JEDDAH, 11 September 2006 — The Saline Water Conservation Corporation (SWCC) is considering three options, including the formation of five companies to privatize the organization, which is expected to draw investment worth more than SR60 billion.
Fehaid Al-Sharief, governor of SWCC, said a meeting of the SWCC board next month would select the best option from the three and make its proposals to the Supreme Economic Council accordingly. The three were picked from several options presented by consultancy firms.
The first option calls for converting the corporation into a joint stock company and offering part of its shares for public subscription. Participation of the private sector in SWCC assets is the second option. Under the third option five independent companies would be formed to operate main desalt plants, Sharief said.
“Studies on privatization will be presented to the SEC for approval, and we hope that the privatization and restructuring of SWCC will start by the end of the current fiscal year,” the SWCC chief said.
Saad ibn Bakheet, director of the privatization program, said a clear picture about SWCC privatization would be ready within four months. He said a special panel of accountants has been set up to assess the corporation’s financial condition and its total assets, adding that the panel would issue regular reports.
SWCC runs 30 desalination plants on the Red Sea and Arabian Gulf coasts. Saudi Arabia is the world’s largest producer of desalinated water. The water and electricity sectors in the Kingdom are growing at the rate of seven percent.
According to Water and Electricity Minister Abdullah Al-Hussayen, the Kingdom will require nearly SR350 billion in investment for water and sewage projects and SR340 billion for electricity projects during the next 20 years. The Ministry of Water and Electricity launched a drive to privatize desalination plants in November 2005 by awarding an SR9.1 billion contract to a consortium of Saudi and Malaysian companies which will set up Shuaiba-3 plant designed to supply 194 million gallons of water daily as well as 900MW electricity.
Another giant dual-purpose Independent Water and Power Plant (IWPP) will be established in Jubail shortly at a cost of SR11 billion. Marafiq (the Power and Water Utility Company for Jubail and Yanbu) has received offers from major national and international companies to carry out the project.
The new IWPP, to be established in Jubail Industrial City by 2009, will supply 2,700MW electricity and 800,000 cubic meters of desalinated water daily. Designed according to the most advanced technical standards, the project will be set up on the basis of the build, operate and transfer (BOT) system.
The Supreme Economic Council, a mini Cabinet chaired by Custodian of the Two Holy Mosques King Abdullah, has approved four IWPPs (Shuaiba-3, Shuqaiq-2, Ras Al-Zour, and Jubail-3), which will be carried out by the private sector on a BOT basis.
The total cost of the four projects is estimated at SR30 billion. The private sector will contribute 60 percent of their cost while the state-owned Public Investment Fund will have 32 percent stake and Saudi Electricity Company 8 percent.
The combined production capacity of the four projects will reach 492 million gallons daily and 4,500MW. The four projects will boost the total desalination capacity of the Kingdom by 80 percent.
The IWPPs will meet the increasing demand for water and power in the Kingdom and compensate old desalination plants, which will be decommissioned in the near future. Water & Electricity Company (WEC) will sell 100 percent water produced by these plants to Saline Water Conversion Corp. (SWCC) and 100 percent of their power supply to Saudi Electricity Company.