Alkhorayef confirms $2bn Saudi water pipeline award

18 September 2023
The project will extend 150 kilometres and transmit 500,000 cubic metres of water a day

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A consortium including the local Alkhorayef Water & Power Technologies Company (AWTP) has confirmed winning a contract worth SR7.78bn ($2bn) to develop and operate the first independent water transmission pipeline (IWTP) project in Saudi Arabia.

The Rayis-Rabigh IWTP project will have a length of 150 kilometres and transmit 500,000 cubic metres a day (cm/d) of drinking water between the two municipalities.

Alkhorayef said in a bourse filing that the construction period of the project will run for 30 months, after which commercial operations will kick off by the second quarter of 2026. 

The duration of the build-operate-transfer (BOT) contract is 450 months, inclusive of the construction period.

MEED earlier reported that the team offered a levelised water transmission cost of SR1.25678 a cubic metre for the contract.

Saudi Water Partnership Company (SWPC) previously announced signing the project agreements with the winning developer team.

Saudi Minister of Environment, Water and Agriculture and SWPC chairman Abdulrahman al-Fadli signed the project agreements with the developer consortium last week.

Alkhorayef said it "will now work with the relevant stakeholders to reach the project’s financial closure".

In December 2021, MEED reported that 31 companies, including 14 Saudi companies, had expressed interest in the project.

The request for proposals (RFP) was issued in August 2022.

In March, SWPC said it received bids from three consortiums for the project.

  • Nesma Company (local) / Ajlan & Bros (local) / Mutlaq al-Ghowairi Company (local) / Buhur for Investment Company (local)
  • Cobra Instalaciones y Servicios (Spain) / Alkhorayef Water & Power Technologies (local) / Orascom Construction (local)
  • Vision International Investment Company (local) / Abu Dhabi National Energy Company (Taqa – UAE) /  Gulf Investment Corporation (Kuwait)
Initial plans

The 150km IWTP scheme was initially part of a longer planned project that extends from Yanbu.

However, the 39km segment of the initial project, running from Yanbu to Rayis, has been integrated into the $826m Yanbu 4 independent water producer (IWP) project, which was awarded in 2020 to a team led by France’s Engie.

The Rayis-Rabigh scheme is one of four projects comprising the initial batch of the kingdom’s IWTP programme.

Transmission agreement

The project companies implementing these planned projects will provide the entire transmission capacity to SWPC under a 35-year water transmission agreement (WTA).

SWPC’s obligations under the WTA will be guaranteed by a credit support agreement entered into by the Finance Ministry on behalf of the Saudi government.

The transaction advisory team for the first four IWTP projects comprises India’s Synergy Consulting as financial adviser and the local Amer al-Amr and Germany’s Fichtner Consulting as legal and technical advisers, respectively.

The projects align with the kingdom’s National Water Strategy 2030, which aims to reduce the water demand-supply gap and ensure desalinated water accounts for 90 per cent of the national urban supply to reduce reliance on non-renewable ground sources.

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