The invitation from Saudi Arabia’s Water & Electricity Company (WEC) for developers to express interest in a number of desalination and wastewater projects marks the start of the kingdom’s programme to privatise its water sector.
The invitations for the Shuqaiq and Yanbu 4 schemes are different to any major water projects that the kingdom has moved ahead with before. Firstly, they mark the kingdom’s first major standalone desalination projects to be developed under the independent water project (IWP) model, with previously private desalination schemes forming part of cogeneration projects with major power components.
More interestingly, the other difference is that the client has stated it will potentially bundle in existing state-owned assets along with the new projects. For the Yanbu 4 project, the utilities company will consider bundling in four existing cogeneration and desalination assets. For the proposed Shuqaiq IWP, the existing Shuqaiq 1 cogeneration plant may be bundled in with the new project.
Moreover, MEED reported earlier this year that SWCC was planning to privatise the existing Ras al-Khair power and water plant, which houses the largest desalination facility in the world.
Riyadh first launched plans to privatise the assets of state desalination provider Saline Water Conversion Corporation (SWCC) in 2008. However, the process stalled until 2016, when it was given fresh impetus following the launch of the Vision 2030 economic reform programme. The government is now targeting to have sold all of its brownfield assets by 2020. The recent call to the market for interest in taking on existing desalination assets is an indicator of the fresh urgency the kingdom has placed on privatising government assets, as it seeks to modernise its economy.
WEC is also seeking a similar approach for the wastewater sector, with the utility announcing it is considering bundling in the existing Jeddah airport sewage treatment plant (STP), owned by National Water Company (NWC), in with the planned Jeddah airport STP 2.
While the hard part is still to come, Riyadh’s decision to include existing assets as part of deals for important new projects shows the kingdom’s programme for rolling out privatisation across the utilities sector is finally under way.