The infrastructure requirements for King Abdullah Economic City (Kaec) are huge. The project site spans 168 square-kilometres, and once completed in 2025, the city is expected to be home to more than 4 million residents and thousands of businesses and industries.
Anticipating the power and water requirements for each phase of the development is a big challenge for the project developer Emaar, The Economic City (Emaar EC).
“It’s easier for us to predict what the energy requirements will be in 2025 than what they’ll be in 4-5 years,” says Fahd al-Rasheed, chief executive officer of Emaar EC. “The reason is simple. You can get one industrial tenant, which, if it is a large company, will automatically double the amount of energy needed for the city. Over the next three years, our projections are for about 300MW, but we expect that to double depending on the kind of industries that come in to our industrial zone.
“In terms of water, we have already awarded the contract for a water desalination plant and we are looking toward the second phase. We are very much phasing our power and water requirements. But we are trying to outsource that as much as possible.”
The UK’s HSBC was awarded the advisory contract for the infrastructure at Kaec, which includes power and desalination plants, transmission and distribution networks. It advises on the structuring of concessions for the individual projects, and acts as a project adviser when raising the finance for each scheme.
The local Arabian Bemco Contracting Company was awarded the contract to build a 390MW power plant in Kaec, which is expected to meet the city’s entire power requirements until 2012. Germany’s Siemens was contracted to build the electricity generation and distribution network.
On 1 May, the local Huta Marine Works finished commissioning a 10,000-cubic-metre-a-day (cm/d) reverse osmosis desalination plant. It was awarded a SR196m ($52.4m) contract to build a drinking water plant on a 10-year build-own-operate basis. The plant can be expanded to 20,000 cm/d after the first two years of operation.
Ultimately, Kaec will house two desalination and power plants. Emaar EC cancelled an agreement signed with City Cool Company in June 2008 to build and operate two district cooling plants. “The contract was cancelled because they couldn’t address the financing aspect of the contract,” says Al-Rasheed. “We withdrew the concession amicably and will be looking to issue another tender very soon for district cooling.”
In addition to meeting the utility requirements of Kaec’s residents, Emaar EC also has to provide for their social needs, including education and healthcare provision. The educational facilities will start from pre-school and continue up to university level, catering for both local and international students, which are expected to number more than 2,000. In 2008, Emaar signed a deal with Dubai’s Gems to open the first school at Kaec. The local Saudi Freyssinet was awarded a SR120m ($32m) design and build contract for the school, which will have a built up area of 50,000 square metres. On the healthcare front, Emaar EC, says a medical clinic will be available for every 5,000 residents at Kaec. There will be one hospital for every group of 20,000 residents, each having 300-400 beds, and providing different speciality treatments.
Kaec is focused on attracting investors that have a proven commitment to the region in order to deliver the necessary utilities and infrastructure to this remote location on the Red Sea. In April 2009, France-based pharmaceutical company, Sanofi-Aventis signed a deal with Emaar EC to set up a global division at Kaec. The firm has been operating in Saudi Arabia for more than 30 years. In 2008, Sanofi-Aventis generated SR135bn ($36bn) in global sales, making it the largest pharmaceutical company in Europe and emerging markets.
Kaec is still in the early stages of construction, but the partnerships forged indicate it will be a leading development project within Saudi Arabia. Building a solid infrastructure platform is essential and with projects ranging from electrical and water supply to road networks and landscaping planned, the opportunities for investors are plentiful.