Jan. 4, 2010 -
PRLog -- Saudi Arabia is the third largest consumer of water per capita in the world, but has limited groundwater to tap. The country has been plagued by shortages in recent years, and with consumption rising on the back of a growing population and economic growth set to soar, the government has needed to act quickly to stave off potential disaster and civil unrest. Desalination forms the backbone of the government's water strategy. Some 30 desalination plants have already been built by the state, but these have barely been able to keep pace with rising demand. In BMI's Q110 Saudi Arabia Water Report we have revised down our forecasts for water desalination capacity additions over coming years. We now expect desalinated water to reach 1.127bn m3 in 2010, down from 1.167bn m3 in our previous forecast. By 2014, we envisage water desalination supply to reach 1.298bn m3, compared with a previous forecast of 1.366bn m3. The revision reflects slower than expected progress on key schemes, as well as the delays with the major new Ras al-Zour IWPP scheme, which was to have been let on a privately financed basis, but is now being implemented as a state-backed scheme. Building on a master plan drawn up in 2002, some US$6bn a year has been committed by the government to bolstering the water sector over the next two decades. This was regarded as too big a task for stateowned utilities alone, so, for the first time in Saudi Arabian infrastructure outside the hydrocarbons sector, the programme involves massive input from the domestic and international private sector. Saudi Arabia's regulatory system for the power and water sectors was overhauled to make it more investor-friendly and to enable the creation of bodies such as the Water and Electricity Company (WEC) and the National Water Company (NWC) to manage the transition and provide state partners for investors. The main vehicles are independent power and water projects (IWPPs) in which the private sector can take stakes of up to 60%. Over US$15bn worth of IWPPs have been sanctioned since the programme started in 2004. They will add over 1bn m3 per day to the country's water supply and nearly 10GW of power capacity. Difficult economic conditions and reduced demand growth forecasts have caused the government to reappraise some proposed IWPPs. Projects at Yanbu and Ras Al Zour have been revamped to allow greater state participation. The first IWPP to be completed, the US$2.45bn Shuaibah facility, sought funding in 2004 and - after initial mistrust among foreign investors then unfamiliar with the Saudi Arabian market - eventually received financing from a Saudi-Malaysian consortium. The success of this financing paved the way for a number of other IWPPs to successfully seek funding. Saudi Arabia's population dynamics will cushion it from the worst of the fallout from the regional economic downturn. The kingdom is one of the few states for which we are not projecting a population decline in 2009, thanks to a fast-growing (and majority) local population.
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