KSA major player in global water market: Report
The US$6.4bn for water and sanitation projects in 2013 alone
Saudi Arabia has solidified its place as a major player in the world water market as the pressure on the existing water system continues to mount, prompting large investment from Saudi government, BMI said in its Saudi Arabia Water Report Q4 2013. In addition to the basic provision of water services to the public, an expansionary economic policy, active construction sector and water intensive operational developments in the oil and gas industry create an increased urgency.
Backed by a multi-billion dollar infrastructure expenditure programme, the Kingdom is ploughing resources into its water sector and prioritising contractor awards across the key desalination, wastewater and network areas.
The Minister of Water and Electricity, Abdullah Al- Hussayen, announced in January 2013 that the government allocated US$6.4bn for water and sanitation projects in 2013 alone and committed over $66 billion to long-term capital investments over the next 10 years.
The most favourable aspect of the Saudi landscape is the abundance of liquidity and the willingness of key projects sponsors and utilities to furnish this on what is a critical economic sector, in a country where water resources are highly restricted yet demand continues to grow.
Projects worth around US$15bn have been ordered since Saudi Arabia decided to push ahead with its IWPP programme. They are set to add over 1bn m3/d to the nation's water supply and nearly 10 gigawatts (GW) of power capacity. These have made Saudi Arabia a hotspot for international engineering firms and foreign investment.
PPPs have been established for a number of cities with international and domestic companies, typically under six- or seven-year contracts, which cover water distribution and wastewater collection. Wastewater treatment is being handled through a separate programme. These contracts are also designed to limit the loss of water in the system, defined as non-revenue water.
However, considering that Saudi Arabia has one of the largest infrastructure project pipelines, with around US$400bn in our Key Project's Database alone, comments from the National Committee in Saudi Chambers (NCSC) indicating that a third of construction projects underway have been scrapped suggest that the GCC's largest market is undermining itself with its labour policies.
The 'Saudisation' policy which is a drive to replace expat workers with Saudi nationals, while at the same time removing illegal migrants, has seen hundreds of thousands of people leave the Kingdom. Over the first quarter of 2013 it is estimated that around 200,000 workers left Saudi Arabia on top of the 575,000 illegal workers Saudi authorities deported in 2012.