JEDDAH: Saudi Arabia’s water and power sector holds great potential for development and growth, especially as its population continues to increase. It is in this context that the Kingdom is in the process of evaluating alternative approaches to privatizing the water sector, which is presently heavily subsidized.
The 4th Saudi Water & Power Forum (SWPF 2008), which opened at the Jeddah Hilton yesterday, discussed these and other issues at its sessions yesterday.
SWPF 2008, which began with the 2008 award dinner hosted by ACWA Power on Saturday, and had its formal opening under the auspices of Makkah Gov. Prince Khaled Al-Faisal last night, combines an exhibition with a high-level two-day strategic conference that ends today. A daylong series of technical sessions will follow tomorrow.
The Governorate of Makkah Region and the Ministry of Water and Electricity (MoWE) are supporting the event in cooperation with Saline Water Conversion Corporation, the Saudi Electricity Company, the Water and Electricity Company, the Saudi Arabian General Investment Authority, the International Desalination Association and the Saudi Council of Engineers.
The Kingdom is one of the largest power and water markets in the world where more than $200 billion will be invested over the next 20 years. Led by the MoWE and all key state-sector companies, SWPF 2008 has turned out to be the exhibition and meeting place for domestic and international companies to help meet these enormous investment requirements.
“We have an ongoing national water plan and the World Bank is helping us in executing it,” a MoWE official told participants on the sidelines of the conference.
International experience in water and power privatization, the impact of tariff policy on utilities, achieving sustainability through innovation, and fuel and sustainability were among the subjects discussed at the forum.
Usha Rao-Monari, senior manager at the infrastructure department of the World Bank Group’s Washington-based International Finance Corporation, gave a presentation on privatization, partnerships and sustainable development in water and power projects. The session, moderated by Dr. Adil Bushnak, chairman of the Jeddah-based Bushnak Group, had panelists that included Shaikh Mohamed Al-Khalifa, director of privatization and outsourcing at Bahrain’s Ministry of Finance, Dr. Ghassan Ejjeh, group advisory and director of BESIX-SANOTEC who also serves on the boards of several water and construction companies, as well as the board of the Arab Belgian Luxemburg Chamber of Commerce, and Jonathan Barnes, director of KPMG’s global infrastructure and projects group based in London.
Usha gave an overview of the status of private public partnerships (PPP) internationally and said that the encouragement of the private sector could improve the funding of infrastructure.
Dr. Ejjeh said there were several issues affecting privatization. “It is, however, a way forward. Privatization is not an instant solution. Everyone should understand the benefits of privatization, because the man on the street has to pay.”
“We need lots of investment in the water sector, almost $10 billion a year for a long time to come,” Bushnak said, adding that the Kingdom should initiate programs toward improving maintenance and infrastructure.
Ejjeh, who additionally moderated the session on the impact of tariff policy on utilities, said the cost of water is difficult to estimate when it is subsidized. “Subsidized tariffs have been the cause of underinvestment in this sector,” he said.
Dr. Christopher Gasson, publisher of Global Water Intelligence, pleaded for water tariffs and offered suggestions. “Introduce exponential rising blocks, reduce the blocks as demand patterns change, use trickle flow meters to deal with non-payment (if people don’t pay then they should get only trickles of water), and set fixed quotas for agriculture with rising blocks for excess usage. There will be no water crisis if you pay more for water,” he said, adding that tariffs can regulate consumption and help conserve water. “In fact, demand can be controlled through tariffs.”