JEDDAH, 14 February 2008 — Saudi Arabia’s water and sewage sector requires SR150 billion ($40 billion) in new investment in the next 20 years, Deputy Water & Electricity Minister Luay Al-Musallam has said.
“The ministry has succeeded in attracting foreign investment in the Kingdom’s water and sewage sector, which needs investments worth SR150 billion during the next 20 years,” Al-Musallam said in comments published by an Arabic daily.
Al-Musallam, who is deputy minister for planning and development, also spoke about privatization of the sector. “The ministry has already completed negotiations with a company selected for managing and operating the sector in Riyadh,” he said, adding that an agreement in this respect would be signed this year.
The Council of Ministers licensed the establishment of a National Water Company (NWC) last month as part of the privatization process. NWC will be fully owned by the government and will cover all parts of the Kingdom in three years, a Cabinet statement said.
The new company will have a capital of SR22 billion with 2.2 billion shares, each with a nominal value of SR10, and a paid-up capital of SR6.84 billion with 684.88 million shares. It will sell part of its shares in an initial public offering at a later stage.
“The new company is expected to bring about qualitative changes in water production and distribution in the country, said Water and Electricity Minister Abdullah Al-Hussayen in a previous statement.
The NWC will provide all services related to underground water sector, drinking water distribution sector and collection and treatment of sewage water on a sound commercial basis. “It will also replace directorates of water in cities and regions,” Al-Hussayen said. An international firm will be appointed for five years to manage the company, he added.
NWC’s activities will start from Riyadh, the largest consumer of water in the Kingdom, as the company will take over groundwater resources, sewage network and sewage treatment plants in the region. Within three months the company will move to Jeddah, then to Madinah, Dammam, and Makkah. These five cities account for 65 percent of water consumption in the country.
The ministry has also signed a number of consultancy contracts to set up two sewage water treatment plants with the support of the private sector on a BOT basis. Six more such plants would be set up in Riyadh in partnership with the private sector. The project will be presented to the Supreme Economic Council for approval.
“With respect to privatization of the sector in Jeddah, the ministry has signed an agreement with a Saudi and a French company,” Al-Musallam said. The agreement covers supervision, operation and maintenance of water network and pumping stations and improving client service stations, he added.
Al-Musallam said a contract for operation and maintenance of the water and sewage sector in Jeddah would be signed soon. Seven companies from 84 national and international firms have been qualified to bid for the contract.