Manama invites interest in first stage of wastewater privatisation plan

13 June 2008
First contracts to develop Muharraq wastewater plant to be awarded next year.

Bahrain is to award the first contract in its wastewater privatisation scheme by early next year, with companies due to submit their expressions of interest before the end of June.

As MEED went to press, the government was due to request expressions of interest from companies to develop a sewage treatment plant at Muharraq - the first part of the wider privatisation of the country’s wastewater sector.

According to sources close to the privatisation programme, the wastewater treatment facility will have capacity of about 150,000 cubic metres a day. That will mean it is capable of serving a population of 500,000 or almost half the country’s population.

The plant will be developed on either a 20-25 year build-own-operate, or build-own-operate-transfer basis.

Following the submission of expressions of interest, which are likely to be due by the end of June, there will be a prequalification process followed by a request for proposals. An award of the concession is expected to be made by early next year.

To attract interest in the scheme, Manama is offering a low-risk contract to developer groups, which will not include the requirement to find a local partner.

The government, through the Finance Ministry, Works Ministry and the Economic Development Board, will guarantee the supply of effluent to the plant and the collection of treated water.

The tariff paid for the treated water will also rise in line with inflation throughout the lifetime of the contract. The fast-track Muharraq project is the first part of the kingdom’s wider wastewater privatisation plan, which is aimed at improving the network’s overall efficiency.

Germany’s Fichtner, HSBC and Norton Rose have been given the technical, financial and legal advisory mandates respectively.

They are formulating the privatisation strategy and implementation plan.

About 88 per cent of Bahrain’s population is served by two state-owned sewage plants, at Sitra and Toubli. However, the treated wastewater is not of a high enough standard to be used for irrigation and so is dumped in the sea.

As part of the privatisation initiative both existing plants are likely to be sold to the private sector over the coming three to seven years.jor local industrial producers of effluent, such as Aluminium Bahrain (Alba), will also be required to ensure their wastewater is treated adequately before it enters the sewage network in order to improve the efficiency of the sewage plants.

Eventually, the government may also spin off responsibility for the collection of wastewater from domestic and industrial customers into separate companies.

Other companies may also be set up to buy and distribute the treated wastewater.

The privatisation of the wastewater sector is gaining momentum in the Gulf.

Saudi Arabia and Abu Dhabi are currently busy with their own programmes to sell existing facilities and build new ones.

Governments are increasingly keen to bring in private sector participants as they see it as a way to improve efficiency and upgrade water treatment levels.

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