JEDDAH, 21 August 2005 — The Water and Electricity Ministry has set out a strategy to privatize water and sewage projects in the Kingdom within the next five years as experts said new expansion projects in the sector would require SR60 billion in 20 years.
The ministry said it would present a report to the Supreme Economic Council, a high-level decision-making body chaired by King Abdullah, on its privatization plan within a few weeks.
The ministry has already started awarding some of its projects to private companies and the Cabinet recently approved the formation of a joint stock company for the building, operation and maintenance of Shuaiba-3 desalination plant on the Red Sea coast.
In June, a Saudi-Malaysian consortium was selected as the first-ranked bidder to build the SR9 billion Shuaiba Independent Water and Power Project (IWPP).
Shuaiba is the first of the four IWPP projects which will be implemented by the private sector. The other three projects are Shuqaiq, Ras Azzour and Jubail plants.
The Saudi-Malaysian consortium will build, own and operate the 900 MW and 880,000 m3/d Shuaiba IWPP. The credit support is to be provided by the Ministry of Finance. Sixty percent of the share capital will be owned by the consortium, 32 percent will be owned by the Public Investment Fund and the remaining eight percent by the Saudi Electricity Company.
Efforts are also under way to establish three new joint stock companies for the production and distribution of water and electricity, Al-Eqtisadiah business daily, a sister publication of Arab News, reported yesterday. The companies will float part of their shares for public subscription.
Informed sources said the companies would be established to implement the giant desalination plants in Shuqaiq (which will supply water to Jizan and Asir regions), Jubail (Eastern Province) and Ras Azzour, which will meet water requirements of Riyadh. Work on the Shuqaiq project is likely to start by the end of this year.
Saudi Arabia is now the world’s largest producer of desalinated water with desalt plant on the Red Sea and Arabian Gulf meeting 70 percent of the country’s present drinking water requirement and supplying major urban and industrial centers through a network of water pipes, which run for more than 3,700 kilometers.
According to predictions by the Central Statistics Department, the Kingdom’s total population will exceed 29 million by 2010 and rise to 36.4 million 10 years later. Taking a baseline consumption of 300 liters per person per day, the resulting demand for water will increase to over 3,000 million cubic meter annually by 2010 and nearly 4,000 million cubic meter by 2020.