Riyadh is planning to reduce the amount of water it is losing from its network from up to 35 per cent to just 7 per cent over the next 20 years. The efficiency drive could also involve Riyadh raising water tariffs sooner than previously expected.
The kingdom loses 1.1 million cubic metres a day (cm/d) of water, the equivalent of the daily drinking water supply to 15 cities.
“Recovering these losses looks very economical,” said Loay al-Musallam, deputy minister for planning & development at the Water & Electricity Ministry, speaking on the sidelines of MEED’s Power and Water conference in Abu Dhabi on 17 March. “We will save more than $11bn over the next 20 years.”
Physical losses account for 25 per cent of the total water lost. This, coupled with commercial losses caused by inefficient metering, means the figure may be as high as 35 per cent.
International operators awarded management contracts for water and wastewater networks under a public-private-partnership (PPP) scheme will be given the task of reducing the amount of water that is unaccounted for in their cities.
It will require a $1.7bn investment, which should be recouped quickly, according to Al-Musallam. “The payback period is only four years,” he said. “The [net] saving will be $9.3bn.”
The ministry plans to complete its network privatisation programme within three to four years. It has already awarded the management contracts for Riyadh and Jeddah to France’s Veolia and Suez respectively.
A consultancy tender for Medina, Mecca and the Greater Dammam and Al-Khobar area has also been issued. The contracts for these cities should be agreed before the end of the year.
Management contracts for six more urban areas – Tarif, Buraida and Onaizah, Khamis Mishayat and Abha, Tabuk, and Jubail and Al-Hofuf – will follow in the near future (MEED 10:03:08).
Consuming around 3.8 million cm/d of water, the cities have a combined population of more than 14 million and account for 74 per cent of all the water used in the kingdom.
As part of its efficiency drive, the ministry plans to eventually raise water tariffs. Initially, it planned to do so only after the six seven-year management contracts had expired. Now, says Al-Musallam, this could happen sooner.
“Happy customers will definitely accept any increase in tariff, but there is no intention to raise tariffs in the near future,” he says.
Last year, Water & Electricity Minister Abdullah al-Hussayen said the government was considering “drastic” changes to water tariffs to reduce consumption (MEED 27:7:08).
Wastewater treatment plants are also being privatised under a separate process, with requests for proposals due to be issued for the network in Riyadh within two months. The ministry is awaiting approval from the Supreme Economic Council for its privatisation strategy (MEED 1:02:08).
The ministry is also planning to launch a second PPP programme covering wastewater distribution networks. Private companies will build the infrastructure to supply customers with treated sewage effluent. “They will take the water at the boundary of the wastewater treatment plants, identify customers and be in charge of marketing,” Al-Musallam said.
The new networks could sell the treated effluent to district cooling plants and other private buyers.
Tariffs for the distribution of the treated effluent will not be subsidised by the government.
“The price will not be regulated,” Al-Musallam told the MEED conference on 17 March. “We are looking for full cost recovery. There is a huge demand for treated effluent.”
He added that the first opportunity might emerge in Riyadh, which has a population approaching 5.5 million people and produces more than 1 million cm/d of treated effluent.
This could lead to sales of 800,000 cm/d of water with a value of at least $4bn over a 25-year period.
Riyadh is also planning significant reforms to its power sector, in an effort to cope with demand which is expected to rise fourfold over the next 25 years.
Saudi electricity consumption could reach 140,000MW in 2032 compared with 35,000MW in 2007, according to the first long-term power forecast by the Water & Electricity Ministry.
The figures are based on the assumption that the population of Saudi Arabia will grow by at least 50 per cent over that time, rising from 22 million people today to reach 33-39 million.
The five economic cities being developed in the kingdom will need 10,662MW in 2030, according to the ministry.
Riyadh’s Supreme Economic Council is studying a restructuring plan for the kingdom’s electricity system that could lead to the Saudi Electricity Company bring broken up into several different power generating companies and private investment being brought into the kingdom’s transmission system.