Saudi Arabia thinks big on wastewater privatisation

I was in Saudi Arabia this weekend for the long-awaited launch of the first phase of the Jeddah wastewater system. The project will see 52,000 people connected to a wastewater treatment network in the notorious sewerage black spot, rising to 132,000 in the next three years.

Officially opened by Prince Khaled Al-Faisal, the governor of the Mecca province in the Kingdom, the project is the culmination of a huge spending drive by the Saudi National Water Company. The first stage of the project included the construction of 950km of tunneling and four wastewater treatment plants with a combined capacity of 450,000m3/d, all completed ahead of schedule – something the NWC will rightly feel proud about achieving.

But while the Jeddah project will grab the headlines, another initiative in the capital Riyadh next year is in many ways even more impressive. As reported last week, NWC is set to seek advisers at the start of 2012 for the first large-scale privatisation of wastewater assets in Saudi Arabia.

Riyadh will be the first of five regional wastewater concessions, where a public-private special purpose vehicle will take on responsibility for owning, operating and upgrading the system in exchange for the right to sell treated effluent. The SPVwill have full responsibility for the wastewater cycle, from collection through treatment to the disposal of treated effluent – a level of private sector involvement currently unheard-of in the region.

The key to the development lies in NWC’s realisation of the value of treated sewage effluent (TSE) and its use in the industrial sector – and just as importantly, its efforts to create this value on a large scale. Contracts to sell TSE to the industrial sector, worth SAR10 billion ($2.7 billion) over their lifetime, are believed to have been signed or on the table for NWC, but even this figure only scratches the surface of the amount of wastewater theoretically available for reuse.

While water reuse is hardly a new idea, NWC’s packaging up of the whole wastewater system around industrial demand is a model that makes a lot of sense for the rest of the region, and elsewhere. The BOT (build-operate-transfer) model has taken steps towards rationalising the cost of wastewater investment, but this model could improve things yet further, taking in as it does the network, distribution and disposal aspects of the system as well.

Combined with a rise in the industrial tariff for potable water, the initiative should also help to reduce the strain on non-renewable sources of water, a useful bonus in water-starved regions such as Saudi Arabia.

The Saudi wastewater experience shows that infrastructure investment doesn’t have to be unsustainable. The plant-specific BOT model has done plenty to reduce the risk and cost of wastewater treatment for the public sector. If municipal bodies are willing to think big, there is plenty more that can be done.

This week's columnist is Tom Scotney, GWI’s Middle East editor. Christopher Gasson is away.

*GWI will be back in Jeddah next week – as of course will the National Water Company – to talk business at the Saudi Water and Power Forum, being held at the Jeddah Hilton from 4-6 December. If you’re planning to be there, come along to our stand and say hello.