Abu Dhabi has changed the senior management of some of its most strategic companies as the sheikhdom adjusts to a tougher economic environment and with government reassessing its previous plans.
Since May, senior management changes have taken place at several of the emirate?s corporations which include Abu Dhabi Investment Authority and Mubadala, Abu Dhabi National Oil Company (ADNOC), energy company?Taqa?and Tabreed, a district cooling company.
Sheikh Khalifa bin Zayed Al Nahyan, president of the United Arab Emirates and ruler of Abu Dhabi, has also reshuffled the Supreme Petroleum Council, a body charged with managing the country?s precious oil resources.
The emirate, home to about 90 per cent of the UAE?s oil, is preparing for a new round of economic uncertainty after property prices in the emirate fell and projects were delayed. Despite its oil wealth, some of the companies in which the government has stakes have been rattled by debt restructuring.
?There?s a drive to bring in new blood,? says one federal government official. ?Change is always useful.?
‘Emiratisation’, the process of increasing the number of UAE nationals in the workplace, has also returned to the forefront of domestic policy. The UAE, which has avoided the political unrest sweeping the Middle East, is focused on increasing the number of its nationals at work to stave off unemployment. Bulk of the unrest in the Middle East can be attributed to youth unemployment and lack of economic opportunities.
Abu Dhabi began to witness changes from December last year when five members of the ruling family were removed from the emirate?s executive council which is the government?s main advisory group. Sheikh Hazza bin Zayed Al Nahyan, the ruler?s half-brother, was for the first time appointed to the council as vice-chairman.
Since then, the young sheikh has began an informal process of reviewing the emirate?s domestic entities to assess the relevance of certain projects and investments. His scope of operation does not extend to these companies but affects departments such as that of transport and municipality.
?There is also a natural move to more conservative leadership when economic times are less rosy,? said another Abu Dhabi government official on condition of anonymity. ?There is no co-ordinated strategy to replace senior management positions but as reviews are done on particular businesses, new challenges emerge which sometimes result in the need for a change in leadership,? the source added.
As part of the recent changes, Ahmed al-Sayegh, former chairman of?Aldar, the developer that was forced to accept a $5.2bn government bail-out, was replaced on the board of Mubadala.
One of the new men on the Mubadala board is Abdul Hamid Mohammed Saeed, managing director of First Gulf Bank, of which Sheikh Hazza is the chairman. Mubadala holds stakes in companies including Carlyle Group and?General Electric.
Among the changes, one of the most important is the restructuring of the Supreme Petroleum Council, where the head of Adnoc will no longer be the secretary-general. In the coming years, the group will be negotiating the renewal of its onshore oil concession, one of the largest in the world, which pumps more than 1m of barrels of oil per day.
The UAE made headlines this year after petrol stations in the northern emirates ran out of petrol, despite the large oil resources of Abu Dhabi. Domestic consumption will become a priority for Adnoc, according to an Abu Dhabi government official.
Despite high oil prices, Abu Dhabi was unable to meet the economic growth forecast included in its long-term 2030 plan after the global economic crisis curbed lending and companies struggled to repay debt.
Like its neighbour Dubai, Abu Dhabi?s property sector is suffering, with one developer estimating that prices may continue to decline for another 12-18 months. Abu Dhabi-based companies linked to property, such as Aldar, Tabreed and Al Jaber Group were forced to either restructure debt or receive government funds for survival.
?We are going through a transitory period, not just in Dubai but in Abu Dhabi too,? said a banker in Abu Dhabi. ?It shows you where we are in the cycle; Abu Dhabi is about eight to 12 months behind Dubai.?
As Dubai?s debt problems moved into the public eye in 2009, the emirate made a number of senior management changes, including replacing the head of the department of finance, the governor of the Dubai International Financial Centre and the chairman of the board of Dubai World, one of the emirate?s main holding companies that was forced to restructure about $25bn of debt.
THE IRISH WAY
Abu Dhabi has chosen Ireland as a guide for its 2030 Economic Vision, a sweeping plan to diversify the emirate’s economy and reduce its reliance on oil revenues.
In some regard, Ireland in the 1950s and 1960s faced challenges that are parallel to today’s Abu Dhabi. Its economy was almost wholly agrarian, (Abu Dhabi’s oil-dominated) and was highly dependent on exports to the UK.
Despite Ireland’s troubles, its development model, preened carefully over the decades with government support, is one Abu Dhabi and other places in the Gulf are examining closely as they try to diversify and grow their own economies.
Sources: FT, The National