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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. 

Click here for MEED's latest water developer ranking

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Jennifer Aguinaldo

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    > BANKING: Saudi lenders readjust to lower lending and deposit climate
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    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
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    Colin Foreman