Water projects offer opportunities

17 April 2016

Demand remains for residential and industrial desalination and wastewater schemes

While concerns remain over many parts of the region’s projects market in the lower-oil-price era, the water and wastewater sectors offer opportunities in 2016.

As the land transfer agreement was being negotiated and signed in late March for Abu Dhabi Water & Electricity Authority (Adwea) to begin working on plans for the next major water scheme in Fujairah, project owners were working on tendering and awarding major contracts for both desalination and wastewater schemes.

One of the most interesting contract awards in the region’s utilities sector this year was the deal issued to France’s Veolia to build an industrial wastewater facility at Ras Laffan in Qatar.

While rapidly growing populations will ensure major residential power and water schemes will move forward, there has been much speculation over the prospects for utility projects in the industrial sectors, which have been most affected by the lower oil price. The cancellation of a previous tender for an independent water project (IWP) at Ras Laffan in 2015, following the shelving of two major petrochemicals schemes, had stoked fears over the demand for industrial utility projects. The award of the Ras Laffan deal should placate concerns that demand for water projects in the industrial sector will completely diminish.

Bahrain is another market moving ahead with a major wastewater scheme, with bids due on 20 July for the project to double the capacity of the existing Tubli treatment plant. Groups are also working on proposals for the much-awaited Umm al-Hayman wastewater treatment project in Kuwait.

The Umm al-Hayman scheme will be one of many opportunities for developers and lenders in the region’s water market, as more project owners are expected to lean towards public-private partnership (PPP) models in response to falling oil revenues.

As Oman presses ahead with its tried and tested IWP model for its next desalination project in Salalah, Saudi Arabia’s Saline Water Conversion Corporation is seeking to move back to the independent water and power project (IWPP) model, which it has not implemented since 2007.

Rather than whether schemes will be required, the focus is now on how they will be paid for. If project owners are able to successfully implement PPP and other contractor financing models, the Middle East and North Africa will remain a key target for the world’s water companies.

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