JEDDAH, 8 October 2006 — Desalination, which currently supplies 60 percent of the Kingdom’s water, is Saudi Arabia’s strategic option, according to Fehaid Al-Sharief, governor of Saline Water Conversion Corporation (SWCC).
“For many regions of the Kingdom, including Riyadh, Eastern Province, Yanbu and Madinah, as well as coastal cities desalination is a strategic choice. Even for cities like Jeddah, Makkah and Taif we have to depend on desalination,” he said.
Referring to Jeddah’s ongoing water shortage, Al-Sharief said it would be solved within three years. “We are working on a big project, which will be presented to higher authorities after discussing the matter with the water and electricity minister,” he said.
Speaking about future projects, the SWCC chief said tenders for the Shaqeeq-2 plant would be opened shortly. Another plant will be established in Ras Al-Zour on the Arabian Gulf to supply one million cubic meters of water and 3,000 megawatts of electricity to Riyadh, Hafr Al-Baten and Naeeriya.
He also spoke about the new National Water Company, which will have a capital of SR40 billion ($10.6 billion). He said the joint stock company would take over management of ground water and sewage water sector that has been targeted for privatization.
Explaining the privatization plan for desalination plants, he said SWCC was considering three options, including the formation of five companies. SWCC’s board of directors will meet next week to select the best option from the three and make its proposals to the Supreme Economic Council accordingly, he added.
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 desalination plants, Sharief said.
According to Saad ibn Bakheet, director of the privatization program at SWCC, a clear picture about privatization process will 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.
In a previous statement, Water and Electricity Minister Abdullah Al-Hussayen said the Kingdom would require nearly SR350 billion ($93.3 billion) in investment for water and sewage projects and SR340 billion ($90.6 billion) for electricity projects during the next 20 years.
The Kingdom has already started privatization of desalination plants. Last November it awarded an SR9.1 billion ($2.43 billion) contract to a consortium of Saudi and Malaysian companies to set up Shuaiba-3, a dual purpose independent water and power plant (IWPP) designed to supply 194 million gallons of water daily as well as 900MW electricity.
The project is one of the four IWPPs approved by the Supreme Economic Council. The others are Shuqaiq-2, Ras Al-Zour, and Jubail-3, which will be carried out by the private sector.
on 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, which are expected to boost the Kingdom’s total desalination capacity by 80 percent, will be 492 million gallons daily and 4,500 megawatts. The IWPPs will help meet the increasing demand for water and power in the country and compensate for old desalination plants taht will be decommissioned in the near future.
