National Water Company scraps treatment plant privatisation

18 December 2009

State firm to pay for construction of third wastewater facility

Saudi Arabia’s National Water Company (NWC) has scrapped plans to privatise the three wastewater treatment plants it is building at Al-Kharj in Riyadh.

NWC has changed its approach because Saudi Arabia’s Finance Ministry has failed to offer potential private developers a guarantee that it will step in if NWC runs into financial difficulties making its payments for using the waste-water treatment service.

Only one of the plants – a 100,000-cubic-metre-a-day (cm/d) facility – is operational. A second 100,000-cm/d plant is currently being built by local contractor Al-Khuraif Group.

NWC will prequalify construction firms for the contract to build the third plant before the end of December, according to one source at the utility.

Under NWC’s original plans, it would have sold the rights to operate all three plants to a private developer, which would have taken over the sole operational plant immediately and acquired the second when construction was completed. As a condition of the privatisation, the developer would have had to finance, build and operate a third plant with a capacity of 160,000 cm/d.

Through the privatisation, NWC hoped to benefit from a foreign developer’s technology.

“The whole point of the privatisation process was to bring in international developers,” says the developer. “But international firms want security. Without a government guarantee, the project is only likely to attract Saudi developers.”

Now, instead of selling the plants, NWC will retain ownership of the two that are in hand and pay for the construction of the third.

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