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Saudi water capacity procurement takes new turn

20 December 2024

Commentary
Jennifer Aguinaldo
Energy & technology editor

The better part of 2024 saw Saudi Water Authority (SWA), formerly Saline Water Conversion Corporation (SWCC), the world’s largest water desalinator, tender and award several contracts to build new seawater reverse osmosis (SWRO) plants in Saudi Arabia.

The four projects have a total combined capacity of over 2 million cubic metres a day (cm/d) and cost about $2bn.

Unlike the independent water projects (IWPs) being procured by Saudi Water Partnership Company (SWPC), SWA’s projects were being procured using an engineering, procurement, construction and commissioning (EPCC) model.

The urgency of additional water desalination capacity, and the need to lower the carbon intensity of the kingdom’s existing water desalination fleet, underpinned SWA’s decision to take the EPCC route, which typically takes less time compared with the build, own and operate (BOO) model, the preferred model for SWPC’s projects.

SWA, however, cancelled two of the four SWRO contract awards towards the end of 2024 while reassuring the bidders that the contracts would be rendered “over the coming weeks”, most likely with recalibrated or lower capacity than the initial plans.

The cancellation has put the bidders in an awkward situation. For example, the value of shares of India’s VA Tech Wabag – the winning bidder for the Yanbu SWRO contract – plunged by 16% following the cancellation announcement.

Notably, SWPC did not officially sign new water-purchase agreements in the first 11 months of 2024 despite naming the preferred bidders for the Ras Mohaisen IWP, which has a capacity of 300,000 cm/d, and the Jubail 4 and 6 IWP, which together have a capacity of 600,000 cm/d.

These contracts are expected to be awarded in early 2025, coinciding with the release of new tenders for future IWP and independent sewage treatment plant projects.

SWPC is also expected to finalise the award of the contract to develop the kingdom’s second independent water transmission pipeline that links Jubail and Buraydah shortly, after naming a team comprising Aljomaih Energy & Water, Nesma Company and Buhur for Investment Company as the preferred bidder.

A third entity, Water Transmission Company (WTCO), has motored ahead by tendering water transmission pipeline projects using a hybrid approach comprising engineering, procurement and construction (EPC) and public-private partnership (PPP) models for different projects.

Despite the SWA contract cancellations, Saudi Arabia’s water sector has performed relatively well. The value of awarded contracts over the past 11 months reached roughly $14bn, closely matching the previous year’s record-high figure.

The $4.7bn contract to construct dams at Trojena, which Neom awarded to the Italian contractor Webuild in January, helped the kingdom’s water sector avoid a downturn this year.

The kingdom’s various water stakeholders are expected to foster closer coordination of their procurement programmes in the future to enable more streamlined tendering procedures.

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Jennifer Aguinaldo

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