Acwa Power tightens grip on GCC water
26 January 2024
This report also includes: Mena water delivers exceptional growth
Time-bound sustainability objectives and improving economic conditions kept the GCC region’s water sector projects buoyant in 2023.
This coincided with the key milestones achieved by independent water producer (IWP) contracts awarded between 2020 and 2021, which reached either the commissioning or commercial operation stages in 2023 following two years of disruption caused by the Covid-19 pandemic.
The UAE awarded three IWP contracts in 2023 and Saudi Arabia awarded one. This was a remarkable recovery considering that there was only one contract award in 2021 and none in 2022, barring the directly negotiated contract for the development of Shuaibah 3 in Saudi Arabia.
In contrast, there were no new awards for independent water and power producer (IWPP) projects – a model that worked successfully from the 1990s until the mid-2010s, when policies started to shift away from thermal desalination technologies and towards IWPs that rely on reverse osmosis technology for water treatment.
Source: MEED
IWP awards
The IWP contracts awarded in 2023 include Mirfa 2 and Shuweihat 4 in Abu Dhabi, Rabigh 4 in Saudi Arabia and Hassyan 1 in Dubai. The four IWP schemes have a total combined capacity of about 2.3 million cubic metres a day (cm/d).
The award of these contracts resulted in higher net and gross capacities for Saudi utility developer Acwa Power, France’s Engie and Spain-headquartered GS Inima, relative to the last MEED water developer ranking published in January 2023.
Acwa Power’s overall net capacity leapt by 20 per cent in 2023 to reach approximately 3.5 million cm/d. This resulted from its 40 per cent equity in Dubai’s Hassyan 1 IWP project, which has a capacity of over 818,000 cm/d; and its 45 per cent shareholding in the 600,000 cm/d Rabigh 4 IWP.
Engie likewise posted an impressive two-digit rise in terms of its net capacity, growing from 1.67 million cm/d to 1.87 million cm/d, thanks to its 40 per cent equity in the Mirfa 2 IWP project in Abu Dhabi.
The size of the two projects that Acwa Power won in 2023, however, meant it managed to further widen its lead over Engie and the other private water developers operating assets across the GCC states.
At 3.5 million cm/d, Acwa Power’s overall net capacity is equivalent to the total combined net capacity of the next five developers in the ranking: Malaysia’s Malakoff, Japan’s Marubeni and Sumitomo, and GS Inima, in addition to Engie.
The Saudi utility developer has also for the first time overtaken Engie in terms of gross water desalination capacity. As
of the end of 2023, its gross capacity crossed 7.7 million cm/d compared to Engie’s 7.0 cm/d.
In terms of ranking, GS Inima registered the most significant improvement among the top 10 private water developer companies, advancing three spots to rank fifth, having grown its net equity capacity nearly 50 per cent to reach close to 383,000 cm/d. This change takes into consideration that Kuwait’s Gulf Investment Corporation (GIC), which was included in the previous index, has been excluded this year due to its role as an investor rather than a developer of water desalination projects.
GS Inima will maintain a 60 per cent shareholding in Abu Dhabi’s Shuweihat 4 IWP scheme, which is expected to reach commercial operation by mid-2026.
Despite not having won any new contracts, Saudi Brothers Commercial Company and Abdulaziz al-Ajlan, both Riyadh-based, managed to land in the top 10 ranking of water developers this year, mainly due to the exclusion of both GIC and Water & Electricity Holding Company (Badeel), which is fully owned by Saudi Arabia’s Public Investment Fund.
Outlook
The next 12 months will likely be an active period for the water industry, particularly in Saudi Arabia.
This is mainly due to the target set by the kingdom’s Environment, Water & Agriculture Ministry to meet 92 per cent of Saudi Arabia’s water demand using desalinated water by 2030, to reduce reliance on ground and surface water.
Both Saudi Water Conversion Corporation, the world’s largest desalinator, which supplies 69 per cent of Saudi Arabia’s water, and Saudi Water Partnership Company (SWPC) will have to get “plants up and running as soon as possible to make this target”, says Robert Bryniak, CEO of Dubai-based Golden Sands Management Consulting.
Elsewhere – particularly in the UAE and, to a lesser extent, Oman – expiring contracted capacity and growing demand are expected to continue to drive the procurement of additional seawater reverse osmosis (SWRO) capacity.
The past few years have seen several international and local developers and investors enter the GCC’s water desalination market.
“The water industry could benefit by having more engineering, procurement and construction (EPC) contractors and developers, but I do not see this holding back procurers in launching new projects,” says Bryniak. “Having said that, there is definitely room for the water industry to accommodate more developers and EPC contractors.”
Tariff trend
Tariffs, or the long-term levelised costs that offtakers pay for water that private developers produce, are expected to trend upwards in 2024. This is due to higher interest rates and inflationary pressures on materials and supplies.
“These considerations, coupled with a limited number of experienced EPC contractors with excess contracting capacity, suggest that it will be tough seeing lower tariffs this year,” Bryniak says.
“We expect this trend due to the expected higher costs,” says another water desalination expert based in the UAE.
“The tariff for the Hassyan 1 IWP was low, but I see that as an anomaly,” says Bryniak, referring to the $cents 36.5 a cubic metre ($c/cm) tariff that Acwa Power proposed last year to develop the Hassyan 1 IWP in Dubai.
The previous tariff bid for the project was about 30 per cent lower than that proposed by Acwa Power last year, and it is likely that the bidder “had tremendous pressure to maintain a relatively low tariff to secure the project”, says Bryniak.
Future projects
SWPC issued the tender for the contract to develop the Jubail 4 and 6 IWP schemes on 1 January, and the tendering process is also under way for the Ras Mohaisen IWP. Both contracts are expected to be awarded before the end of this year.
In addition, SWPC has indicated that four more IWPs are expected to reach commercial operation by 2027, which implies that it could start seeking interest from developers for these projects in the next 12-24 months.
Under the latest plan, the Ras al-Khair 2 and 4, Al-Rais 2 and Tabuk 1 IWP projects will have a combined total capacity of 1.7 million cm/d.
In the UAE, Acwa Power is understood to be the sole bidder for the 400,000 cm/d Hamriyah IWP in Sharjah. The contract could be awarded in the first half of 2024.
In Abu Dhabi, the tendering process is under way for two SWRO plants that will be developed under one contract. The Abu Dhabi Islands SWRO projects will each have a capacity of 227,000 cm/d.
Kuwait’s two IWPPs – Al-Zour North 2 & 3 and Al-Khiran 1 – and the Facility E IWPP in Qatar include water desalination units with capacities of 695,000 cm/d and 454,000 cm/d, respectively.
MEED understands that an option is open for the bidders to use membrane technology for the desalination units of these planned facilities.
Unstoppable
Acwa Power thus appears unstoppable given its plans to further consolidate its presence in the region’s water industry, and pursue new technologies and partnerships, as its CEO Marco Arcelli told MEED in July last year.
The company plans to work with Japanese membrane technology provider Toray Industries to explore energy-saving technologies for SWRO. It is also working with other suppliers located in the US, Japan and China, as well as with Saudi Arabia’s King Abdullah University of Science & Technology to explore energy-efficient solutions for treating seawater.
The scale of the IWP projects Acwa Power has won between 2019 and 2023 enables it to outprice key competitors, or bid for projects deemed too risky by other developers.
The firm’s offer to develop Rabigh 4 for $c0.458/cm, for instance, was lower than what some of its competitors anticipated Acwa Power was capable of offering, although it lost Mirfa 2 to Engie a few months earlier.
As it is, Acwa Power won five of the 12 IWP contracts that were tendered and awarded in Saudi Arabia, the UAE and Oman during the past four years, equivalent to more than 56 per cent of the gross capacity awarded over that period.
Other developers should take note as they establish strategies to win more contracts in the future and potentially slow down Acwa Power's three-year sector dominance.
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Ewec invites Al-Sila wind bids
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Firms submit Saudi Lenovo production plant bids
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Ninety express interest for Taif airport PPP
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Taqa caps 2024 with $1.9bn net income
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Abu Dhabi National Energy Company (Taqa) completed its full 2024 fiscal year with a net income of AED7.1bn ($1.9bn) on the back of revenues that reached AED55.2bn.
The previous year’s net income is only 1.5% higher compared to the prior year, excluding one-off items worth AED10.8bn related to the acquisition of a 5% stake in Adnoc Gas and AED1.1bn deferred tax charge due to the introduction of the UAE corporate tax.
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Some of the firm’s highlights in 2024 included merging Abu Dhabi Distribution Company (ADDC) and Al-Ain Distribution Company (AADC) into one brand, known as Taqa Distribution.
Taqa also continued to focus on Saudi Arabia, having reached financial close with its partners last year for the Juranah independent strategic water reservoir project and the Najim cogeneration plant project.
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Jafurah cogeneration plant expansion talks start
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Saudi Aramco and Korea Electric Power Corporation (Kepco) are understood to be undertaking talks to expand the capacity of the $500m Jafurah cogeneration independent steam and power plant (ISPP) in Saudi Arabia.
The construction of the facility is nearing completion and negotiations have started for phase 2 of the project, a source close to the project tells MEED.
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Unconventional programme
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Ewec invites Al-Sila wind bids
13 February 2025
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Abu Dhabi state offtaker Emirates Water & Electricity Company (Ewec) has invited prequalified developers to submit their proposals for a contract to develop a 140MW wind power project in Abu Dhabi.
The Al-Sila wind independent power project is a greenfield renewable energy project with a generation capacity of up to 140MW. When fully operational, it will more than double the existing wind generation capacity in the UAE.
Ewec said it expects to receive bids by Q2 2025.
Companies understood to have expressed interest in bidding for the contract include Japan’s Marubeni Corporation and Jera, France’s Engie and EDF Renewables, Saudi Arabia’s Acwa Power and Alfanar, and Beijing-based PowerChina, among others.
Ewec has not disclosed the list of prequalified bidders, but industry sources say most of the companies that expressed interest also passed the prequalification phase.
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Masdar developed the 103.5MW wind power projects, which use “the latest technology and innovation to capture low wind speeds at utility scale, adopting advances in material science and aerodynamics to make wind power possible in the country”.
The Al-Sila wind farm takes the total number of IPPs under various procurement stages in Abu Dhabi to six. The other schemes are:
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Contractors have submitted proposals to build a manufacturing facility in Riyadh for Chinese computer maker Lenovo.
MEED understands that the proposals for the project, known as the Oasis Project, were submitted on 10 February.
The tender notice was issued on 3 January.
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The second phase covers the construction of the second plant building and other associated buildings. The second phase is expected to be completed by August 2026.
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Lenovo secured a $2bn investment deal with Alat to manufacture computer devices in the kingdom in January.
In May 2024, Lenovo signed a collaboration agreement with Alat to set up a manufacturing facility in Saudi Arabia.
The funding will also support Lenovo in establishing a regional headquarters for the Middle East and Africa market in Riyadh. The headquarters will include customer centres, research and development centres, and manufacturing facilities for personal computers and servers.
In February last year, the PIF unveiled its $100bn capital-backed company Alat, which aims to transform Saudi Arabia into a global hub for electronics and advanced industries.
The company aims to create 39,000 direct jobs and achieve a direct non-oil GDP contribution of $9.3bn in Saudi Arabia by 2030.
It was reported that Alat would have seven business units focusing on areas such as semiconductors, artificial intelligence, next-generation infrastructure, and smart appliances and smart buildings.
According to the PIF, Alat will manufacture more than 30 product categories, including robotic systems, communications systems, advanced computers and digital entertainment products, as well as advanced heavy machinery used in construction, building and mining.
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South Korea is reported to produce about 20% of the global supply of semiconductors, which are essential for laptop production, while Taiwan is recognised for its advanced semiconductor manufacturing capabilities. Additionally, India is working to enhance its domestic laptop production, although it currently imports over 80% of the laptops in use.
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Ninety express interest for Taif airport PPP
13 February 2025
Some 90 firms have expressed interest in bidding for a contract to develop and operate a new international airport in Taif in the kingdom’s Mecca province.
Saudi Arabia’s Matarat Holding, through the National Centre for Privatisation & PPP (NCP), invited firms to express interest in bidding for the contract in early December.
The international and local firms that expressed their interest are:
- Abdul Ali Al-Ajmi Company (local)
- Abrdn Investcorp Infrastructure Investments (UK)
- Aeroporti Di Roma (Italy)
- Algihaz Holding (local)
- Al-Jaber Contracting (local)
- Al-Modon Al-Arabia Company (local)
- Al-Rashid Trading & Contracting Company (local)
- Al-Sharif Contracting & Commercial Development (local)
- Al-Yamama Company for Trading & Contracting (local)
- Al-Ayuni Investment & Contracting Company (local)
- Alghanim International General Trading & Contracting (Kuwait)
- Almabani General Contractors (local)
- Almansouryah Company General Contracting (local)
- AlMozaini Real Estate (local)
- Almutlaq Real Estate Investment Company (local)
- Alternative Resources Investment
- Annasban Group (local)
- Asyad Holding Company (local)
- AVIC-KDN Airport Engineering (China)
- Bangalore International Airport (India)
- Binladin International (local)
- Bouygues Batiment (France)
- CACC International Engineering
- China Harbour Engineering Company (China)
- Surbana Consultants (Singapore)
- Buna Al-Khaleej Contracting (local)
- China National Aero-Technology International Engineering Corporation (China)
- China Railway Construction Corporation (China)
- Clavrix (US)
- Consolidated Contractors Company (Greece)
- Contrax International (UAE)
- Corporacion America Airports (Luxembourg)
- Currie & Brown (UK)
- DAA International (Dublin Airport Authority, Ireland)
- Dar Al-Handasah Consultants (Shair & Partners, Lebanon)
- DG Jones & Partners (UAE)
- EB Cornerstone (UK)
- Edgenta Arabia (Malaysia)
- Egis Project (France)
- Enzar Company for Operation & Maintenance (local)
- Erada Advanced Projects (local)
- EXP Arabia (Canada)
- FAS Energy (local)
- Ghesa Ingeniera Technologia (Spain)
- GMR Airports (India)
- Gulf Investment Corporation (Kuwait)
- Haji Abdullah AliReza & Company (local)
- IC Ictas (Turkiye)
- Indiza Airport Management (South Africa)
- Innovative Contractors for Advanced Dimensions (ICAD, local)
- International Energy (local)
- Kalyon Insaat (Turkiye)
- Kolin Insaat (Turkiye)
- Korea Airports Corporation (South Korea)
- Koushan Real Estate Development Company (local)
- Lamar Holding (local)
- Limak Insaat (Turkiye)
- Lynx Contracting Company (local)
- Mada International Holding Company (local)
- Makyol Insaat (local)
- Manchester Airport Group (UK)
- Middle East Tasks (local)
- Modern Airports (local)
- Mota-Engil (Portugal)
- Mowah Company (local)
- Munich Airport International (Germany)
- Namaya Investment Company (local)
- Nasser Abdullah Abu Sarhad (local)
- National Transportation Solution Company (local)
- Nesma & Partners (local)
- Nesma Company (local)
- Pini Group (Switzerland)
- Ports Projects Management & Development Company (local)
- Salso & Associates (Greece)
- Samsung C&T Corporation (South Korea)
- Sarh Developments (local)
- Saudi Arabian Trading & Construction Company (local)
- Saudi Binladin Group (local)
- Saudi Building Technic Maintenance Company (local)
- Skilled Engineers Contracting (local)
- Sumou Real Estate Company (local)
- Tamasuk Holding Company (local)
- Tatweer Buildings Company (local)
- Tav Airports Holding (Turkiye)
- Technical Development Company for Contracting (local)
- Terminal Yapi Ve Ticaret (Turkiye)
- Vantage Group (Australia)
- Vision International Investment Company (local)
- WCT International (Malaysia)
- Zamil Group (local)
The new Taif International airport will be located 21 kilometres southeast of the existing Taif airport, with a capacity to accommodate 2.5 million passengers by 2030.
The clients opted for a 30-year build-transfer-operate (BTO) contract model, including the construction period.
In addition to a new airport terminal, the proposed design features a runway with a full-length parallel taxiway connecting to a single commercial apron.
The scope includes facility buildings, utility networks, car parks and access roads, as well as provisions for additional expansions to meet future subsystem requirements.
The new Taif International airport is expected to meet the projected increase in demand by 2055 and contribute to the economic development of Taif city and its surrounding areas, in line with the kingdom’s National Aviation Strategy.
It is also expected to meet the needs of Umrah pilgrims as a viable alternative within the region’s multi-airport system, which includes King Abdulaziz Airport in Jeddah, Prince Mohammed Bin Abdulaziz Airport in Medina and Prince Abdulmohsen Bin Abdulaziz Airport in Yanbu.
Other airport PPPs
In addition to the Taif International project, three other airports comprise the first stage of Saudi Arabia’s latest plan to modernise and privatise its international and domestic airports.
The other planned airport public-private partnership (PPP) schemes are in Abha, Hail and Qassim.
Matarat and NCP recently tendered the contract to develop and operate a new passenger terminal building and related facilities at Abha International airport. They expect to receive bids by April.
Located in Asir province, the first phase of the Abha International airport PPP project is set for completion in 2028. It will increase the airport terminal area from 10,500 square metres (sq m) to 65,000 sq m.
The contract scope includes a new rapid-exit taxiway on the current runway, a new apron to serve the new terminal, access roads to the new terminal building and a new car park area. The scope also includes support facilities such as an electrical substation expansion and a new sewage treatment plant.
The transaction advisory team for the client on the Abha airport PPP scheme comprises UK-headquartered Deloitte and Ashurst as financial and legal advisers, respectively, and ALG as technical adviser.
Previous tenders
The Taif, Hail and Qassim airport schemes were previously tendered and awarded as PPP projects using a BTO model.
Saudi Arabia’s General Authority of Civil Aviation (Gaca) awarded the contracts to develop four airport PPP projects to two separate consortiums in 2017.
A team of Tukey’s TAV Airports and the local Al-Rajhi Holding Group won the 30-year concession agreement to build, transfer and operate airport passenger terminals in Yanbu, Qassim and Hail.
A second team, comprising Lebanon’s Consolidated Contractors Company, Germany’s Munich Airport International and local firm Asyad Group, won the BTO contract to develop Taif International airport.
However, these projects stalled following the restructuring of the kingdom’s aviation sector.
Saudi Arabia has already privatised airports, including the $1.2bn Prince Mohammed Bin Abdulaziz International airport in Medina, which was developed as a PPP and opened in 2015.
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