Waste management firm Averda has big plans for the Middle East's recycling industry
Oil-rich Abu Dhabi hit the headlines in November as the city’s annual Formula One circus rolled into town. For one weekend only, the emirate’s Yas Island track morphed into a media spectacle as drivers, celebrities and royalty jostled for the spotlight that trails the world’s richest sport. Less glitzy, and significantly less reported, was the rubbish that accompanied the Grand Prix. In just three days, fans churned out 800 tonnes of discarded drink cans, paper plates and ripped-up leaflets; enough to fill a football pitch with a 6 metre-high pile of trash.
For Malek Sukkar, CEO of Lebanon-based waste management firm Averda, it is the rubbish rather than the racing that raises his pulse. The contract for the Grand Prix clean-up is part of a slew of lucrative wins in the company’s portfolio, and a sign the Gulf’s big-talking green policies are translating into hard cash for local firms.
“We think we’re going to be a billion-dollar company by 2015,” Sukkar says, in an interview in the UAE capital where the company has offices.
“We’re very comfortably on our way. We’ve gone from being a single country family-managed business to being a real corporation.”
As the petrol station of the world, the oil-exporting GCC and green policies may appear to be unlikely bedfellows. But the Gulf states have led from the front in recent years with ambitious plans to cut their gas-guzzling ways, pouring money into clean energy projects.
Abu Dhabi was first out of the gate, vowing to generate seven percent of its power from renewable sources such as solar and wind energy by 2020. Kuwait, OPEC’s fifth biggest oil producer, raised the bar in October by promising to wean its population away from state-subsidised power plants and generate ten percent of its electricity from sustainable sources by 2020.
For green companies, then, the region is offering fertile ground for growth and Averda has been among the firms to benefit. The family-owned business has netted contracts to clean beaches in Saudi Arabia, while in Abu Dhabi a trio of its boats scoop debris from the emirate’s coastline. In Beirut, the firm played a key role in the post-war clean-up after a 34-day battle with Israel in 2006 devastated the city’s infrastructure. The five-year contract, worth some $30m year-on-year, saw Averda face one of its toughest challenges yet.
“It took us a very long time to take the scars away,” Sukkar admits. “When you take over [a city’s contract], you wouldn’t expect to see that level of massacre.
“I would say you could tell the difference within a month and it took about six months to a year to complete. We knew it was going to be very difficult and very challenging.”
But big-spending state contracts aren’t, alone, enough to commercialise the waste management industry. For that, you need regulation. While the Gulf states may talk a good game on green policies, little of this has trickled down into solid legislation. Unlike those in Europe, firms aren’t forced to price the cost of recycling into their balance sheets and there are few perks to sweeten the cost of ‘greening’ their business. As a result, waste is still largely seen by corporates as an expensive problem rather than a potential resource.
“Regulation tends to offset cost,” says Sukkar. “When regulation says you have to do something, it doesn’t matter how much it costs. We don’t have that here so every [recycling] step has to make sense financially.”
In the UK, for example, electronic goods retailers must fund a portion of the cost of recycling products such as televisions and DVD players. Businesses often factor this into their price tags, passing the pinch on to the consumer.
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