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Saudi water contracts set another annual record

11 March 2025

 

Stakeholders in Saudi Arabia's water sector awarded contracts totalling $14.9bn in 2024, exceeding by 3% the previous year's figure, which set a record high.

This is a significant milestone considering that the annual value of contracts awarded in the kingdom's water sector averaged only about $6.5bn between 2018 and 2022.

A major outlier, the $4.7bn Trojena Valley dams in Neom, boosted the total value of contracts awarded in 2024. It also allowed the gigaproject developer to outperform the usual top clients, which include National Water Company (NWC) and Saudi Water Authority (SWA), formerly Saline Water Conversion Corporation (SWCC). While NWC awarded contracts valued at approximately $4bn during the year, SWA made contract awards of $3.3bn.

The sustained capital spending in the sector aligns with Saudi Arabia's 2030 National Water Strategy, which aims to reduce the water demand-supply gap and ensure desalinated water accounts for 90% of the national urban supply, to reduce reliance on non-renewable ground sources.

The kingdom's main desalinator, boasting the world's largest water desalination fleet, SWA tendered and awarded several major water desalination contracts in 2024, despite ongoing restructuring in the water sector, which entailed transferring ownership of SWCC's existing desalination plants to sovereign wealth vehicle the Public Investment Fund.

During the year, SWA awarded the engineering, procurement and construction contracts for the Jubail and Ras Al-Khair seawater reverse osmosis (SWRO) plants, respectively worth $677m and $625m.

It also tendered the contracts for two other SWRO schemes – Yanbu 5, which was subsequently cancelled, and Shoaiba 6, which was similarly cancelled but was retendered before the end of 2024.

In addition to these, SWA awarded the contracts for several storage or reservoir projects, including the Al-Moghamas phase two strategic storage tank project and the Riyadh Southern Ring water transmission system.

NWC awarded $2.5bn-worth of contracts for the first phase of its long-term operation and maintenance (LTOM) programme. The initial phase comprises eight packages covering the treatment of 4.2 million cubic metres a day (cm/d) of sewage water for the next 15 years.

The average cost of a cubic metre of treated sewage is SR0.5, which is less than $c15, including capital and operational expenditure and electricity costs.

Local contracting firm Alkhorayef Water & Power Technologies won three contracts with a combined capacity of 2.04 million cm/d, nearly half of the awarded total. These three contracts are worth more than SR5.53bn ($1.47bn).

A consortium of France's Suez and the local Al-Awael Modern Contracting Group with its affiliate Civil Works Company (CWC) won two packages worth a combined SR1.84bn. A consortium comprising France's Veolia and Awael-CWC won a single package worth SR1.26bn. Local utility developer Miahona won one package worth SR392m.

Public-private partnerships

Shifting from awarding several public-private partnership (PPP) contracts a year, Saudi Water Partnership Company (SPWC) awarded a single contract in 2024 – the $400m Al-Haer independent sewage treatment plant (ISTP) project.

A developer team comprising the local Miahona Company and Belgium's Besix won the contract in March 2024, offering to develop the project for SR1.9407 ($c51.73) a cubic metre. Power & Water Utility Company for Jubail & Yanbu (Marafiq) subsequently joined the consortium.

The project involves the development of a water treatment plant with a capacity of 200,000 cm/d.

Despite widespread expectations to the contrary, SWPC did not manage to award contracts in 2024 for two of its much-anticipated independent water projects (IWPs) and one independent water transmission pipeline (IWTP) scheme.

In April 2024, SWPC received two bids for a contract to develop the 300,000 cm/d Ras Mohaisen seawater reverse osmosis IWP. Spain’s Acciona and a team led by Saudi utility developer Acwa Power submitted bids for the contract.

SWPC eventually selected the Acwa Power-led team as the preferred bidder, but the signing of the water-purchase agreement only took place in February 2025.

In September 2024, SWPC received a single bid from a team comprising Acwa Power, Haji Abdullah Alireza & Company (Haaco) and AlSharif Contracting & Commercial Development for the Jubail 4 and 6 IWP located in the Eastern Region.

Although the bid evaluation was completed in December, the offtake agreement for the 600,000 cm/d plant has yet to be signed.

Despite several delays last year, projects activity at the start of 2025 suggests the possibility of a return to the higher levels seen by SWPC in previous years.

In January, it tendered the contracts to develop and operate two ISTP projects in the kingdom. Located in Mecca, the first scheme, the Arana ISTP, will have an initial capacity of 250,000 cm/d, expandable to 500,000 cm/d.

The second scheme, the Hadda ISTP, will also be located in Mecca and will have an initial capacity of 100,000 cm/d, expandable to 250,000 cm/d.  

The scopes of work include treated sewage effluent (TSE) re-use systems consisting of transmission pipelines and TSE tanks.

Expected to be operational by 2028, both projects will be implemented on a 25-year build, own, operate and transfer model. SWPC expects to receive bids for the contracts by 5 May.

Earlier in March 2025, SWPC awarded the $2.2bn contract to develop the Jubail-Buraydah IWTP project to a team comprising local companies Aljomaih Energy & Water, Nesma Company and Buhur for Investment Company.

The 587-kilometre pipeline will be able to transmit 650,000 cm/d of water and will be developed at a levelised cost of SR3.59468 a cubic metre.

2025 outlook

Last year, NWC, which provides water distribution, sewage collection and wastewater treatment services throughout Saudi Arabia, sought interest for the second phase of its LTOM programme, which resembles a build-operate-transfer structure and risk allocation. This phase is divided into 10 packages encompassing 116 existing sewage treatment plants.

There is an expectation that SWA, along with Water Transmission Company (WTCO), will continue to engage the market with new tenders.

In December, WTCO initiated the prequalification process for the Ras Mohaisen-Baha-Mecca independent water transmission system project.

It is also continuing the bid evaluation process for a contract to build phase four of the Al-Shuqaiq to Jizan water transmission system. Estimated to be worth $2.9bn, the project is split into four packages that include pipeline supply, water transmission pipelines, pumping stations and strategic reservoirs.

Having prequalified companies that can bid separately for seven ISTPs and five water projects in November last year, there is an expectation that SWPC will issue the first tenders for this project in 2025.

It prequalified 53 companies to bid for the seven ISTPs, which have a total combined capacity of 700,000 cm/d, and 41 to bid for the five IWPs, which have a total combined capacity of 1.7 million cm/d. The tenders for these projects are expected to be issued over two years, until 2026. 

Project finance

With so many independent water contracts under execution and a robust pipeline of upcoming work, the liquidity of the mostly local banks that are providing project finance could become an issue, experts say.

“Banks are facing liquidity issues in terms of debt-versus-loan ratios,” says an executive with a Saudi Arabia-headquartered infrastructure investment group.

He adds that since some Saudi banks have relatively low US dollar reserves, the market will likely see a mix of Saudi riyal and US dollar financing being offered for new projects.

“Lending rates are already up from previous projects such as the Jubail 4 and 6 IWP and the Jubail-Buraydah IWTP. It will be interesting to see how bids develop this year,” he tells MEED.

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Jennifer Aguinaldo

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