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Saudi Arabia cancels Yanbu desalination award

18 December 2024

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Saudi Water Authority (SWA) has cancelled the contract it awarded in September to India-headquartered VA Tech Wabag to construct a 300,000 cubic-metres-a-day (cm/d) seawater reverse osmosis (SWRO) plant in Yanbu, Saudi Arabia.

The contract for the Yanbu 5 SWRO plant was valued at $317m.

In a regulatory filing, the Bombay Stock Exchange-listed firm said the customer “notified all tender participants on December 16, 2024, that the said tender stands cancelled pursuant to their internal administrative procedures”.

A source close to the project said the client intends to recalibrate the plant’s capacity and decrease it by 10% to 15%. 

MEED understands that SWA intends to retender the contract over the coming weeks.

The engineering, procurement, construction and commissioning (EPCC) contract covers the design, engineering, supply, construction and commissioning of the desalination plant.

Wabag said in September that the plant will operate using dual media filters followed by a two-pass reverse osmosis process and re-mineralisation to produce clean potable water, which SWA will distribute.

The planned facility is located on the west coast of Saudi Arabia, south of the Red Sea-facing Yanbu Al-Bahr, and is scheduled to be completed within 30 months of the contract award.

Saudi Arabia’s main producer of desalinated water, SWA – formerly Saline Water Conversion Company (SWCC) – received two bids in May for the contract to build the Yanbu 5 SWRO project. 

The other bidder is understood to comprise a local contractor team and an overseas-based partner.  

The tender for another desalination project, the Shoaiba 6 SWRO plant, which has a capacity of 545,000 cm/d, has been similarly cancelled and is likely to be retendered.

MEED reported in October that Jeddah-based Alfatah Water & Power submitted the lowest bid for the contract to build the Shoaiba 6 SWRO plant on Saudi Arabia’s western coast.

The contracts to build two other projects, the Jubail and Ras Al-Khair SWRO projects, are understand to have also been awarded.

In November, Najran-based Emar Al-Janoub for Contracting (EJC) won the contract to build the Ras Al-Khair SWRO plant in Saudi Arabia’s Eastern Province.

Emar Al-Janoub offered SR2.346bn ($625.6m) to win the contract, seeing off competition from other bidders that included the local Civil Works Company and Saudi Services for Electro Mechanic Works (SSEM), and the Saudi branch of India’s VA Tech Wabag. 

Data from regional projects tracker MEED Projects also indicate that the local Mutlaq Dalmook Al-Ghowairi Contracting won the $677m contract for the Jubail SWRO project. 

The four contracts are being procured using an EPCC model, in contrast to the SWRO facilities being procured on a public-private partnership basis by state offtaker Saudi Water Partnership Company.

SWA is the world’s largest producer of desalinated water, with a capacity of at least 6.6 million cm/d. Plants utilising older and more energy-intensive techniques, such as multi-stage flash technology, account for the majority of the current capacity.

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Jennifer Aguinaldo

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