Saudi Arabia Water Report Q2 2012 Published : March 2012
No. of Pages : 51
BMI View: Saudi Arabia has started 2012 in an active mode, with the signing of a major corporate loan for the main power and water utility company Marafiq, planned revisions to operation and maintenance contracts covering water facilities in the main urban centres, large contract awards for water and wastewater treatment networks, and the starting of the bidding process for a new Jeddah sewage treatment plant. Increased budgeted spend for water this year (up by 13% year-on-year) will help to underwrite contract awards to improve service distribution across the kingdom. Notably, Jeddah – neglected in terms of public infrastructure spending to date – will receive renewed attention. National Water Company (NWC) completed phase one of upgrades to the city’s wastewater treatment facilities last year, providing coverage for almost three-quarters of residents. The new spending will increase this to nearly 100% coverage. This is a welcome development and one that is related to the wave of protests in parts of the Arab world over the past year. The key themes to highlight for Saudi Arabia’s water sector are: 1.Increased funds have been set aside for boosting water supply and upgrading water and wastewater treatment networks. Overall spending in the 2012 state budget has increased by 13% y-o-y to SAR57.5bn, focusing on water, agriculture and related infrastructure. The short-term budgetary increase underscores long-term capital expenditure plans announced by the main water utilities. NWC plans to spend US$66bn on water and wastewater developments in 20122020 period. About US$30bn of this will be capex. 2.Jeddah will be the centre of much of the spending. An estimated US$8bn will be spent on projects in the city. NWC has said the development of the sewage system is seven months ahead of schedule. The coming on stream of five sewage treatment stations with a total of 622,000m3/d will, over the long-term, give Jeddah more than 1mn m3/d capacity, according to NWC. Contractors have been invited to submit bids by mid-May 2012 for a SAR1bn contract to build a sewage treatment plant at Jeddah’s international airport with 500,000m3/d capacity. 3.NWC is also preparing for operation and maintenance (O&M) contracts that will involve the private sector this year, with the first tenders anticipated in H112. This will mark a break with previous practice, under which NWC remained in control of the city business units in each of the urban centres. The new O&M regime will include the creation of business units outside of direct NWC control, though they will still be answerable to the NWC CEO. 4.Marafiq secured a US$1.2bn Islamic finance loan in February 2012, arranged by HSBC and Banque Saudi Fransi, which will help to underwrite the company’s expansion plans in the water sector.Saudi Arabia must confront a growing crisis associated with its rising consumption of water. In BMI’s five-year forecast, we expect an increase in water demand to 11,833bn m3, an increase of nearly 300bn m3 from our previous forecast. This represents an increase of more than 3,000bn m3 of water demand in 2012 and will clearly drive policymakers’ decisions to increase water production and promote reuse as the number of subscribers exceeds 1mn. The growing focus on treated sewage effluent is welcome, as is the improved effort on water retention, with NWC claiming it saved 67mn m3 of water by preventing leakages from drinking water networks. Even so, it will be tough for the Saudi authorities to keep pace with demand that is growing from industrial and domestic users. Saudi Arabia Water Industry
Executive Summary . 5 SWOT Analysis . 7 Saudi Arabia Water Industry SWOT .. 7
Saudi Arabia Political SWOT ... 8 Saudi Arabia Economic SWOT 8 Saudi Arabia Business Environment SWOT .. 9 Market Overview . 10 Domestic Competitive Landscape 10 Pricing Mechanisms And Regulatory Framework .. 15 Tariffs .. 15 Regulatory Framework 15 Sectors 17 IWPP ... 17 Wastewater Treatment . 18 Water Systems/Pipelines .. 20 Major Projects . 22 IWPPs .. 22 IWPs 24 Water And Sewerage Networks 24 Wastewater Treatment . 24 Key Projects . 26 Table: Major Projects – Water 26 Industry Forecast Scenario ... 28 Table: Key Data – Water Industry, 2006-12012 .. 28 Table: Key Data – Water Industry, 2010-2016 28 Table: Water Data By City, 200-2006 (‘000 cubic metres) .. 29 Regional Overview . 30 Table: Middle East Infrastructure Business Environment Ratings ... 35 Company Profiles ... 36 ACWA Power International . 36 Suez Environnement . 38 Veolia Water 40 BMI Water Forecast Modelling .. 42 How We Generate Our Industry Forecasts .. 42 Infrastructure Business Environment Ratings .. 42 Table: Infrastructure Business Environment Indicators .. 44 Project Finance Ratings .. 45 Table: Design And Construction Phase ... 46 Table: Commissioning And Operating Phase – Commercial Construction . 47 Table: Commissioning And Operating Phase – Energy And Utilities .. 48 Table: Commissioning And Operating Phase – Transport ... 49Table: Major Projects – Water . 26 Table: Key Data – Water Industry, 2006-12012 . 28 Table: Key Data – Water Industry, 2010-2016 . 28 Table: Water Data By City, 200-2006 (‘000 cubic metres) . 29 Table: Middle East Infrastructure Business Environment Ratings . 35 Table: Infrastructure Business Environment Indicators . 44 Table: Design And Construction Phase . 46 Table: Commissioning And Operating Phase – Commercial Construction . 47 Table: Commissioning And Operating Phase – Energy And Utilities . 48 Table: Commissioning And Operating Phase – Transport . 4
Saudi Arabia has started 2012 in an active mode, with the signing of a major corporate loan for the main power and water utility company Mar...