Mena water delivers exceptional growth
26 January 2024
Click here for MEED's latest water developer ranking
As a water-scarce hotspot facing geopolitical tensions and climate change, many jurisdictions in the Middle East and North Africa (Mena) region have long recognised that water is an important security concern. It requires sustained investments, especially in light of the region’s long-term economic diversification agendas.
This fact supports the major upturn in spending in 2023, when the total value of awarded contracts within the sector climbed to $20bn – up 74 per cent compared with the $11.5bn-worth of contracts awarded the previous year.
Prior to this, the region awarded the highest value of contracts for a year in 2021, at $14.5bn.
Saudi Arabia registered the largest share, accounting for over 56 per cent, or about $11bn, of the contracts awarded in 2023. This was 69 per cent more than in 2022.
The value of contracts awarded in the UAE, the region’s second-largest market, grew by more than 250 per cent to reach approximately $4.9bn in 2023. This was driven by the awards of three independent water producer (IWP) projects, as well as major water pipeline, sewerage and storm water packages.
All the remaining Mena countries recorded higher values of awarded contracts in 2023 compared to 2022, except for Qatar, which declined by 72 per cent; Jordan, which fell 58 per cent; and Algeria, with a drop of 57 per cent.
Water transmission and distribution network projects continued to represent a significant share of the total awarded contracts, contributing 37 per cent, or $7.7bn, in 2023. This was 1 per cent higher than in the previous year.
A total of $6.8bn-worth of water treatment plant projects was awarded in 2023, in a 180 per cent increase on the value of awarded contracts in 2022. The value of awarded water desalination contracts also grew from $1.8bn to close to $4bn in 2023.
Future opportunities
An estimated $77.5bn-worth of projects across the five Mena water sub-sectors are in the pre-execution phase. This is 29 per cent higher compared to the value of projects on the pipeline a year earlier.
This means that major opportunities remain for both utility developers and engineering, procurement and construction (EPC) contractors looking to win more work within the sector.
As in previous years, Saudi Arabia commands a significant share of future opportunities, with planned and unawarded projects worth close to $30bn. This is expected to grow as the kingdom ramps up capacity to meet its 2030 target to reduce reliance on ground and surface water and enhances its storage capacity – and as the execution of gigaprojects such as Neom gathers pace.
Private utility developers are expected to take a more prominent role as the pipeline of independent water desalination, sewage treatment, water transmission and storage facilities being planned in Saudi Arabia and beyond grows.
This does not preclude growth in EPC projects, with the Saline Water Conversion Company (SWCC) and National Water Company ramping up their procurement activities, and state water offtaker Saudi Water Partnership Company focusing on independent water infrastructure projects.
Beyond the GCC
Last year, Morocco awarded its first major independent water producer (IWP) contract. Spain’s Acciona, in consortium with local firms Afriquia Gaz and Green of Africa, won the $875m contract to develop the Grand Casablanca seawater reverse osmosis (SWRO) plant. The 30-year, build-operate- transfer project will have a design capacity of 548,000 cubic metres a day.
Morocco’s National Office of Electricity & Drinking Water (Onee) is advancing plans for the development of a new IWP following the Grand Casablanca project. To be located in Morocco’s Oriental region, the project will cater to the cities of Nador, Oujda, Berkane, Taourirt and Saidia.
In December, Jordan’s Water & Irrigation Ministry received a single bid for the multibillion-dollar Aqaba-Amman water conveyance and desalination project. If things go as planned, the sole bidder is expected to be awarded the estimated $2bn-$3.5bn contract this year. There is also an expectation that the first batch of Egypt’s planned renewable energy-powered SWRO plants will be tendered over the next 12-24 months.
Sewerage infrastructure
Dubai and Qatar offer some of the most lucrative sewerage tunnel and infrastructure projects over the short to medium term. This year, Qatar’s Public Works Authority (Asghal) is expected to tender four packages of the South of Wakrah and New District of Doha pumping station and outfall scheme. The packages have an estimated value of $1bn-$2bn.
Last year, Dubai Municipality revived its strategic sewerage tunnels project, which is expected to require an investment of up to $22bn. Known as the Deep Tunnels Portfolio, it involves developing assets across Dubai and Hatta.
This includes two sets of deep tunnels terminating at two terminal pump stations located at sewage treatment plants (STPs) in Warsan and Jebel Ali. A conventional sewage and drainage collection system and STPs will be built in Hatta. The scheme also includes recycled water distribution systems connected to the STPs.
For the foreseeable future, water transmission and distribution projects will continue to be a priority in the region. They will remain the largest water sub-sector as utility companies expand their networks to accommodate new residential, commercial and industrial developments; link new desalination and treatment plants to their networks; and replace ageing infrastructure to curb water losses.
Register for MEED's guest program now to access this article.
Exclusive from Meed
-
Neom cancels $1.5bn desalination plant project17 May 2024
-
Neom receives bids for schools PPP15 May 2024
-
Ewec plans new independent water project15 May 2024
-
Saudi Arabia expands PPP pipeline14 May 2024
-
Rua Al Madinah seeks construction partners14 May 2024
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Neom cancels $1.5bn desalination plant project
17 May 2024
The joint development agreement (JDA) for a project to develop a zero liquid discharge plant in Saudi Arabia's Neom has expired and has not been renewed, leading to the cancellation of the project, sources familiar with the scheme tell MEED.
A consortium of Neom subsidiary Enowa, Japan’s Itochu and France’s Veolia signed a JDA for the scheme in December 2022, approximately six months after they signed a memorandum of understanding to develop the renewable-energy powered advanced seawater reverse osmosis project in Oxagon, Neom’s industrial cluster.
The proposed plant was to deliver up to 2 million cubic metres a day (cm/d) of desalinated water to Neom, equivalent to about 30% of the gigaproject's expected total water demand once complete.
The entire facility was understood to require a total investment of $1.5bn-$2bn.
The developer team initially indicated that the target commercial operation date for the project's first phase, understood to have a capacity of 500,000 cm/d, was 2025.
In a statement sent to MEED, Enowa said Neom's water requirements have evolved over the last year "leading us to adopt a stepwise approach to expanding capacity".
It continued: "As a result, we've decided to discontinue our joint development agreement (JDA) for this project. This decision was made after open communication and extensive discussions to ensure mutual understanding and commitment.
"Our dedication to delivering sustainable and innovative solutions remains unchanged, and we value our collaboration with international partners as we adjust our approach to best serve Neom's long-term goals."
Advanced technology
In addition to using 100% renewable energy, the proposed state-of-the-art desalination plant intended to use advanced membrane technology to produce separate brine streams, enabling the production of brine-derived products to be developed and monetised downstream.
The plan involved converting brine, the main waste output of desalination, into industrial materials to be used locally or exported internationally.
At the time, Enowa said brine generated from the desalination plant would be treated to feed industries utilising high-purity industrial salt, bromine, boron, potassium, gypsum, magnesium and rare metal feedstocks.
Neom appointed Japan’s Sumitomo Mitsui Banking Corporation as financial adviser for the project. UK-based DLA Piper was the legal adviser and Canada’s WSP was the technical adviser.
MEED's April 2024 special report on Saudi Arabia includes:> GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
> BANKING: Saudi lenders gear up for corporate growth
> UPSTREAM: Aramco spending drawdown to jolt oil projects
> DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector
> POWER: Riyadh to sustain power spending
> WATER: Growth inevitable for the Saudi water sector
> CONSTRUCTION: Saudi gigaprojects propel construction sector
> TRANSPORT: Saudi Arabia’s transport sector offers prospectshttps://image.digitalinsightresearch.in/uploads/NewsArticle/11780001/main.jpg -
Neom receives bids for schools PPP
15 May 2024
Saudi Arabian gigaprojects developer Neom has received bids for a contract to develop and operate two schools in the SR1.5tn ($500bn) development.
According to a source close to the project, around a dozen local companies submitted proposals for the scheme in late April or early May.
The project is being procured on a build, own, operate and transfer (BOOT) basis.
It is understood Riyadh-based Banque Saudi Fransi Capital is the client's financial adviser for the project.
Related read: PPP offers budget and efficiency routes
Neom recently invited companies to bid for a contract to develop four hotels at Oxagon, the development's industrial cluster.
Neom expects to receive bids for the contract in July. The hotels, understood to have a total of 1,200 keys, will also be developed using a BOOT model.
Most of Saudi Arabia's gigaprojects have been shifting the physical and social infrastructure components of their developments, in addition to their utility infrastructures, to public-private partnership (PPP) models due to budgetary constraints and a need for a more efficient approach to procuring and operating these assets long term.
MEED's April 2024 special report on Saudi Arabia includes:> GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
> BANKING: Saudi lenders gear up for corporate growth
> UPSTREAM: Aramco spending drawdown to jolt oil projects
> DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector
> POWER: Riyadh to sustain power spending
> WATER: Growth inevitable for the Saudi water sector
> CONSTRUCTION: Saudi gigaprojects propel construction sector
> TRANSPORT: Saudi Arabia’s transport sector offers prospectshttps://image.digitalinsightresearch.in/uploads/NewsArticle/11773702/main.jpg -
Ewec plans new independent water project
15 May 2024
Abu Dhabi-based offtaker Emirates Water & Electricity Company (Ewec) is considering procuring a new independent water project (IWP), according to industry sources.
The planned seawater reverse osmosis (SWRO) facility is expected to have a capacity of 90 million imperial gallons a day (MIGD), equivalent to about 409,000 cubic metres a day (cm/d).
Sources have told MEED that the proposed location is either in Al Nouf or Taweelah in Abu Dhabi.
A facility in Al Nouf will require a long pipeline that will connect the plant to Abu Dhabi, and will likely involve the participation of the Abu Dhabi Transmission & Despatch Company (Transco), according to one of the sources.
It is understood that Ewec could seek interest from developers for the new IWP by the end of the year.
This development follows the revision of the scope and capacity of Abu Dhabi's fourth IWP scheme, which is currently in the tendering stage.
The Saadiyat Island IWP will have a capacity of 60 MIGD.
When it was tendered in July 2023, the original scheme – called the Abu Dhabi Islands IWP – comprised two SWRO plants each with a capacity of 50 MIGD, to be located on the Saadiyat and Hudayriat islands in Abu Dhabi.
The current tender closing date for the Saadiyat Island IWP project is 29 June.
"They need this additional planned capacity [in Al Nouf or Taweelah] since the other scheme in Hudayriat has been cancelled," the source added.
Ewec previously said these projects are important to Abu Dhabi’s water security due to their proximity to the load centre of the Abu Dhabi islands, as well as the scheduled decommissioning in 2028 of the integrated power and water desalination plant at Sas Nakhl.
As in previously tendered IWPs, the successful developer or consortium will own up to 40% of a special-purpose vehicle that will implement these projects, while the remaining equity will be primarily held indirectly by the Abu Dhabi government.
Awarded contracts 2023
Ewec awarded the contracts for two IWPs last year. Ewec, Abu Dhabi National Energy Company (Taqa) and France’s Engie signed the water purchase agreement for the Mirfa 2 IWP project in February 2023. They reached financial close for the project, which will have a capacity of 120 MIGD, two months later.
Taqa, Ewec and South Korea’s GS Inima reached financial close on the $444m Shuweihat 4 SWRO IWP in December. Located within the Shuweihat power and water complex, the facility will supply up to 70 MIGD of potable water. Commercial operations are expected to commence in the second quarter of 2026.
MEED's April 2024 special report on the UAE includes:
> COMMENT: UAE rides high on non-oil boom
> GVT & ECONOMY: Non-oil activity underpins UAE economy
> BANKING: UAE banks seize the moment
> UPSTREAM: Adnoc oil and gas project spending sees steep uptick
> DOWNSTREAM: UAE builds its downstream and chemical sectors
> POWER: UAE marks successful power project deliveries
> WATER: Dubai tunnels project dominates UAE pipeline
> DUBAI CONSTRUCTION: Dubai real estate boosts construction sector
> ABU DHABI CONSTRUCTION: Abu Dhabi makes major construction investmentshttps://image.digitalinsightresearch.in/uploads/NewsArticle/11772504/main2450.gif -
Saudi Arabia expands PPP pipeline
14 May 2024
Register for MEED’s guest programme
Saudi Arabia’s National Centre for Privatisation & PPP (NCP) has seen significant progress in its public-private partnership (PPP) programme in the past year, according to Salman Badr, vice-president of the state PPP procuring authority.
Speaking at the MEED Mena Construction Summit in Riyadh, Badr said that NCP has a “healthy pipeline” of over 200 approved projects in different stages of development.
He noted that another 300 projects are currently under review.
It is understood that the pipeline includes more than 180 schools, following the award of contracts to develop and operate 60 schools each in Jeddah and Medina in 2020 and 2022.
“New sectors like healthcare and education have been opened up for public-private partnerships beyond the traditional water and power sectors,” said Badr.
The kingdom is understood to have awarded more than 60 PPP contracts since 2017, when NCP was formed.
Badr said private sector participation has “allowed the government to deliver infrastructure projects much more efficiently”.
Recently completed projects include the kingdom’s first hospital PPP project in Medina.
In addition to healthcare and school facilities, NCP’s pipeline includes airports, seaports and roads, catering to Saudi Arabia’s growing infrastructure needs as the population and economy expand.
MEED’s April 2024 special report on Saudi Arabia includes:> GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
> BANKING: Saudi lenders gear up for corporate growth
> UPSTREAM: Aramco spending drawdown to jolt oil projects
> DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector
> POWER: Riyadh to sustain power spending
> WATER: Growth inevitable for the Saudi water sector
> CONSTRUCTION: Saudi gigaprojects propel construction sector
> TRANSPORT: Saudi Arabia’s transport sector offers prospectshttps://image.digitalinsightresearch.in/uploads/NewsArticle/11768175/main.jpg -
Rua Al Madinah seeks construction partners
14 May 2024
Register for MEED’s guest programme
Saudi Arabia’s Rua Al Madinah, the Public Investment Fund (PIF) subsidiary tasked with Medina’s tourism and cultural development, has revealed that construction work is under way on the main tunnel that will take all incoming traffic towards the Harem area.
Extensive works are also ongoing to redevelop the airport road and modernise the city’s wider transportation network.
“There are significant opportunities for contractors and partners,” said Abdulsalem Alharbi, projects delivery director, Rua Al Madinah, at the MEED Giga Projects event in Riyadh on 13 May.
“We are looking for capable service providers and strategic partners to support the large-scale infrastructure and construction works.”
Alharbi said five packages of residential towers – comprising over 120 towers in total – are currently in various stages of design and tender.
The superblock 5 package includes 18 towers and is already on the market, while superblock 4, involving 19 towers, is in the design phase.
Packages District 9 and District 10, consisting of 35 towers and 46 towers, respectively, are seeking partners to take on development roles.
Alharbi also highlighted several investment opportunities being developed to support the growing tourism sector, including a central kitchen, cold storage warehouse, commercial laundry and staff accommodation facilities.
“This represents a major chance for local and international companies to participate in the redevelopment of Medina,” he added.
Project background
Crown Prince Mohammed Bin Salman Bin Abdulaziz Al Saud inaugurated the infrastructure works and unveiled the masterplan for the Rua Al Madinah development in August 2022.
Before this, US-based Hill International was awarded a contract in 2021 for the project management of road works at the Madinah Central Area (MCA).
In June 2022, a local media report cited China Railway 18th Bureau as having won a contract to build the Medina tunnel.
The tunnel, valued at $970m, was expected to be completed within 42 months. The work includes building the AH tunnel, the Ali Bin Abi Talib tunnel, the airport tunnel and related projects, including a pedestrian bridge.
Rua Al Madinah Holding Company CEO Ahmed Al Juhani told MEED in February that construction work on the Ali Bin Abi Talib road has been completed, making it the first tunnel to be finished as part of the Rua Al Madinah project.
In February 2023, US-based Parsons won a $15m contract to provide construction project management consultancy and contract administration services (PMCM) for the project. The US consultancy firm will manage the main infrastructure works, including the tunnel, road and utility works.
MEED’s April 2024 special report on Saudi Arabia includes:> GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
> BANKING: Saudi lenders gear up for corporate growth
> UPSTREAM: Aramco spending drawdown to jolt oil projects
> DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector
> POWER: Riyadh to sustain power spending
> WATER: Growth inevitable for the Saudi water sector
> CONSTRUCTION: Saudi gigaprojects propel construction sector
> TRANSPORT: Saudi Arabia’s transport sector offers prospectshttps://image.digitalinsightresearch.in/uploads/NewsArticle/11766934/main.jpg