In order to meet the growing demand for potable water in the Kingdom, towards the end of 2018 the Water & Electricity Company (WEC) signed an agreement calling for the privatisation of water production and wastewater projects, beginning with the Rabigh-3 IWP desalination project, which is expected to produce 600,000m3 per day by 2022. The project, which is roughly 150km north of Jeddah, will employ reverse osmosis to produce desalinated water.
This was followed by the signing of the final contracts for the Kingdom’s first Independent Sewage Treatment Project ( ISTP), with a consortium comprising of the UAE from the Metito, from Saudi Arabia Mowah, and Egypt Orascom Construction, from which has obtained a mandate to deliver and operate the West Dammam ISTP under a 25-year concession. The plant will have an initial capacity of 200,000m3 per day with a design that will enable expansion up to 350,000m3 per day in the future. Subsequently, a contract has been given to a consortium led by Marubeni from Japan to develop the 450,000m3 per day. Shuqaiq 3 IWP and a preferred bidder, has been chosen for the Kingdom’s second (ISTP), Jeddah Airport 2.
Together with WEC’s IWP programme, state desalination provider Saline Water Conversion Corporation (SWCC) has awarded an estimated $480 million contract for eight satellite desalination plants, which will be located in a variety of places on the Red Sea coast.
At the same time, SWCC received proposals for two large-scale desalination projects, Jubail 2 and Al-Khobar 2, which will be developed under standard Engineering, Procurement and Construction (EPC) contracts. The Jubail 2 and Al-Khobar 2 projects will have capacities of 400,000m3 per day and 600,000m3 per day respectively.
Already in 2019, contracts worth hundreds of millions of dollars have been awarded for Saudi Arabia’s very first Public-Private Partnership (PPP) water and wastewater schemes, and more awards and tenders are anticipated before the end of this year. In addition, Saudi Arabia’s desalination sector has historically been dependent on large cogeneration power and desalination plants to meet the electricity and potable water needs of its escalating population. But this is starting to change as the kingdom moves ahead with plans to decouple power and water production.
Decoupling
The Kingdom’s decision to move away from developing desalination capacity as an element of cogeneration power initiatives has been assisted by the rise of Reverse Osmosis (RO) desalination technology, which enables potable water to be produced by way of a significantly less energy intensive process compared to the traditional thermal technologies utilised throughout the Gulf.
As well as lowering fuel costs, decoupling power and water makes it possible for a great deal more flexibility across the region’s utility grids.
Wastewater
A further trend in the region’s utilities sector is the increasing level of investment in wastewater infrastructure. For the 12 months up to 1 April, $3.2 billion worth of wastewater contracts were granted, making up almost 27 % of the total spent in the region’s water sector across the year. Much like the desalination sector, Saudi Arabia accounted for the vast majority of these. Nearly $1.3 billion worth of awards were made for wastewater treatment projects in the Kingdom over the period, around 40 % of the region’s total.
Together with its ambitious Independent Water Project (IWP) programme, The Water & Electricity Company (WEC) is also pressing ahead with the Kingdom’s initial batch of PPP sewage treatment plants, known as ISTPs.
The projects are going to be developed under 25-year Sewage Treatment Agreements (STAs) with sewage capacity supplied by the National Water Company (NWC). Similar to earlier IWPP and IWP programmes, the government is providing a sovereign guarantee for the sewage treatment schemes.
Final contracts for the first venture, the Dammam ISTP, were signed in January. The $260 million plant will have an initial total capacity of 200,000m3 per day, which can be expanded to 350,000m3 whenever required.
The Future
As the population continues to expand and economic diversification programmes place escalating pressure on water supplies and wastewater facilities, the industry will continue to bring in considerable investment.
With a projected $101 billion worth of projects at different phases of the planning and design stage, the region’s water industry will continue to be a main focus with developers, lenders and contractors in 2019.
On the wider stage, within the GCC, requirement for water is set to increase by approximately 62% by 2025. In a region characterised by an absence of rivers, lakes and rainfall, the swift continuing development of cities, plus the needs of accelerating populations, are driving a surge in demand for water supply and wastewater treatment capacity. Demand for growth at this level requires sizeable capital investment in new capacity. This sort of investment is taking place. About $80 billion worth of water and wastewater projects are currently planned or underway throughout the GCC.
The growing trend of decoupling water production from electricity generation is a crucial step in obtaining water sustainability, as it permits greater overall flexibility in supply and lowers capital costs. Nevertheless, the very best way to ensure a sufficient sustainable water supply is to change the manner in which water is consumed in the region, and this must come through education and the ongoing implementation of new technologies.