Water Company Will Have a Capital of SR40 Billion

JEDDAH, 2 October 2006 — The new water company will have a capital of around SR40 billion and will be a major turning point in the water and sewage sector, said Water and Electricity Minister Abdullah Al-Hussayen.

Hussayen also disclosed plans to solve the water crisis in Jeddah by pumping 50,000 cubic meters of water from reserves and increasing the number of water tankers. “The permanent solution to this problem lies in the completion of the Shuaiba-3 desalination plant,” the Saudi Press Agency quoted the minister as telling reporters in Riyadh.

According to a source, higher authorities have instructed the ministry to establish a new desalination plant in Jeddah as early as possible as well as to modernize the existing plants. Quick deliveries of water tankers have eased the water crisis in Jeddah. According to press reports, the Aziziya Water Distribution Center has started sending out 3,200 tankers in less than eight hours compared to 500 tankers in 24 hours.

The Supreme Economic Council, chaired by Custodian of the Two Holy Mosques King Abdullah, took the decision to restructure the water and sewage sector and establish the new joint stock company on Friday.

Hussayen said the water company would start operations within four months after its formation. “The company will provide all services related to ground water sector, distribution of drinking water, and collection and treatment of sewage water on a commercial basis,” he said.

The ministry has signed four legal, manpower, strategic and technical consultation agreements in order to study privatization of the sector.

“At present the ministry, with the help of consultants, is conducting a survey of assets in Riyadh, Madinah, Jeddah, Dammam and Alkhobar in order to determine the declared capital which is estimated to reach SR30 billion to SR40 billion,” Hussayen said.

He said the five cities, which are targeted for privatization in the first phase, account for 50 percent of water and sewage services in the country. “We’ll start the privatization process from Riyadh and it will be followed by other cities,” he added.

Hussayen allayed public fears that the transfer of ground water and sewage water to the new company would increase prices and affect employees. “Nobody will be affected by this decision,” he said.

The new company would float part of its shares for public subscription through a public offering at a suitable time, the minister said.

Saudi Arabia is the world’s largest producer of desalinated water. But the demand for water is increasing day by day as a result of a growing population.

The Kingdom requires SR350 billion in investment for water and sewage projects for the next 20 years.