2005 - 2006 - Pinsent Masons Water Yearbook 2012

SAUDI ARABIA PART 2: COUNTRY ANALYSIS
Maintaining extant assets
Lack of maintenance has held back the operation of these facilities and their use. For example, the
Jeddah 1-4 desalination plants are meant to generate 95 million gallons per day, but operational
problems means the real figure is some 65-70 million gallons per day. In addition, the water network
suffers from distribution losses in the region of 40%. This in turn has been causing water table
problems, and buildings in the area have not been designed to cope with this. Another example is the
Shuaiba facility, which serves the Holy City of al Makkah (Mecca). This plant has a capacity of 50
million gallons per day, but had been allocated a maintenance budget of US$0.41 million per annum
against an operating cost of US$90 million per annum (US$1.1 per m 3 ).
Sewerage coverage is less than 60% and the population is growing by 3% per annum. Some 8% of
wastewater is fully treated. US$14 billion is needed for basic services over the next 20 years in
Riyadh. This includes US$9 billion in water treatment and distribution and US$4.9 billion for sewerage
and sewerage treatment.
Freshwater
Total (1998, km³) 2.4
Per capita (1998, m 3 ) 119
Withdrawals (1992, km³) 17.0
For domestic use (1992) 9%
For industry (1992) 1%
For agriculture (1992) 90%
Involving the private sector
Short term investment needs of US$17 billion have been identified by the government, along with
US$81 billion is needed by 2022 to increase desalination capacity by 6% per annum and water
treatment by 11% along with developing a suitable wastewater management infrastructure. The
private sector is needed to finance this and to bring the eventual cost down. The Agriculture and
Water Ministry and regional seven water boards are being rationalised into a new Water Ministry to
centralise the management of resources and manage the privatisation process. This involves
charging for services on a cost recovery basis before PSP begins. A law was passed in 2000 allowing
foreign companies to hold 100% of their businesses in Saudi Arabia as opposed to having to use
locally based joint ventures. PSPs are to be carried out under the auspices of the Water & Electricity
Company (WEC).
Utilities in Saudi Arabia are being taken over by the Utilities Company (UCO) as part of a move
towards the full or partial privatisation in the future. The cities of Jubail and Yanbu are being used as
pilot projects for private sector involvement with the UCO. The company will be partially privatised via
a share sale to the public with 75% being retained by the state through three holding companies. No
date has been fixed to date. UCO is to concentrate on water and power for Jubail and Yanbu as
outlined below.
The Jeddah Water and Sanitary Drainage Authority are seeking to develop a series of BOT projects
for Jeddah and Makkah. The private sector is being involved in a series of mooted desalination
projects. Sumitomo of Japan is considering constructing a US$2.2 billion co-generation facility for
Jubail while VE’s Veolia Water and Suez’s Ondeo Services are looking at other projects, along with
Korea’s Doosan.
In 2003, Saudi Arabia’s state-owned Saline Water Conversion Corporation (SWCC) and Saudi
Electricity Company (SEC) invited international developers to submit expressions of interest for the
country’s first independent water and power project, at Shouaiba, 120km south of Jeddah. The first
phase will have a water capacity of 176 million gallons per day and up to 700MW in power generation,
with the second phase being for 700MW and 24 million gallons of water per day. SWCC which
supplies desalinated water is offering private firms a 60% stake in new water and power plants and
says it is also moving towards privatization. SWCC has also teamed up with the Saudi Electricity
Company to devise several independent water and power projects. The Shouaiba Project calls for a
power and desalination plant capable of producing 900MW and 174 million gallons per day, with the
bidder being granted a share of 60%. The similar Jubail Project is designed to produce 2400MW and
79 million gallons per day. Crown Prince Abdullah Bin Abdul Aziz declared that privatization was a
strategic choice for the Saudi economy in 2000.
174 Pinsent Masons Water Yearbook 2005 – 2006