Riyadh launches third phase of water privatisation plan

16 May 2008
Private-public partnership to focus on effective reuse of treated water and sludge.

Saudi Arabia has launched the third phase of its water privatisation programme. The latest public-private partnership (PPP) initiative will focus on wastewater distribution networks and the sale and reuse of treated water and sludge in the kingdom.

The National Water Company (NWC) will start by appointing consultants to advise on and assist with the tendering process for the scheme. “Recently, an invitation for expressions of interest for appointing a consultant was issued and we have received an overwhelming response,” says Loay al-Musallam, chief executive officer of the NWC.

The company expects to issue a request for proposals (RFP) by 15 May, with the deadline for bids on 9 June. The winning financial consultant will lead the tendering process and act as the transaction adviser. The financial adviser will also form a consortium with technical and legal advisers that have been prequalified by NWC by subcontracting with them.

“The main objective of this assignment is to implement effective measures to increase the reuse of treated water and sludge in the kingdom and to prepare the sustainable concept for the medium and long-term reuse of treated wastewater,” says Al-Musallam.

Together, the consultants will assess the potential market for the reuse of treated water and sludge. They will be responsible for the overall management of the project and preparation of a masterplan. They will also carry out detailed financial analysis and financial modelling, as well as identifying and assessing contractual structure options, including off-take arrangements, and have responsibility for investment infrastructure and tariff structure. Finally, they will prepare tender documents and assist with the tendering process and financing of the project.

The NWC has yet to finalise the scope of the PPPs. “The advisers are expected to assist in finalising the scope and in preparing the necessary tender documents,” says Al-Musallam.

Under the scheme, private companies will build the infrastructure needed to supply customers with treated sewage effluent. They will also buy treated effluent from wastewater treatment plants, identify potential customers and sell it to them (MEED 29:3:08).

Saudi Arabia is already implementing two separate schemes as part of its water sector privatisation programme. The first will involve private companies taking over the operation and maintenance of water and wastewater networks in the kingdom’s main cities.

Patrice Fonlladosa, chief executive officer of France’s Veolia, has already signed the management contract in Riyadh, with Saudi Electricity & Water Minister Abdullah al-Hussayen. Veolia’s compatriot Suez will sign the Jeddah management contract on 20 May.

The second component of the plan involves the privatisation of wastewater treatment plants. A request for qualification (RFQ) for the Riyadh privatisation, the first in the country, has yet to be released.

“The RFQ and RFP are ready, but before release of the RFQ, we thought it fit to obtain the required statutory approvals for the implementation plan and credit support,” says Al-Musallam. “The documents have been submitted to the Supreme Economic Council and we expect to obtain the necessary approvals soon.”

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