Water market waits for Saudi Arabia's reforms

24 May 2016

Contractors and developers are waiting for clarity on the future of the kingdom’s desalination and wastewater schemes

The region’s contractors and developers are eagerly waiting to see what impact Saudi Arabia’s new economic transformation plan will have on water projects in the kingdom.

With the population continuing to grow at a rate of more than 2 per cent and Riyadh planning several new economic cities and industries to diversify its economy, the kingdom will remain the region’s most lucrative desalination and wastewater market for the foreseeable future. However, while the potential remains, the Saudi water projects sector is undergoing a lull in tendering activity, and contractors and developers are waiting to see which projects are planned and will move forward in 2016.

For the schemes that have been tendered, doubts remain on whether they will proceed as planned or whether the procurement model will change to involve partnerships with private investors.

The proposed 400,000 cubic-metre-a-day (cm/d) Jeddah 4 desalination plant and the 500,000-cm/d Jeddah airport sewage treatment plant exemplify this. Both have been tendered as standard engineering, procurement and construction (EPC) contracts, but the deadlines are being continually pushed back. Those bidding on the work are unsure whether they will go ahead as planned, with the local Saline Water Conversion Corporation (SWCC) and National Water Company (NWC) both conducting studies on whether they can be switched to public-private partnership (PPP) models.

While contractors work on proposals unsure of whether they will come to fruition in their current form, developers are eagerly awaiting clarity on the opportunities moving forward.

Although the kingdom’s utility companies have favoured EPC contracts in recent years, several major projects in the water sector have previously been successfully executed under the independent water and power project (IWPP) model.

With the kingdom undertaking major reforms in the face of the lower oil price, encouraging private investment and reducing pressure on government accounts will form a central pillar of Vision 2030 and the national transformation plan. While this should offer numerous opportunities for contractors, developers and project financiers alike, the water sector is hoping that information on what is happening will be made clear soon.

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