JEDDAH, 5 November 2007 — Supply of water in cities across Saudi Arabia, especially Jeddah whose different districts complain of shortages from time to time, is being improved with new investments to tackle the leakages and wastage.
“Investment in the Saudi water and power sectors has reached a critical period, with over $200 billion required over the next 15 years,” Minister of Water and Electricity Abdullah A. Al-Hussayen said at the inauguration of third Saudi Water & Power Forum (SWPF) at the Jeddah Hilton on Saturday night.
“We welcome the support of this event as a forum to discuss investment opportunities within the Kingdom” the minister added.
“One way of ensuring continuous supply of water is to check its leakages and wastage,” a water expert said on Saturday night. “In Jeddah, 30 percent of water is lost every day due to leakages and wastage. We want to bring it down to five percent by investing SR500 million in plugging the leakages in the water system,” Adel Bushnak, chairman of Saudi Water & Power Forum, said.
Makkah Gov. Prince Khaled ibn Faisal opened the forum, which had its second day deliberations yesterday. The prince, who also opened an exhibition related to the forum, said that water had been his major concern since he took charge as Makkah governor.
By creating a platform to bring Saudi and international investors together, the forum would turn out to be a crucial tool in the development of the Kingdom’s water and power sectors. “We have increased the number of networking functions this year and also announced the inaugural Saudi Water & Power Forum Award for innovation, to ensure that the forum maximizes the value to industry and all participants,” Bushnak added.
A national water company is being formed to study strategies to save water and meet growing demand from all over the Kingdom. Among the strategies is deployment of a mobile desalination plant that will meet 10 percent of water requirement in Jeddah. “Jeddah’s water problem will be completely solved with the commissioning of Shuaiba 3 Plant by 2009.”
Mohamad Abunayyan, chairman, ACWA Power Projects (APP), main sponsor of the forum, SWPF Award dinner and exhibition, told the forum yesterday that with the rapid growth of local economy, Saudi Arabia urgently needed to expand generation of electricity and production of desalinated seawater.
Giving a presentation on “Developing sustainable and competitive public, private and people partnerships,” Abunayyan discussed the current status and ongoing plans for power and water privatization, fulfillment of social responsibility and inclusion of people in partnerships, and availability of opportunities in the maturing water and power sectors.
“Since the government opened the water and power sector to increased private sector participation, the program has already initiated over SR35 billion of investment in construction of new assets.”
he said.
During the forum, APP is demonstrating the success already achieved by its Saudi model, the value created by the privatization program in monetary terms, and the progress of projects under construction. “Unlike models implemented elsewhere, the Saudi model focuses on retaining maximum value creation offered by opportunities in the country by encouraging the participation of local stakeholders (developers, suppliers and contractors) and the creation of employment opportunities for Saudis with meaningful skill transfer,” Abunayyan added.
All transactions have attracted a mix of international and local developers resulting in a fierce competition with a tariff difference between lowest and the next reaching 20 percent. Even in the equipment supplier- constrained market of today, projects have attracted a good mix of capable participants. Local, regional and international financing community has exhibited significant appetite by oversubscribing finance raising exercises by as much as 60 to 70 percent.
The clarity of the framework, the success of the transactions implemented so far and the significantly long list of opportunities all combined, are offering a major attractive package to developers, contractors, equipment suppliers and financiers. The public, the most important stakeholder in this process, can benefit in due course by participating in the ownership opportunity, in addition to benefiting from water and power on a reliable basis at a competitive price.
“Given the pace of growth of the sector in the Kingdom demonstrated by the demand and real projects, the SWPF is an ideal opportunity for stakeholders in the relevant industries to network, gather firsthand knowledge and share experience,” he added.
APP is equally owned by A.K. Al-Muhaidib & Sons Group, Abdullah Abunayyan Trading Co. and Mada Company for Industrial & Commercial Investment (member of Al-Rajhi Group). APP is an investor in Shuaiba, Rabigh, Shuqaiq and Marafiq projects — all multibillion dollar projects currently under construction.
The day was also marked by sessions on “International participation in water and power projects,” “Moving toward an integrated national and regional strategy for water and power production and distribution” and financing options for various projects.