meed-logo

line1 line2 line3
SIGN IN / REGISTER

Water sector braces for likely slowdown

27 December 2024

 

Geopolitical tensions, climate change and higher-than-average population growth have exacerbated the water demand and supply gap across the Middle East and North Africa (Mena) region, home to some of the world’s most water-stressed countries.

For example, Jordan, where available water per capita is equivalent to only 12% of the absolute water scarcity level, hosts over 700,000 refugees fleeing wars and conflicts in neighbouring countries.

Most regional governments have developed and started to implement water strategies aimed at narrowing this gap. Subsidies are being phased out, environmental campaigns are being developed and digital solutions are being deployed in order to manage demand and improve efficiency.

Expanding desalination and treatment capacity, increasing treated sewage effluent (TSE) reuse, boosting reservoir capacity and building more efficient transmission and distribution networks are key levers used to improve supply.

Strong spending 

These efforts have prompted significant capital spending on more energy-efficient water production, distribution and storage facilities, typically in partnership with private investors, particularly among the more affluent states.

According to data from regional projects tracker MEED Projects, the Mena region awarded $17bn of project contracts across the water desalination, treatment, transmission and distribution, storage and district cooling subsectors in the first nine months of 2024.

This figure represents about 72% of the contracts awarded in 2023 and is slightly above the average value of annual contract awards in the preceding five years.

With only a few more packages expected to be awarded before the end of the year, 2024 looks set to be one of the best years so far in terms of water project activity, even if it fails to match the record value of contracts awarded in 2023, which reached almost $24bn.

In 2024, Saudi gigaproject developer Neom set the pace in January by awarding a $4.7bn contract to build dams at the Trojena Mountain Resort in Tabuk to Italian contractor WeBuild. 

The contract covers the construction of three dams that will form a freshwater lake for the Trojena ski resort. The main dam will have a height of 145 metres and will be 475 metres long at its crest. It will be built using 2.7 million cubic metres of roller compact concrete.

While this project does not necessarily belong to the band of solutions that aim to narrow the water supply and demand gap, the overall development is part of Saudi Arabia’s drive to boost tourism and diversify its economy away from oil.

Meanwhile, 2024 also saw the award by UAE northern emirate utility Sharjah Electricity, Water & Gas Authority of the contract to develop its first independent water project (IWP), the 400,000 cubic-metres-a-day facility in Hamriyah, to Saudi utility developer Acwa Power, the contract’s sole bidder.

In May, Saudi Arabia’s National Water Company announced that it had completed the award of 10 contracts under the first phase of its privatisation programme. Each rehabilitate, operate and transfer contract involves the retrofitting or expansion of existing sewage treatment plants and associated network, and their long-term operation and management. The facilities are expected to deliver water at the TSE level for irrigation reuse.

On the greenfield sewage treatment front, Saudi Water Partnership Company (SWPC) awarded a $400m contract to develop the Al-Haer independent sewage treatment plant (ISTP) project to a team comprising the local Miahona Company and Belgium’s Besix. The facility is the largest and first to be tendered under the third round of the water offtaker’s ISTP procurement programme.

In September, Chennai-headquartered VA Tech Wabag confirmed it had won a $317m contract to build the Ras Al-Khair seawater reverse osmosis (SWRO) facility in Saudi Arabia using an engineering, procurement and construction (EPC) model. The project client is Saudi Water Authority (SWA), formerly Saline Water Conversion Corporation.

In Oman, Nama Water Services awarded two water distribution network packages, worth a combined $600m, catering to Al-Dhahirah Governorate.

Jordan also appointed a team comprising Paris-based Meridiam, Suez and Vinci Construction Grands Projets, along with Egypt’s Orascom Construction, for the contract to develop the Aqaba-Amman water conveyance and desalination scheme. It is the country’s largest infrastructure project to date and the first phase is valued at an estimated $2bn-$3bn.

The project is crucial to addressing Jordan’s severe water shortage problem, piping desalinated water over 445 kilometres from the southern Red Sea coast to the country’s northern regions. The consortium is talking to lenders and aims to reach financial close for the project in 2025.

Slower momentum

Despite 2024 being a good year for contract awards, it fell short of the expectation built over the past few years, when the region’s largest economies began to execute their long-term water strategies.

For example, in Saudi Arabia, the years-long restructuring of the domestic water sector took a significant turn in 2024, with Water Transmission Company (WTCO), the kingdom’s licensed desalinated water transmission operator, gaining a broader portfolio of projects. As a result, the mandate to procure upcoming water transmission pipelines has been transferred to WTCO from SWPC.

The slower pace of IWP contract awards in Saudi Arabia was somewhat offset by a slew of tenders from SWA. The authority received bids for the EPC contracts to build four SWRO facilities in 2024, although as of November it had only managed to award one.

Earlier in 2024, Saudi gigaproject developer Neom also shelved a project to develop a zero-liquid discharge (ZLD) SWRO plant.

“The year may not have been as strong as 2023, but it is still a good year,” says Robert Bryniak, CEO of Dubai-based Golden Sands Management (Marketing) Consulting. “Some projects have been delayed or cancelled – for instance a few in Saudi Arabia – but all in all [2024 has been] a good year for the water business.”

Bryniak adds that Neom’s ZLD scheme is one of the year’s shelved projects that he would like to see revived in the future.

Beyond the GCC states, Morocco and Egypt are endeavouring to move their planned SWRO projects into the tendering phase.

In Morocco, Office National de L’Electricite et de L’Eue Potable (Onee) extended the review of its second IWP in Nador while waiting for its first IWP in Casablanca to reach financial close.

The first batch of renewable energy- powered desalination plants in Egypt has yet to reach the proposals stage despite the Sovereign Fund of Egypt having completed the bid prequalification process in 2023.

Potential contract awards

According to data from MEED Projects, an estimated $34bn-worth of water projects are in the tendering stage across the Mena region. A further $40bn-worth is in the prequalification stage and $57bn is in the design and study phases.

The $22bn Dubai Strategic Sewerage Tunnels (DSST) scheme stands out among the upcoming projects due to its scale, as well as for the chosen procurement approach.

The project aims to convert Dubai’s existing sewerage network from a pumped system to a gravity system by decommissioning the existing pump stations and providing a sustainable and reliable service that is fit for the future.

In April, Dubai Municipality launched the procurement process for the DSST project, which is to be developed as a public-private partnership (PPP).

While a dose of pessimism persists over the chosen PPP model – in part due to the project’s scale and strong civil works orientation, and Dubai’s dismal track record in procuring PPP schemes outside the utility sector – the project has managed to attract strong interest from EPC contractors, as well as from potential investors and sponsors.

Some of those that have sought to prequalify as investors, such as Begium’s Besix, Beijing-headquartered China Railway Construction Corporation and South Korea’s Samsung C&T, have previously been prequalified as EPC contractors for the DSST project, which suggests that the preferred approach of prequalifying EPCs ahead of investors could offer advantages.

In Saudi Arabia, WTCO, SWA, SWPC and Neom’s utility subsidiary Enowa are each expected to let several contracts in 2025, while Bahrain and Abu Dhabi could award one IWP contract each.  

However, a robust overall pipeline does not necessarily guarantee that 2025 will resemble the upward trajectory that the sector has seen in the past two years.

“This year could be a turning point for the water industry throughout Mena,” says Bryniak, alluding to the possibility that, come January, the foreign and climate policies of the new occupant of the White House could affect the trend of water production capacity buildout in the Mena region.

Bryniak says that if US President-elect Donald Trump follows through with his promises, then we may be in store for, among other events, lower energy prices as the US drills more oil; a dampening of world trade as the US places tariffs on imports, especially on Chinese goods and services; less focus on the environment; and, generally, a more isolationist America.

“In my view, much depends on how much oil prices fall,” he continues. 

“A significant drop in oil prices could result in cut-backs in a lot of development projects, and this, in turn, will adversely impact water demand and the overall build programme.”  

However, the impact will not be uniform across asset types and procurement models, Bryniak notes. He expects water PPP projects to continue to grow, especially if capital availability is reduced by lower oil prices, as this is one way to preserve capital for use in other areas. 

“I do not see any reason for tariffs to fall further in 2025. Tariffs, in my view, will remain roughly where they are now or increase slightly,” adds Bryniak.  

However, the executive says that EPC contracts will likely have “a higher opportunity cost”, so there might be a reduced focus on this type of procurement model.  

He concludes: “To the extent that development projects get trimmed down due to less capital being available as a result of significantly lower oil prices, then water procurers and other developers will likely scale back their projects.”

https://image.digitalinsightresearch.in/uploads/NewsArticle/13146291/main.gif
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Chinese contractor wins Morocco solar plant deal

    10 August 2026

    China Harbour Engineering Company (CHEC), a subsidiary of China Communications Construction Company (CCCC), has won a contract to build a solar photovoltaic (PV) power plant in Fez in northern Morocco.

    Known as GreenPower Morocco 4 (GPM4), the project is being developed by Moroccan company GPM Holding through its utility-scale solar subsidiary GPM Parks.

    The project covers engineering design, equipment procurement and installation, construction of an operation and maintenance building, grid connection and commissioning. It also includes upgrades to the associated substation.

    According to CHEC, the completed plant will supply electricity to the local grid, although it did not disclose the project’s capacity or contract value. 

    The project is being developed under Law 13-09, which provides Morocco’s framework for private renewable energy generation.

    According to its website, GPM Holding is also developing another solar PV project called GreenPower Morocco 2 (GPM2). This follows the completion of its first solar project, the 34MW project (GPM1) commissioned in Tangier in 2024. 

    GPM1 was developed by Green Power Morocco, a special purpose vehicle owned by GPM Holding and UAE-based Amea Power. The $30m project covers 75 hectares and includes 91,000 PV panels. It is expected to generate about 66,149MWh a year.

    The project has a 25-year power purchase agreement in place with Amendis, a subsidiary of Veolia Morocco. PowerChina was the main engineering, procurement and construction (EPC) contractor.

    Chinese contractors have previously been involved in other projects in Morocco’s renewable energy sector.

    Shandong Electric Power Construction Company (Sepco 3), a subsidiary of PowerChina, was part of the EPC consortium for the 200MW Noor 2 concentrated solar plants and 150MW Noor 3 concentrated solar power projects at the Noor Ouarzazate complex.

    New contract awards have been limited in Morocco in 2026, although six solar PV plants are now in the execution stage under phases one and two of the 305MW Noor Atlas solar PV programme.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18263680/main.jpg
    Mark Dowdall
  • Shamal picks Dutco for Dubai Zoo site homes

    10 August 2026

    Dubai-based Shamal Holding has awarded local contractor Dutco Construction the main construction works contract for a low-rise residential project on the site of the former Dubai Zoo in Jumeirah 1.

    The project will comprise 90 low-rise homes and is designed as a residential leasing community that will remain under Shamal’s ownership, with all homes offered for premium leasing.

    The development will retain mature trees from the former zoo and is planned around shared courtyards, landscaped open spaces and a central park. Residents will have access to a clubhouse, wellness area, children’s play area, family pool, lounge and gym.

    The architect is DXB Lab. The local H&H is the development manager for the project.

    Dutco has previously worked with Shamal on infrastructure elements of the Dubai Harbour and Dubai Harbour Marinas developments.

    Shamal’s wider real estate portfolio includes the Naia Island, Dubai Harbour and Nad Al-Sheba Gardens developments. The company also holds hospitality and leisure assets, including partnerships with Jumeirah, Hilton and Baccarat, and operates attractions such as Skydive Dubai and Deep Dive Dubai.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18262386/main.png
    Colin Foreman
  • WEBINAR: Mena Oil & Gas Projects Market 2026-27

    10 August 2026

    Webinar: Mena Oil & Gas Projects Market 2026-27 
    Thursday 27 August 2026 | 11:00 AM GST  |  Register now

    Agenda:

    • Summary of the Mena oil, gas and petrochemicals projects market 
    • Overview of major megaprojects, including project programmes
    • Analysis of active contracts and spending to date
    • Review of top contracts by work already awarded
    • Long-term capital expenditure outlays and forecasts
    • Key contracts expected to be tendered and awarded over the next 18 months
    • Leading clients, contractors and market participants
    • Spending by segment: oil, gas and petrochemicals (upstream, downstream, onshore and offshore) 
    • Audience Q&A 

    Hosted by: Indrajit Sen, MEED’s oil & gas editor

    Click here to register

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18260597/main.gif
    Indrajit Sen
  • Spanish firm renews Yanbu desalination O&M contract

    10 August 2026

    Spain’s Aqualia has announced it has renewed a contract to operate and maintain three floating desalination plants in Yanbu on Saudi Arabia’s Red Sea coast.

    The contract was awarded by the National Shipping Company of Saudi Arabia (Bahri) and will run until 14 September 2028, with an option to extend for a further two years.

    The three reverse osmosis (RO) plants are mounted on barges and have a combined production capacity of 150,000 cubic metres a day (cm/d). Each plant has a capacity of 50,000 cm/d.

    The three plants were originally deployed at Al-Shuqaiq and are designed to be relocated along Saudi Arabia’s coastline according to water demand. The barges are currently located at Yanbu.

    The $255m floating desalination project was commissioned for the Saudi Water Authority in 2022, with Bahri as the developer and UAE-based Metitio as the main contractor.

    Bahri is publicly listed on the Saudi Exchange but has significant government ownership, with the Public Investment Fund (PIF) holding 22.5% and Saudi Aramco Development Company owning 20% of the company.

    Aqualia is providing operation and maintenance services in Saudi Arabia through its joint venture Haji Abdullah Alireza Integrated Services Company (Haaisco), in which it holds a 51% stake.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18259350/main.jpg
    Mark Dowdall
  • Kuwait shows tentative signs of economic development

    7 August 2026

     

    Kuwait was one of the chief targets of Iranian drone and missile strikes during July, but against the backdrop of regional instability, the Kuwaiti authorities also managed to conclude a series of significant deals during the month. That suggests that, if the US and Iran can come to some sort of agreement to end their conflict, there is the potential for the Kuwaiti economy to diversify and expand in a way that it has, until now, struggled to do.

    The sense of nascent progress was bolstered in early August, when a survey of local businesses found that the non-oil sector had returned to growth at the start of the third quarter, having been in a slump since the start of the war. However, the risk of renewed fighting means most observers remain deeply cautious about whether the latest purchasing managers index (PMI) is just a blip, or the start of a longer trend.

    Debt deals

    The first big deal came on 22 July, when the government sold $6bn-worth of bonds. It was the second debt issuance by the authorities since a long-awaited public debt law was passed by decree last year. The latest package included debt with tenors of three, five and 10 years. In a sign of the turbulent geopolitical environment, the bonds were priced at 70-85 basis points over US Treasuries. Notably higher than the 40-50 basis point spread the government achieved in its bond sale late last year.

    The second significant development came just a few days later, with Kuwait Oil Company (KOC) unveiling a $16bn deal with international investors Blackstone, Brookfield and KKR for its crude oil pipeline network. In a similar structure to deals struck in the past by Abu Dhabi National Oil Company (Adnoc) and Saudi Aramco, KOC will lease the country’s domestic and export pipelines to a new joint venture it has set up with the trio of international partners. The Kuwaiti energy company will then lease back the pipelines on an exclusive basis, in return for a volume-based tariff.

    KOC will have a 51% stake in the joint venture and – in line with Kuwaiti law – will retain full ownership and operational control of the 320-kilometre network.

    It was the largest energy infrastructure deal ever agreed in Kuwait and, according to KOC, the largest foreign direct investment made in the country. The $7.85bn that the three international partners will invest upfront will be used to support KOC parent company Kuwait Petroleum Corporation’s wider capital expenditure plans.

    The fact that the country was able to secure the deal at a time when its only existing export route – through the Strait of Hormuz – has been effectively closed off is an important vote of confidence by investors in the country’s longer-term prospects. According to energy consultancy Wood Mackenzie, Kuwait’s crude export volumes had fallen from 1.2 million barrels a day before the year to zero in April.

    It was the largest energy infrastructure deal ever agreed in Kuwait and, according to KOC, the largest foreign direct investment made in the country

    UK-based Oxford Economics noted that the bond issue and the pipeline deal came at a time when Kuwait “faces elevated fiscal funding needs and remains one of the GCC’s most exposed oil exporters to any disruption in the Strait of Hormuz given its limited alternative export infrastructure”.

    Blackstone said it also plans to open an office in Kuwait this year. There was a further show of investor interest in early August, when the Kuwait Investment Authority (KIA) reportedly agreed a $4.25bn, three-year loan from a group of 14 banks. The facility will be used for general corporate purposes, according to Bloomberg.

    In a further notable development, Kuwait’s Ministry of Public Works also handed a contract in late July to China State Construction Engineering Corporation (CSCEC) to build the country’s largest wastewater treatment plant. The North Kabd plant will have a capacity of up to 1 million cubic metres a day (cm/d). Kuwaiti water desalination plants have been hit on several occasions by Iranian drones during this year’s war, causing fires and other damage.

    Policy reforms

    On a smaller level, some notable reforms have been rolled out to try to shape the direction of the non-oil economy too. In late July, the Ministry of Commerce & Industry stopped issuing any more sole-trader or freelance business licences, while a review is carried out into the sector and official oversight is tightened.

    The authorities went a step further on 2 August, when a decree was issued to stop businesses offering goods and services without the right sort of licence. Anyone found to be working without the required permit could now face a prison term of up to three years and a fine of up to KD100,000 ($323,000) – or a sum equivalent to the profits generated by the unlicensed activity, whichever is greater.

    Some steps have been taken to ease restrictions in other areas. In early August, a change to the visa system was announced that will allow some foreign nationals to convert a visit visa into a regular residency permit in return for a fee of KD150. The measure proved immediately popular, but many applicants had failed to read the small print and, according to local media reports, several hundred were rejected. The scheme is primarily aimed at those seeking to bring their wives or children to Kuwait, as well as humanitarian cases and others with exceptional circumstances.

    Economic recovery

    The wider economy is showing tentative signs of improvement. The latest PMI survey delivered an unexpectedly strong result, showing that the non-oil private sector returned to growth in July for the first time since the war began.

    S&P Global Market Intelligence, which compiles the index, said the resumption of flights at Kuwait International airport had helped to support a rise in output and new orders – the first for five months. That in turn supported greater purchasing and hiring activity by local businesses and took the index up to 50.8 points – just above the 50-point threshold that separates growth from contraction.

    Even so, S&P warned that market conditions remain “challenging” while local bank NBK Capital warned in early August that “it remains to be seen how much of this improvement [in the PMI] will be sustained … following the reescalation in US-Iran tensions in the past weeks”.

    If the Kuwaiti economy is to make the most of its potential, the country needs the war between Iran and the US to come to a definitive end.

    MEED’s September 2026 report on Kuwait also includes:

    > BANKING: Necessity is the mother of invention for Kuwaiti lenders
    > OIL & GAS: Regional war to have lasting impact on Kuwaiti oil sector
    > CONSTRUCTION: Kuwait construction holds up despite regional strife

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18199239/main.gif
    Dominic Dudley