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Tunnel projects set pace for UAE water sector

14 October 2025

 

The UAE’s water sector has recorded $1.91bn in contract awards so far in 2025, a more measured pace than in recent years, but one that comes ahead of a potentially transformative 12 months for the market.

The total is lower than the $3.10bn awarded in 2024 and the $6.15bn in 2023, reflecting a year focused on network expansion rather than large-scale production assets. Only one major desalination project has reached the contract stage so far this year. The $400m Saadiyat seawater reverse osmosis independent water project (IWP) in Abu Dhabi, awarded to Spain’s Acciona, remains the single largest contract signed to date.

Most of this year’s awards have come from Dubai Municipality through a series of mid-sized contracts, generally in the $50m to $150m range, covering stormwater, sewerage and drainage upgrades.

DSST programme

The next phase is already taking shape, however, with several major projects moving through procurement. The largest is Dubai Municipality’s $22bn Strategic Sewerage Tunnel Programme (DSST), which represents most of the country’s current pipeline. 

In September, the municipality issued a refresher request for qualifications (RFQ) for the next phase of the DSST public-private partnership (PPP) project, which aims to increase total sewage treatment capacity by 1 million cubic metres a day to serve an expected population of 6.3 million by 2040.

The scheme, which also aims to reduce the number of pumping stations from 70 to just two, involves the construction of deep tunnels, terminal pumping stations and extensive sewer links.

Four contracts under the Warsan and Jebel Ali components of the DSST have now advanced to prequalification. The $5bn Warsan Package W will deliver a 16-kilometre deep tunnel and a terminal pumping station with a capacity of 830 million litres a day. 

The Jebel Ali packages, known as J1 North, J2 South and J3 Links, will extend the network across the southern corridor. The J3 package includes the construction of 129km of sewer links and will be implemented under a design-build-finance PPP model, featuring a concession period spanning 25 to 35 years. Bidding for all four packages is set to begin soon, with contract awards targeted for March 2026.

Tasreef project

The $8.2bn Tasreef wastewater and drainage programme is also advancing. The initiative aims to expand Dubai’s rainwater drainage network and boost capacity by 700% by 2033.

In April, local firm DeTech Contracting won the $136m first contract to upgrade the West Deira stormwater system. The remaining contracts for work in Jebel Ali, Dubailand and on Sheikh Mohammed Bin Zayed Road/Al-Yalayis Road are at the bidding or bid evaluation stage. These are expected to be awarded later this year, or in early 2026.

Tender pipeline

Beyond tunnel works, the overall tender pipeline is valued at $30.98bn, including $1.68bn of pipeline projects and $1.39bn of treatment plants, with smaller packages covering pumping stations, district cooling and reservoirs. The makeup shows how the market is entering an investment phase focused on water networks that will prepare the system for the next round of large-scale capacity projects later in the decade.

Over $2bn-worth of projects are currently under bid evaluation, with some of these projects expected to move to award before the end of the year, which could bring the 2025 total closer to last year’s figure.

This includes a contract for the construction of a $400m district cooling plant project on Palm Jebel Ali, set to be awarded under a joint venture of National Central Cooling Company (Tabreed) and Dubai Holding.

In Ras Al-Khaimeh, plans are moving forward for the emirate’s first sewage treatment plant to be developed under a PPP model. Two consortiums have submitted bids to develop and operate the 60,000 cubic-metre-a-day facility.

While Dubai Municipality has driven most of this year’s activity, other entities have also played a role. Emirates Water & Electricity Company’s (Ewec) Saadiyat IWP has been the largest single contract, alongside network and stormwater awards from Al-Dhafra Region Municipality, Abu Dhabi Sewerage Services Company, Etihad Water & Electricity and Dubai Electricity & Water Authority.

The pattern of activity this year aligns with previous investment cycles. Periods of heavy desalination and treatment awards are typically followed by phases of large-scale network development. While 2025 has so far been steady rather than headline-grabbing, the outlook is significantly stronger.

With more than $2bn in projects under evaluation and nearly $31bn in the tender pipeline, the UAE’s water sector is on the brink of a major investment wave. The DSST, Tasreef and a series of supporting network initiatives are expected to define this next phase, laying the groundwork for future capacity expansion.

MEED's November 2025 special report on the UAE also includes:

> GOVERNMENT: Public spending ties the UAE closer together
> ECONOMY: UAE growth expansion beats expectations
> BANKING: Stability is the watchword for UAE lenders
> UPSTREAM: Adnoc strives to build long-term upstream potential
> DOWNSTREAM: Taziz fulfils Abu Dhabi’s chemical ambitions at pace
> POWER: UAE power sector hits record $8.9bn in contracts
> CONSTRUCTION: UAE construction faces delivery pressures
> TRANSPORT: $70bn infrastructure schemes underpin UAE economic expansion

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Mark Dowdall

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