active in the spheres of trade or services, and what manufacturing does take place there is generally on the lighter side – with a focus on fast-moving consumer goods – in contrast to the presence of heavy industries, such as petroleum- and steel-related manufacturing, in HFZ.

The zone was founded in 1995 and now hosts more than 6500 companies, up from just over 5000 in 2010. Its facilities include an industrial park that has a minimum plot size of 2500 sq metres, pre-built warehouses ranging between 103 sq metres and 450 sq metres in size, and an accommodation complex that can house more than 14,500 workers.

Onshore Zones

In addition to the offshore free zones, Sharjah hosts 19 onshore industrial zones. A major example is Emirates Industrial City, a 7.7-sqkm zone for light and medium industry launched in 2005. Some 75% of this zone had been leased by November 2017, according to local media, with authorities aiming for full occupancy by mid-2018.

The 1.3-sq-km Al Sajaa Industrial Oasis, another such zone, is located on Emirates Road, one of the two main highways connecting Sharjah with the rest of the country. This zone is still under development, led by state-backed investment body Sharjah Asset Management. Upon completion of its four construction phases, it will contain 353 plots for light and medium industry, as well as other activities. The first phase will comprise 34 plots for light industry, seven for medium industry, and 14 for retail activities and offices. In accordance with its onshore status, Emirati and GCC investors will be able to secure freehold plots in the zone, while other investors will have usufruct rights for 100 years.

Relocation Process

Industrial operations are increasingly moving out of Sharjah City, as central industrial zones are progressively being redeveloped into commercial and residential areas. As a result of this trend, industrial businesses are relocating to zones outside the urban area and closer to new inter-emirate highways. This widespread shift is being encouraged by the government’s objective of rezoning and redeveloping the city centre to improve commercial and residential areas.

However, some stakeholders have said this trend has had negative consequences for businesses. “The development of infrastructure and utilities in new industrial areas has led to higher prices for this type of space, with companies paying slightly more than they did in the city centre,” Giri Dharmarajan, managing director at Multi-Tech Engineering Industries, told OBG. Furthermore, Dharmarajan found that such locations were generally less convenient for company staff and workers. “There are few public transport connections from a number of industrial zones to the city centre, meaning that workers have to take taxis or firms must provide them with some form of transportation.”

Additionally, the relocation process itself can be problematic, as not all industrial free zones have the required infrastructure in place for moving companies. “The relocation of a capital-intensive manufacturing facility can be challenging in the UAE, as each industrial free zone is unique in its advantages, and not all have the necessary infrastructure for a business. A firm may require lots of power, large warehouses, manpower accommodation or port access, which not all free zones have. Thus, entrepreneurs must select and negotiate for services with the free zone,” Suneel Aggarwal, CEO of local manufacturer GRP Industries, told OBG. “Additionally, the high capital expenditure in starting a new factory means that entrepreneurs want security of tenure with long-term options and transparent fixed costs. The SAIF Zone, for example, is offering revised rental leases every 10 years. This uncertainty adds another element of investor risk.”

Growing Demand

Despite these challenges, a range of dynamics taking place in the local economy and beyond appear set to boost demand for local industrial products over the medium and long term. In particular, large-scale construction and real estate projects will require a substantial amount of manufactured materials for years to come.

“Sharjah benefits from strong existing industrial infrastructure, including access to logistics and a strong and diverse labour pool,” Lalu Samuel, chairman at Kingston Holdings, a manufacturer of electrical goods based in the SAIF Zone, told OBG. “This connectivity and access to quality infrastructure will help local industries benefit from upcoming projects in Sharjah, including new real estate developments, which have the potential to strengthen business for support services and products.”

Ongoing local real estate developments, such as the 2.2-sq-km Aljada urban housing initiative, as well as the expansion of logistics capabilities, are bolstering the manufacturing sector by increasing the demand for a variety of quality construction materials, including electricity cables. “The local market for cables continues to rely primarily on residential and commercial construction projects, with both medium-sized developments and major infrastructure and utilities programmes driving demand,” Salim Duybassi, general manager for sales and marketing at National Cables Industry, told OBG.

Similar dynamics are leading to more work across an array of other segments as well. “The market for industrial manufacturers remains highly competitive and fairly price-sensitive, but many larger-scale works – including transportation and infrastructure projects, hotels and mixed-use developments – are increasingly looking for higher-quality products, providing opportunities for a number of new local industries,” Marwan Orabi, general manager at Metallic Equipment, told OBG.

Investment Environment

Industrial activity in the emirate benefits from an attractive business environment, including relatively low operational costs. “Costs in Sharjah are around 25% to 30% lower than in Dubai, and it is only 20 minutes away,” Ranjan told OBG. “Although the UAE has faced some economic challenges, these could actually improve investment flows into Sharjah as firms seek to lower their costs by relocating here.”

Expenses

Costs are sometimes lower in more northerly emirates, but these areas tend to not be in competition with Sharjah’s free zones, mainly because they do not offer proximity to Dubai. Ultimately, the relative ease of establishing operations in Sharjah’s free zones, combined with the lower costs that the emirate offers – including considerably cheaper housing costs for employees than what is available in Dubai – continues to draw in businesses. “All the free zones offer similar advantages, so competition is based mainly around the cost of doing business,” Thaddeus Best, analyst at sovereign ratings agency Moody’s, told OBG.

As housing is one of the emirate’s main advantages, the development of more affordable housing in the Dubai real estate market could challenge Sharjah’s success in attracting industrial investment. This is likely to accelerate as Dubai seeks to step up its industrial and manufacturing activity. In June 2016 the Jebel Ali Free Zone Authority and Dubai Industrial Park of the Dubai government launched the 2030 Dubai Industrial Strategy. Among other goals, this aims to transform Dubai into an international manufacturing centre, resulting in more intense competition for Sharjah.

Room for Improvement

While noting such cost and location advantages, there are areas that could be improved. For example, even though Dubai’s port facilities are relatively near, transport between the Dubai and Sharjah free zones still involve large amounts of paperwork and high deposit requirements, and aside from the red tape, traffic congestion on these routes can be an issue. In addition, some firms have found that obtaining approvals for expansions takes time, a concern that could be minimised by the authorities streamlining their administrative processes.

Sharjah hosts ports of its own – such as Port Khalid, the main facility on the west coast, and Khorfakkan Port outside of the Strait of Hormuz on the east coast – which shorten journey times and allow for lower insurance costs. However, operators at these ports generally offer fewer international shipping routes compared to ports at neighbouring emirates.

Securing sufficient supplies of electricity could be another setback for heavy industrial operations in Sharjah, including within free zones and industrial areas, though some have said that the issues relating to electricity connections are improving. “The situation has improved since the Sharjah Electricity and Water Authority (SEWA) put in place a structured connection fee two years ago, and also as a result of Sharjah obtaining more electricity from Abu Dhabi,” George Berbari, CEO of DC Pro Engineering, told OBG.

In October 2017 Sharjah Asset Management and SEWA signed an agreement for SEWA to provide electricity, water and gas to companies operating in free zones, which has improved the provision of utilities there. Moves to expand the emirate’s power generation capacity and the availability of gas, which is the main feedstock for local power plants, should further improve access to power (see analysis).

More incentives could also foster the development of local industry and manufacturing. “Although Sharjah continues to have a strong manufacturing and industrial base, further improvements could be implemented by the government to facilitate visa processing, import procedures and support offered to local businesses,” Samer Saleem Sayegh, managing director and partner at National Paints, told OBG. “This would enable companies to expand and would help keep the local business environment competitive as other industrial zones are launched across the Northern Emirates.”

The government of Ras Al Khaimah, for example, offers sponsorship and multiple forms of support for foreign businesses looking to establish operations there. Ahmed Ali Nalwala, managing director at Anchor Allied Factory, told OBG, “At the moment Sharjah mostly competes on cost, and without such incentives the emirate will be forced to lower costs even further in order to remain competitive.”

While regulatory changes have threatened to push up costs, reforms have largely been transparent thus far, which has helped reduce their impact on firms. “Regulations for local businesses are changing, particularly in terms of environmental efficiency, fire safety standards and securing a trade licence. Regulations are easily accessible online as the majority of government departments offer digital services, which allows firms to understand the impacts of changes and speeds up processes,” Orabi said.

Another recent development affecting the local business environment is the introduction of the 5% VAT, effective as of January 1, 2018, on the sale of goods in the emirate. Although the tax does not apply in free zones, companies importing goods from the onshore economy into free zones are required to pay VAT. Nevertheless, it is unlikely that the VAT will have much of a direct effect on sector activity. The largest impact will most likely be in terms of living costs for employees, thus wages may have to increase slightly, but for most businesses this would be a minor issue.

Hydrocarbons Production

The contribution of hydrocarbons – which includes the local mining and quarrying industry, the production of crude oil and national gas, and supporting economic activities – to GDP stood at Dh6.3bn ($1.7bn) in 2017, according to the DSCD, which represented 6.8% of the emirate’s total GDP for the year.

Hydrocarbons production rose from Dh6.5bn ($1.8bn) in 2010 to a peak of Dh10.4bn ($2.8bn) in 2013, which was equivalent to 13.2% of GDP that year. However, it has fallen steadily in the years since then, both in absolute terms and as a percentage of GDP. The recent downwards trend in the economic contribution of hydrocarbons is mainly due to the declining international oil prices as well as shrinking production volumes in the emirate. Sharjah produced approximately 6m barrels of oil equivalent worth of energy in 2016, a significant decrease from the 17.2m barrels of oil equivalent produced in 2008, according to figures from ratings agency Moody’s.

The international oil price fell from an average of $111.60 per barrel of Brent crude in 2012 to $52.40 per barrel in 2015 and $43.55 in 2016, pushing down hydrocarbons revenues in the emirate. Oil prices recovered somewhat in 2017, picking up to reach $54.30 per barrel, which raised the sector’s contribution to GDP for the year. In March 2018 the price of oil stood higher still, at around $65 per barrel.

The outlook for the sector has notably improved as oil prices have begun to bounce back. “Companies in the oil and gas sector worldwide overreacted to the fall in global oil prices by excessively cutting costs, which led to the loss of talented staff,” Surendranath Dhanekula, managing director at Trans Asia Pipeline, told OBG. “However, the outlook for the industry now looks very positive, with new projects being launched across the region. The UAE remains one of the safest options for external investment, partly thanks to its high degree of political stability and transparent business environment.”

Energy Operators

The Sharjah National Oil Corporation (SNOC), the emirate’s only state-owned oil and gas company, was founded in 2010 when all of the government’s existing oil and gas operations were merged into a single entity. In terms of production, SNOC operates the Sajaa, Kahaif and Moveyeid gas condensate fields. Sajaa is the largest of these, producing around 50,000 barrels of condensates per day. BP and Petrofac previously held substantial interests in the Sajaa field, but SNOC acquired these stakes in 2013 from BP and in 2015 from Petrobras.

All three fields are located onshore, about 30 km inland from the emirate’s coast. Regarding support infrastructure, SNOC also operates a gas-processing facility named after the Sajaa field, as well as export terminals for condensate and liquid petroleum gas.

The other major players in the local hydrocarbons sector are the privately owned Sharjah-headquartered firms Crescent Petroleum and Dana Gas, with Crescent being the largest individual shareholder in the latter of these, having a stake of 19.1%.

Crescent describes itself as the largest and also the oldest private upstream hydrocarbons company in the region, having been founded in 1971. The history of the emirate’s hydrocarbons sector effectively dates back to the company’s discovery of the offshore Mubarek Field in 1972. At the moment, Crescent is exploring the offshore Sir Abu Nu’Ayr concession and, under a farm-out agreement made with Russian oil company Rosneft in 2010, the onshore Sharjah concession. The company is part of the family-owned conglomerate Crescent Group, which also oversees a non-oil and gas subsidiary, Crescent Enterprises. In addition to its operations in Sharjah, Crescent Petroleum is active in the Kurdistan region of Iraq and has interests in Egypt.

Dana Gas, meanwhile, was established in 2005, at which point it became the first oil and gas company in the region to trade publicly on a stock exchange, listing on the Abu Dhabi Securities Exchange. The firm operates the Zora gas field, which is part of the Sharjah Western Offshore Concession. The field straddles the coastal waters of both Sharjah and Ajman, approximately 35 km off the emirate’s coast.

Production at Zora gas field, which is the most recent hydrocarbons discovery in the emirate, began in February 2016. At that time Dana Gas predicted it would achieve a flow rate of 6650 barrels of oil equivalent per day. Output from the Zora field has fallen below these expectations, however, dropping from 1650 barrels of oil equivalent a day in the second quarter of 2017 to 1550 barrels the following quarter. In November 2017 local media reported that the firm was considering the feasibility of a field development plan and intervention programme it had devised to address the drop in output.

Dana Gas also encountered a financial hurdle the month prior in October 2017, when the company announced that it could not redeem its $700m sukuk (Islamic bonds) under the original terms because of legal advice it had received stating that the instrument was no longer sharia-compliant, and thus unlawful (see Financial Services chapter).

Utilities

The GDP of the emirate’s utility sector – which comprises electricity, gas, water and waste management – totalled around Dh2.9bn ($789.4m) in 2017, equivalent to 3.1% of the emirate’s total GDP for the year and up from Dh2.8bn ($762.2m) in 2016, according to data from the DSCD.

State-owned SEWA is responsible for the production, distribution and sale of electricity and water in the emirate. In the past the authorities were obliged to provide substantial financial support to SEWA, but this is no longer the case. SEWA has been profitable since 2015, largely thanks to the gas and electricity provisioning deals that have reduced SEWA’s need to burn expensive fuel oil to generate electricity (see analysis), as well as the post-2014 decline in the price of oil and gas. The authority aims to further improve energy efficiency and sustainability as part of its Vision 2020 plan, launched in 2016.

Indeed, efficiency is increasingly important, yet there are persisting challenges. “Although demand for energy-efficient products, appliances and equipment is growing in the UAE, the market remains mostly price focused, and there needs to be more awareness of the advantages these products offer to consumers,” Abdul Karim Al Saleh, CEO of SKM Air Conditioning, told OBG.

In addition to prioritising energy efficiency, SEWA has considerably stepped up its revenue collection efforts and is now a net contributor to state revenues. Planned investments to bolster efficiency at SEWA’s generation facilities, including a major expansion at one of its power stations, should further increase its financial profitability in the coming years.

Electricity

As of the end of 2016, SEWA had an installed electricity generation capacity of 2838 MW, of which 2124 MW was available at the time, according to the DSCD. Approximately 2372 MW of the installed capacity is provided by gas turbines, 432 MW by steam turbines and 33 MW by diesel units. The utility operates power stations at six locations, the largest being the Al Wasit power station with a capacity of 1182 MW, or around 45.8% of total installed capacity. The Al Layyah power station is second largest with a capacity of 867 MW, followed by the Hamriyah power station with 527 MW. All three are powered by gas-turbine units.

SEWA produced 13.3bn KWh of electricity in 2016, up from 12.3bn KWh the previous year and 11.6bn KWh in 2014, according to the DSCD. In 2016 approximately 12.8bn KWh of the total generated was marked for distribution, while 10.9bn KWh was sold to customers – up from 10.8bn KWh in 2015 and 9.2bn KWh in 2012. SEWA’s installed power generation capacity is not sufficient to meet the emirate’s rising consumption needs, and as a result the authority buys additional supply from other emirates, with the bulk coming from Abu Dhabi. The Abu Dhabi Water and Electricity Authority (ADWEA) supplied 6719 GWh of electricity to Sharjah in 2016, slightly down from 6852 GWh in 2015.

However, SEWA’s generation capacity is set to rise, with the provider aiming to reach energy self-sufficiency by 2021. This will be achieved through a three-phase expansion of the Hamriyah power plant that envisions adding two new turbines to eventually raise capacity to 1500 MW and boost the plant’s desalinated water production capacity to 140m gallons per day. The first phase, which is due to be completed in 2019, will convert the plant from an open cycle to a combined cycle with gas and steam turbines to boost capacity by 750 MW. The second and third phases are scheduled to come on-stream in 2020 and 2021, respectively.

In December 2017 local media reported that SEWA was considering executing the Hamriyah power plant expansion as an independent power project under a build-operate-transfer contract, and was in negotiations with a consortium including GE and Japan’s Sumitomo about the potential deal. The state-owned entity is reported to be considering other public-private partnerships as well, as the use of such models for new power and water plants are becoming increasingly common across the wider region.

In May 2017 SEWA secured further gas supplies to support its capacity expansions, signing a deal with SNOC and its partner Uniper, a liquefied natural gas (LNG) provider, for the provision of gas to three of SEWA’s power stations from 2019 onwards. This follows SNOC signing an agreement with Uniper in 2016 to deliver up to 4m tonnes of LNG per year, transported via a floating storage regasification unit that is planned to be installed at Hamriyah in 2019.

Renewables

The local authorities have so far appeared ambivalent about the development of renewable energy in Sharjah. For example, Rashid Alleem, chairman of SEWA, told local media in December 2017 that the combination of sand and humidity in the emirate made it a problematic location for solar panels and that further research was needed to overcome the issues. Alleem noted that many providers of concentrated solar power went bankrupt, and suggested that the best way to utilise renewable energy would be for consumers to launch their own solar mini-grids.

Others, however, say that Sharjah has promising resources and characteristics for developing renewable energy. “There are large areas of the emirate that could house photovoltaic power stations and there is also room on the east coast for the possible development of wind farms,” Berbari told OBG.

Although there is only a limited amount of activity in the renewables segment at the moment, this is likely to pick up in the medium term given the revised national renewables targets that were outlined in the UAE Energy Strategy 2050. Unveiled in January 2017, the programme aims to have 44% of the UAE’s total energy come from renewable sources by 2050. This target is to be supported by $163bn worth of investments in renewable projects.

There has also been progress in the emirate with the use of district cooling, where pipes chill water, steam or hot water from a central power plant to a building for use in air conditioning or heating. The process has already been implemented in some real estate projects under development.

Water

SEWA produced 37.7bn gallons of desalinated water in 2016, up from 36.3bn in 2015. Approximately 32.9bn gallons of the 2016 total were distributed. As with electricity, Sharjah imports water from other emirates, sourcing 4.9bn gallons from ADWEA in 2016, a sizeable increase from the 3.4bn gallons that was imported in 2015. However, Sharjah’s utilities provider is working to expand its capacity here too. In July 2017 SEWA awarded a build-operate-transfer contract to Emirati company Alpha Utilities for a new reverse-osmosis desalination plant to be built in Kalba on the eastern coast. This new plant will eventually have the capacity to produce 2.2m gallons per day.

Additionally, SEWA has plans to upgrade its Hamriyah reverse-osmosis plant, which will raise its capacity from 17m gallons per day to 20m gallons per day. In an attempt to reduce unnecessary loss of water, SEWA aims to replace its pipe network, which spans more than 3000 km. The provider expects these upgrades to take three to five years to complete.

Outlook

Industry is set to remain the backbone of Sharjah’s economy, and recent oil price rises and their knock-on effects on the national and regional economy are likely to boost demand for manufactured goods, while plans to relax ownership restrictions should open the sector to further investment.

Meanwhile, moves to secure gas supplies, both via new pipeline deals and in the form of LNG, will help to support SEWA’s financial position and improve the availability of electricity and gas for industry.

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