They offer vast opportunities for national and international investors, as the Saudi government seeks strategic public-private partnerships in building utility infrastructure.

Arab News files bear witness to the gradual development that has taken place in this sector over the last 35 years.

Arab News quoted officials from Banque Saudi Fransi (BSF) in a March 2010 report, that Saudi Arabia’s water and power sectors would require at least SR1 trillion in investments until 2025 to build capacity that caters for a population that has grown at around 2.5 percent per year in recent years and is likely to continue expanding by about 2 percent annually over the next decade.

The demand for power in the Kingdom is constantly rising thanks to the expansion of industrial activities, which according to estimates, have grown in size by more than a fifth since 2005. By the end of 2008, 4,167 factories employing 466,661 people were operating in the Kingdom, up 7 percent from the previous year, according to BSF.

Currently, power demand outpaces supply in many areas during peak summer months, and natural renewable water resources are among the sparsest in the world. The utilities sector has suffered from insufficient investments by the public and private sectors in the past decade. This will need to be rectified in the coming years simply to complement domestic demand for utilities, which is growing at a rate of around 8 percent per year.
 

Saudi Arabia is also trying to be at the forefront of the renewable energy movement, which is viewed by many as the industrial revolution of the 21st century. Besides exploiting other alternative energy resources, the government is seeking to be an effective and major supplier of solar power to the world.

The Kingdom’s determination can be gauged from the statements of ministers and top officials that have been appearing in Arab News recently.

“We want to make the Kingdom a major source of solar energy in the world,” said Finance Minister Ibrahim Al-Assaf.

His comment preceded the statement of Petroleum and Mineral Resources Minister Ali Al-Naimi, who said: “Saudi Arabia aspires to export as much solar energy in the future as it exports oil now.”

“The solar energy scheme will reduce the cost of producing desalinated water and of generating power for use in the Kingdom, an oil-dependent nation which has also launched a national energy efficiency program,” said Prince Turki bin Saud bin Muhammad, vice president of King Abdul Aziz City for Science and Technology (KACST), in an Arab News report.

“Emitting about 7,000 watts of energy per square meter over an average of 12 hours every day, the Kingdom’s sun is a powerhouse.”
 

In the 2010 fiscal budget, Saudi Arabia boosted its allocation for the water, agriculture and infrastructure sectors by 30 percent to SR46 billion, accounting for 8.5 percent of the total budget. It specified that this spending would go toward new projects designed to enhance water resources, build dams and wells, improve water and sewerage networks, and develop and upgrade water desalination plants.

While these steps are laudable, the urgency of designing new and improving existing municipal sewerage systems became evident in November 2009, when flash floods and reported sewage leaks in Jeddah killed at least 120 people and damaged thousands of homes and vehicles.

In the next 15 years, Saudi Arabia’s Ministry of Water and Electricity expects around SR300 billion to be invested in electricity generation, another SR200 billion in water desalination projects and SR200 billion in the sewage sector. This SR700 billion is certainly a step in the right direction, claims BSF, adding at least a third more in funding would be required to bolster capacity in a way that comfortably cushions demand.

Arab News quoted the chief executive officer of National Water Co. (NWC) Loay Al-Musallam as saying that 70 percent of the SR200 billion allocated for water projects will go toward developing sewerage and waste water treatment schemes.

“We currently have a sewage project in Riyadh and Jeddah with an investment of SR18 billion and we are looking to expand these projects to the rest of the Kingdom,” he said.

NWC is an autonomous body formed by the Ministry of Water and Electricity in 2008. It is mandated to oversee all of the Kingdom’s groundwater wells, sewage and desalination plants.
 

Saudi Arabia is the world’s largest producer of desalinated water, with 30 desalination plants on the Red Sea and Arabian Gulf coasts. The Kingdom currently depends on desalination for 70 percent of its water requirements. The rest comes from around 230 dams and hundreds of wells.

A total of nine desalination projects are to be implemented within a few years, according to the Saline Water Conservation Corporation (SWCC), a major participant in the solar energy initiative.

In June 2009, Arab News published a special supplement on “Water Resources.” It covered almost all aspects of water governance in the Kingdom.

In July 2002, the Supreme Economic Council passed a resolution allowing the private sector to participate in desalinization projects. The objective was to set up four Independent Water and Power Production projects (IWPPs), each of which would be 60 percent owned by the private sector, with 32 percent owned by the Public Investment Fund and eight percent by the Saudi Electric Company (SEC).

The resolution also resulted in the formation of a new public entity, the Water and Electricity Company (WEC), which would act as the sole purchaser of the desalinated water and electricity produced and there was government credit support in the form of purchase guarantees. In addition, a further six IWPPs were envisaged three years ago at an estimated cost of SR22.5 billion ($6 billion). Today these estimates are thought to be inaccurate as the projects are likely to cost much more.
 

Storing rain and underground water for use in peak seasons is another important area to be developed. Arab News has been covering this subject as well. In 2007, it quoted an expert at the Water Research Center of King Abdulaziz University in Jeddah, who emphasized the importance of establishing an underground water storage dam for Jeddah.

“We have already made a proposal to set up an underground dam in Wadi Nueman, which is located between Jeddah and Makkah. This SR100 million project will help store more than 100 million cubic meters of water,” said Muhammad Habeeb Al-Bukhari.

He also referred to a study calling for a SR20 billion water bank project designed to meet the Kingdom’s water requirements for the next 20 years.

Bukhari, who has participated in preparing the study on the project, said it would be carried out in the southern Tihama region, which receives a lot of rainwater and has suitable locations to establish underground dams.