Saudi Arabia’s Water & Electricity Company (WEC) has signed a water purchase agreement (WPA) with a consortium led by the local Acwa Power to develop the planned 600,000 cubic-metres-a-day (cm/d) Rabigh 3 independent water project (IWP).

MEED reported in late November that WEC had appointed the Acwa Power consortium as preferred bidder for the project. The WPA was signed on 25 December.

The client received bids from five groups in July, and publicly opened the tariffs in August.

Acwa Power submitted a levelised water cost bid of 199.2 halalas ($0.53) a cubic metre (hals/cm), which was marginally lower than the 202.1 hals/cm price submitted by the consortium of Japan’s Marubeni and the local Abdul Latif Jameel.

The reverse osmosis (RO) desalination plant will have a capacity of up to 600,000 cm/d, expandable to 1.2 million cm/d. The project will have a 25-year concession period, with WEC as the offtaker, supported by a payment guarantee from the government.

The lead adviser for the IWP is the local Banque Saudi Fransi. The client has appointed Germany’s Fichtner Engineering & Consulting as the technical adviser, and the UK’s DLA Piper and Alderbrook as legal adviser and financial adviser respectively.

The client had originally planned to tender and award a standard engineering, procurement and construction (EPC) contract to develop the plant. MEED reported in late 2015 that the Saline Water Conversion Corporation (SWCC) was planning to issue tender documents for the EPC deal by February 2016.

However, as with the vast majority of the kingdom’s major upcoming utilities projects, the plant will now be delivered through a public-private partnership (PPP) model as the kingdom seeks to reduce pressure on capital expenditure because of lower oil revenues.

The Rabigh 3 desalination facility will service the cities of Jeddah, Mecca and Taif as well as surrounding villages.