Bidders start path to Jordan Red Sea Project
The huge plan to desalinate water from the Red Sea and use the brine to top up the shrinking Dead Sea will be one of the biggest technical challenges of the coming years. Financial sustainability is more important to bidders.
Jordan has qualified six bidders for the Jordan Red Sea Project, the massive desalination, power and transmission plan the country hopes will solve its water needs over the coming decades.
Acciona/Mitsubishi, ACWA Power, the Jordan Red Sea Group, Orascom Construction, Samsung C&T and the Sinohydro Corporation have been given until September to bid for the project by Jordan’s Ministry of Water and Irrigation.
The six groups will now have to start the complicated process of bringing together the expertise to put in bids for one of the most wide-ranging, complicated and expensive water projects in the world.
The first phase of the project is expected to include 575,000m3/d of SWRO desal capacity built at the southern port of Aqaba. The brine outflow from the plant will be mixed with an extra 520,500m3/d of seawater before being transported about 150 miles north and used to refill the shrinking Dead Sea.
This is just the first phase of a five-part project planned by the Ministry over the next 45-50 years. They hope to eventually expand capacity and build another SWRO plant at the Dead Sea end of the water conveyor. The project is aimed to eventually provide 2.55 million m3/d of desalinated water to the national network, while adding 3.34 million m3/d to the Dead Sea.
While the scale of the contract made it an attractive project to be involved in – evidenced by the number of interested companies – the wide scope and vague detailing of the project means the process of putting together a bid is likely to be long, complicated and expensive for the six consortia.
A source close to one of the bidders described prequalification for the JRSP as “an opportunity to spend vast amounts of money preparing a mammoth proposal”.
The total capital cost of the first phase of the project alone is expected to add up to more than $2 billion. Including later phases, this figure could rise beyond $10 billion. With the Jordanian government not keen on raising water tariffs, one of the key tasks for the winning developer will be making the project financially sustainable.
A number of attached projects could potentially be included in the JRSP contract to make the plans commercially viable. These include a hydroelectic plant generating 180MW of power, and the design and construction of a series of residential developments, commercial areas, industrial centres and tourist resorts.
Whoever wins the contract and is named master developer for the project will have to manage a huge coalition of different skillsets, as part of a partnership in which the government of Jordan will most likely take a significant stake.
Another source within the bidding groups outlined the problems facing the bidders, and said it would be the ability to create a viable financial plan that would ultimately be the deciding factor.
“At the end of the day it’s not going to fly if it isn’t bankable,” he said. “You’ve got to remember that this is a 50-year project. It’s huge, but it’s also still relatively vague. They have a number of components that could make it work financially, but we will have to wait and see how it will all gel.”