Meed | Water developers adopt selective stance

Water developers adopt selective stance

19 September 2024

UAE-based utility Sharjah Electricity & Water Authority (Sewa) and Saudi water offtaker Saudi Water Partnership Company (SWPC) each received a single bid for their recently tendered independent water producer (IWP) projects.

An all-local team comprising Acwa Power, Haji Abdullah Alireza & Company (Haaco) and AlSharif Contracting & Commercial Development submitted the sole proposal for the contract to develop the Jubail 4 and 6 IWP schemes in Saudi Arabia.

This is a far cry from the four bids SWPC received in 2020 for a contract to develop and operate the Jubail 3B IWP.

However, the fact that SWPC received only two bids for the contract to develop the smaller Ras Mohaisen IWP in April this year indicates that utility or water developers and investors have increasingly adopted a more selective stance when it comes to bidding for new projects.

"Combined, Jubail 4 and 6 is a large project and most developers are tied up with other ones, as there are many IWPs under way at the moment, not only in Saudi Arabia but throughout the GCC," says Robert Bryniak, CEO at Dubai-based Golden Sands Management (Marketing) Consulting.

The Jubail 4 and 6 seawater reverse osmosis (SWRO) plants will have a total combined capacity of 600,000 cubic metres a day (cm/d) and will be developed under one contract.

In comparison, the Ras Mohaisen IWP has a capacity of 300,000 cm/d, while Sewa's Hamriyah IWP will have a capacity of 410,000 cm/d.

Bryniak says that many developers are at, or near, their capacity and this makes it difficult to make short-term commitments without paying significantly more for skilled workers and key equipment component parts.

"Developers may be shying away from some of the larger projects because of this, especially knowing that tariffs need to be competitive to win.

"Developers have to spend significant amounts just to bid on a project and, if unsuccessful, this sunk cost needs to be eventually recouped on future projects. And I think this is resulting in developers being more selective in terms of the projects they go after, focusing more on those where they believe they have a good chance of winning."

The case is slightly different for the Hamriyah IWP, which is Sharjah's first major SWRO project to be procured on a public-private partnership (PPP) basis.

Acwa Power submitted the sole proposal for the contract to develop the project in December last year.

"This is Sharjah’s first IWP and, unlike other jurisdictions such as Oman, Abu Dhabi and Saudi Arabia, the emirate has yet to establish a track record with PPPs, especially in power and water," explains Bryniak

Given several false starts and issues with past PPPs, it is likely that developers will shy away and focus their efforts on more established – and financially stronger – offtakers elsewhere in the region.

Known for its strong risk appetite, Acwa Power signed the water procurement agreement with Sewa earlier in September and a team of France's Sidem and its parent company Veolia has been selected as the project's engineering, procurement and construction contractor.

This means discussions with banks and financial institutions could be nearing their conclusion, leading to the start of the project's construction.

Once the Hamriyah IWP reaches financial close and commercial operations, Bryniak says Sewa should be able to attract more developers for future IWPs.

Going forward, procurers could also consider adopting new or additional measures to attract more developers to their future IWP projects and avoid incurring higher tariffs.

A UAE-based executive with an international developer says that in some cases the quality of the request for proposals (RFPs) being issued can be improved.

MEED understands some of the recent RFPs lack comprehensive information or details, which leads contractors to add higher contingency costs to cover risks.

Bryniak concurs, adding that going forward, procurers throughout the GCC will need to spend more time and effort marketing and promoting their IWPs, and will need to be more selective in terms of timing, in order to optimise competition.

"They may also need to consider modifying their procurement processes to attract more bidders. Otherwise, they might continue to realise only one or just a few bidders, with likely higher tariffs in the near term."

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Jennifer Aguinaldo

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The tender follows Adnoc Onshore’s shift in strategy for the wider North East Bab development – comprising the Al-Nouf, Rumaitha and Shanayel fields – after scrapping an earlier engineering, procurement and construction management (EPCm) approach. MEED reported in December that the operator had cancelled an off-plot EPCm contract awarded to China Petroleum Engineering & Construction Corporation (CPECC) in October 2024. Adnoc later cancelled a separate on-plot EPCm tender that it received bids for in the second quarter of 2025.

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MEED previously reported that Adnoc Onshore awarded CPECC the EPC works for the South East off-plot facilities project, with the contract value estimated at around $1.2bn.

CPECC is also performing EPC works on the South East on-plot facilities project in a consortium with Greece-headquartered Archirodon. Adnoc Onshore awarded an estimated $1.5bn contract for that project to the consortium in December 2024, with EPC works scheduled for completion in 2027.

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Contractors submitted expressions of interest on 10 October for a design-and-build contract for a multibillion-dollar new road that will run parallel to Sheikh Zayed Road.

Dubai’s Roads & Transport Authority (RTA) held an online meeting after the submissions to prepare for the prequalification phase of tendering, expected to start in a few weeks.

The scope covers about 30 kilometres (km) of works.

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The RTA floated the expression of interest notice to contractors in early September.

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Planning for growth

Dubai launched the 2040 Urban Master Plan in March 2021, referencing studies indicating that the emirate’s population will reach 5.8 million by 2040, up from 3.3 million in 2020. The daytime population is set to increase from 4.5 million in 2020 to 7.8 million in 2040.

In December 2022, Sheikh Mohammed Bin Rashid Al-Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, approved the 20-Minute City Policy as part of the second phase of the Dubai 2040 Urban Master Plan.

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