Key fact

More than SR500bn-worth of investment will be needed in Saudi Arabia’s water and power sector over the next decade

Source: MEED

Thirteen Arab countries rank among the world’s 19 most water-scarce nations, with per capita water availability in eight of them already below 200 cubic metres – less than half the amount designated as severe water scarcity.

A combination of rapidly rising populations and scarce freshwater resources has given the Middle East the unenviable mantle of being the world’s most water-stressed region.

Countries such as Bahrain, Qatar, Kuwait and Saudi Arabia have some of the lowest volumes of available water per capita in the world. Bahrain has three cubic metres of internal freshwater supply per person and Kuwait even less.

GCC desalination production
(MILLION CM/Y) 2010 2020
Bahrain 252 299
Kuwait 604 774
Oman 994 1,328
Qatar 533 583
Saudi Arabia 22,341 25,066
UAE 3,461 3,526
cm/y=Cubic metres a year. Source: Fichtner

Population growth, rapid urbanisation and the need to irrigate farmland all place high demand on limited renewable water supplies, particularly in more densely populated areas.

In 2009, Kuwait withdrew 2,465 per cent of its internal renewable water resources, a value far beyond sustainable water use, closely followed by the UAE at 2,032 per cent, according to the UK consultancy Maplecroft in its 2011 global water stress index.

Rising water consumption

The excessive withdrawal reflects the high consumption rates in the Gulf. According to US consultancy Booz & Co, the GCC states consume an average of 850 cubic metres of water per capita each year, compared with a global average of about 500 cubic metres. In Saudi Arabia, the largest country in the region, the amount is at about 950 cubic metres per capita a year.

Oman looks to be facing a steeper water demand rate than any of its Gulf neighbours

Demand is on the rise across the GCC. Saudi Arabia’s Water & Electricity Minister Abdullah al-Hussain says that more than SR500bn ($133bn) of investment in the water and power sector will be required over the next decade for supply to keep pace with demand. 

Government figures show that demand for water for municipal purposes is increasing in the kingdom by 2.1 per cent a year and is expected to reach 2,583 million cubic metres in 2014 (the end of the ninth development plan). The usage of water for industrial purposes is expected to rise by 5.5 per cent a year to stand at 930 million cubic metres by 2014.

The one bright spot for the kingdom is declining agricultural demand for water. This is expected to fall by 3.7 per cent over the ninth development plan due to government efforts to rationalise water for agricultural consumption.

But a growing population in Saudi Arabia leaves little room for manoeuvre. The latest Population and Housing Census, conducted in 2010, puts the population at 27.14 million, but it is forecast to increase to 33.11 million by 2024. Provision of basic utilities will be a challenge if the increase in population is not met with equal new production capacity. 

The most effective way to mitigate water stress [in the Gulf] is to improve water management

Similar consumption patterns exist in the other Gulf states. Abu Dhabi’s 525-600 gallons a day per capita consumption is the highest in the world. The UAE capital’s water demand is forecast to grow by 5 per cent a year in the 2010-20 period, according to Abu Dhabi Water & Electricity Company. At this rate, the UAE is on course to deplete its fossil water reserves within 40 years.

Qatar’s booming economy is, meanwhile, proving to be a significant drain on water resources. Qatar Electricity & Water Company (QEWC) expects the country’s water needs to almost double, from 533 million cubic metres a day (cm/d) in 2010 to about 583 million cm/d in 2020.

Oman water demand

Oman looks to be facing a steeper rise in water usage than any of its Gulf neighbours. According to Oman Power & Water Procurement Company, overall demand for potable and industrial water will increase from about 994 million cubic metres in 2010 to 1,328 million cubic metres in 2017.

Kuwait, which has the lowest per capita natural water availability in the world with just 70 cubic metres, has one of the highest consumption rates at about 500 litres a person, according to Kuwait Institute for Scientific Research (KISR) Water Resources Centre.

So far the response from regional authorities, with a few exceptions, has been to increase investment in desalination capacity, rather than attempt to reduce demand.

Only Saudi Arabia has taken a bold step to change demand patterns, although the kingdom also plans to expand its 30 desalination plants, as well as its treated sewage effluent (TSE) processing capacity.

The 2012 Saudi state budget estimates a spending of SR57.5bn on water, agriculture and related infrastructure. This is an increase of 13 per cent from the previous year, with a particular emphasis on enhancing supply and improving treatment networks. Figures released by the central bank, Saudi Arabia Monetary Agency, show a major boost to overall spending on the water sector in 2010.

The Water & Electricity Ministry signed contracts worth SR11.6bn to develop the water and sewage sector, resulting in 701 contracts to build 291 new wells (costing SR262m) and construct and renovate dams (SR272m), along with contracts for six water purification  plants (SR130m).

The biggest allocation, worth SR4.4bn, was on water networks and transmission lines. Spending on underground water supply centres, reservoirs, housing connections and meters reached SR764m. About SR3.3bn was spent on sewage contracts and SR692m on treatment plants with a capacity of 603,000 cubic metres. 

Spending increase on water

Utility firms in Saudi Arabia are increasing spending on water. National Water Company (NWC) plans to spend SR249bn on water and wastewater projects in 2012-20, nearly half of this being accounted for by capital expenditure.

The wastewater sector will receive SR44.8bn of this, while another SR115bn will be spent on water supply projects. One of the primary objectives is to stem leakages, while $4bn is to be spent on expanding TSE networks. 

TSE is also emerging as a growing focus for investment in the UAE, with Dubai and Abu Dhabi experiencing some of the highest annual growth rates in sewage inflows, placing added pressure on the country’s wastewater infrastructure.

Both Dubai Municipality and Abu Dhabi Sewerage Services Company (ADSSC) are adding new capacity by expanding existing facilities and constructing new treatment plants. About 70 per cent of TSE is reused in Dubai. Abu Dhabi recycles up to 90 per cent.

ADSSC plans to spend AED5.8bn ($1.6bn) on wastewater projects in 2012, with AED2bn of this devoted to the Strategic Tunnels Enhancement Programme (Step) project.

Across the wider GCC, TSE is primed to play a more significant role in reducing groundwater withdrawals. According to Booz & Co, between 2010 and 2016 the GCC’s capacity for reusable water will increase at a rate of 13 per cent a year, compared with expected growth of 4 per cent for contracted desalination capacity.

TSE is also a focus for reducing demand in Bahrain, which is planning to increase TSE production from 200,000 cm/d in 2010 to 500,000 cm/d in 2030. Kuwait is set to increase its TSE capacity from 850,000 cm/d to 1.35 million cm/d.

Boosting desalination capacity will nonetheless form a core component of the Gulf’s efforts to keep water demand and supply in balance.

This year, Bahrain’s first independent water and power project (IWPP) at Al-Dur comes on stream, providing 48 million gallons a day (g/d) of new water capacity. Over the full four-phase expansion programme at Al-Dur, capacity will double to 96 million g/d.

Kuwait’s debut IWPP at Al-Zour North will meanwhile boost the emirate’s desalination capacity by 102-107 million g/d by 2015. This is part of a programme to double desalination capacity from existing installed capacity of 317 million g/d, which currently provides more than 90 per cent of Kuwait’s water needs.

Additional desalination capacity is also needed in Qatar, where QEWC is planning a new plant at Ras Laffan with a capacity of 70-90 million g/d.

Oman is planning a water-only plant at Al-Ghubrah, with a 42 million g/d capacity, to be operational in 2014.

With efforts under way to develop new desalination capacity and TSE availability set to rise, much needed new water supplies are being created. But the missing piece of the jigsaw is better water management, say experts. This is fundamental to ensuring the GCC’s taps will not run dry over the long term. In particular, there is a pressing need for more effective demand management.

According to Maplecroft, the most effective way to mitigate water stress is to improve water management. Saudi Arabia’s phasing out of non-drought-tolerant crops, for example, will substantially help to reduce water use. 

Replacing wheat with a drought-tolerant crop that does not require the same level of irrigation can extend the lifetime of aquifers by reducing water use. Saudi Arabia’s move provides an example for other Gulf states to adopt.

Water tariff reform

Tariff reform is another effective way of managing demand. As part of the social contract between Gulf citizens and rulers, free or low-cost water provision has long been seen as a right. Yet the system has only served to encourage excessive consumption.

Water costs range from $0.65 a cubic metre in Bahrain to $1.98 a cubic metre in Kuwait, according to KISR, but utility services are heavily subsidised. Water and wastewater tariffs recover only about 10 per cent of capital and operational costs.

Saudi Arabia only receives $0.08 a cubic metre against a cost of $1.35 a cubic metre. As a result, subsidies come at a heavy price for state budgets, representing 1.7 per cent of Saudi Arabia’s gross domestic product (GDP) and 2.4 per cent of Kuwait’s GDP. Dubai implemented a new water tariff rate for expatriates in January 2011 that enabled utilities to recover full consumption costs. But other Gulf states have been reluctant to address the thorny issue of reforming water subsidies.

According to Booz & Co, higher tariffs could reduce water demand by 20-35 per cent. The Arab uprisings may have reduced impetus in the near term for subsidy reform, but the early results from Dubai’s move shows consumption has been cut by as much as 30 per cent.

With demand for water rising inexorably, governments will eventually have to address subsidies as current growth in consumption is unsustainable.