Tripoli opening up to the private sector

28 August 2009

With an ambitious target of increasing its desalination capacity tenfold by 2015, Tripoli is planning to involve private companies in developing its water projects for the first time

With a growing population and an extensive infrastructure development programme under way, Libya needs more water. Under the auspices of the General Desalination Company (GDC), the country is planning a tenfold increase in desalination capacity from 41.8 million gallons a day (g/d) to 471.2 million g/d by 2015.

The GDC was established in a government reshuffle in mid-2008 and was initially placed under the umbrella of the General Electricity Company of Libya (Gecol), which also allocated its budget. 

But the two utilities were separated in March this year when Libyan leader Muammar Gaddafi abolished the General People’s Committee for Electricity, Water & Gas. Its water and gas responsibilities were handed over to a new Utilities Ministry, which now includes the GDC. The government shake-up also effectively gave Gecol ministerial status, and the company has since reported directly to the cabinet.

“We were set up as a legal body in order to show how desalination is becoming more important,” says Ahmed el-Gumatti, the company’s chairman.

Today, GDC operates and maintains six desalination facilities across the country. These include three 8.8 million-g/d plants at Zwara, Abutaraba and Tobruk, two 6.6 million-g/d plants at Zliten and Bumba, and a 2.2 million-g/d plant at Soussa.

The extra desalination capacity brought on line under the expansion programme will be used to supplement water conveyed by the Great Manmade River from aquifers in the Sahara to Libya’s coastal population centres. On completion, the 4,000-kilometre-long system of pipes will carry 1.3 billion g/d of water across the country.

To help meet its rising demand for water, Libya is for the first time seeking to use private developers in its desalination schemes.

While all previous projects have been implemented on an engineering, procurement and construction (EPC) basis, the aim is to apply the build-operate-transfer model to all future schemes.

The GDC is already in talks with France’s Sidem, the UK’s Biwater, Singapore’s Hyflux, Spain’s Befesa, and Valoriza, also of Spain, about implementing the first batch of such projects.

Ambitious goals

In late June, Hyflux and GDC signed a memorandum of agreement for the construction of two desalination plants in Tripoli and Benghazi.

GDC’s current plans call for the construction of 10 more desalination facilities around the country that will come on line between 2010 and 2015 and remain in operation until 2030.

In a country with next to no experience of privately funded projects, these goals may yet prove ambitious. “For Libya, this is completely new,” says one foreign contractor based in Tripoli. “Little by little they will realise there is a lot to do before they can achieve this.”

The legal and financial frameworks needed to make the schemes viable are as yet under-developed. In the absence of consumer tariffs for water, the government would need to heavily subsidise production to make it profitable for private firms.

It is still early days for project finance in the country. The few deals that have been concluded have been small and limited to the real estate sector. However, the GDC is confident that it can overcome this hurdle.

“Some local banks have started negotiating with the private developers and have agreed to finance these projects -maybe not all of them, but they have chosen some big ones,” says El-Gumatti.

In the meantime, the GDC is on track to conclude several conventional EPC projects by 2010. Sidem is currently working on four projects with a total capacity of 44.1 million g/d, at Zwara, Zawia, Derna and Soussa.

The first unit of the project at Zawia is due to come on line in September, as are the two desalination plants at Derna and Soussa. The fourth plant at Zwara will be completed in June 2010.

The four projects are likely to be the last to use thermal desalination technology, which has enjoyed a monopoly in the country to date.

“All future projects will be reverse-osmosis plants,” says El-Gummati.

The shift towards reverse osmosis is another indication of GDC’s ability to influence policy in its new independent role.

“Things have really changed,” says one desalination industry source.

“It is the difference in thinking between the old Electricity, Water & Gas Ministry and the new Utilities Ministry.”

All that is left now, and this is no small task, is for Tripoli to shake off its reputation for unpredictable decision making and protracted bureaucratic processes, and convince foreign investors that their money will be well spent.

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