Sustainability drives water investments

29 December 2023

 

Growing water scarcity that could imperil long-term economic expansion plans in much of the Middle East and North Africa region continues to drive investments in improving the sector’s capacity and efficiency.

This spending covers projects to increase water desalination and water treatment capacity to meet growing demand more sustainably, as well as water transmission pipeline projects to reduce water loss and improve sanitation.

Other projects, such as reservoirs and district cooling, are also picking up as national and municipal governments work to improve water security and reduce the carbon footprint of buildings. 

Across the five sub-sectors, an estimated $22bn-worth of contracts were awarded between January and November 2023. This is nearly twice the previous year’s figure, according to data from regional projects tracker MEED Projects.

Saudi Arabia accounted for 43 per cent of the total contracts awarded, followed by the UAE at 23 per cent.

Key awards

Recent months have seen the award of several pioneering projects.

Abu Dhabi National Oil Company (Adnoc) and Abu Dhabi National Energy Company (Taqa) awarded a 30-year build-own-operate-transfer (BOOT) contract for the first phase of Project Wave to a team of Egypt’s Orascom Construction and Metito in May this year. The scheme will replace the current aquifer water injection systems used to maintain reservoir pressure in all onshore oil fields in Abu Dhabi. It is expected to reduce the water injection-related energy consumption of the oil fields by up to 30 per cent.

The same month, a consortium including the local Alkhorayef Water & Power Technologies Company won a contract worth SR7.78bn ($2bn) to develop and operate the first independent water transmission pipeline (IWTP) project in Saudi Arabia. The Rayis-Rabigh scheme will be 150 kilometres (km) long and transmit 500,000 cubic metres a day (cm/d) of drinking water between the two municipalities.

Morocco’s National Office of Electricity & Drinking Water (Onee) also awarded a contract to develop and operate the first phase of a seawater reverse osmosis (SWRO) desalination plant in Grand Casablanca – the first major independent water producer (IWP) scheme in the country. A team of Spain’s Acciona and the local Afriquia Gaz and Green of Africa won the 30-year build-operate-transfer contract for the scheme, which will require a total investment of $875m.

State utility Dubai Electricity & Water Authority (Dewa) awarded the contract for its first IWP to Saudi-based utility developer Acwa Power. The Hassyan 1 IWP, which has a capacity of 180 million imperial gallons a day (MIGD), will require an investment of AED3.36bn ($914m).

Neom and its subsidiary Enowa have also awarded over $900m-worth of water utility contracts in the first 11 months of 2023, while Saudi Aramco awarded the $750m Jafurah water desalination project to a local consortium of Al-Bawani, Mowah Company and Lamar Holding.  

While the majority of the contracts awarded in 2023 were procured on an engineering, procurement and construction (EPC) basis, the largest individual contracts are schemes that are being implemented using the public-private partnership (PPP) model.

Saudi Arabia accounted for 43 per cent of the total water contracts awarded, followed by the UAE at 23 per cent

Future projects

Data from MEED Projects shows that close to $75bn of projects are in the pre-execution phase, with a third of this total already in the bidding stage.

Water transmission and pipeline projects account for about 35 per cent of the planned and unawarded projects, followed by water desalination and water treatment plants, which each have a share of approximately 25 per cent.

With its population expected to reach 50 million by 2030, Saudi Arabia accounted for more than 43 per cent of the planned and unawarded water projects in the Mena region.

Water offtaker Saudi Water Partnership Company (SWPC) plans to procure 50 independent water infrastructure projects, according to its latest Seven-Year Statement covering the years 2022-28.

In terms of water desalination capacity, SWPC plans to procure  3.5 million cm/d of capacity based on its 2022-28 plan, exclusive of the Ras Mohaisen IWP which is under bid. The Saline Water Conversion Corporation (SWCC) has also initiated several SWRO projects that are being procured using an EPC model.

Together, SWCC and SWPC, in addition to the National Water Company and its spin-off Water Transmission & Technologies Company, account for a projects pipeline of more than $20bn, or more than a quarter of the total.

Neom and Enowa are emerging as major water project clients, with each having planned projects valued at about $3bn. Enowa is the client for the planned zero liquid discharge SWRO plant in Neom, which will be developed by a team of Japan’s Itochu and France’s Veolia. The project has an estimated budget of $1.5bn.

Going forward, the largest potential client is Dubai Municipality, which has restarted a major project known as the Deep Tunnels Portfolio. The estimated $22bn scheme will be developed as a public-private partnership (PPP) initiative and will involve developing assets across the city of Dubai and Hatta.

The scheme involves the construction of two sets of deep tunnels terminating at two terminal pump stations located at sewerage 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.

Qatar is also expected to resume projects activity in 2024.  In addition to the water desalination component of the Facility E independent water and power project, Qatar’s Public Works Authority (Ashghal) is expected to issue the request for proposals for four contracts that make up the South of Wakrah and New District of Doha pumping station and outfall scheme in the first quarter of 2024.

In the UAE, Adnoc and Taqa are also expected to start the procurement process for the second phase of Project Wave in 2024. As with the Mirfa seawater treatment plant, the Al-Nouf facility will be developed and maintained as a BOOT project. 

Egypt’s plan to procure renewable energy-powered water desalination plants will provide investors and local contractors with opportunities in the coming months or years. In May, the Sovereign Fund of Egypt disclosed that 17 teams and companies had been qualified to bid for the contracts to develop up to 8.85 million cm/d of renewable energy-powered desalination capacity in the country. The tender for the first phase of these projects is expected to be issued soon.

Mena power rides high into 2024

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Jennifer Aguinaldo
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