Families of fish topple Saudi Arabia’s water greats

Published May 5th, 2016

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Insight from Christopher Gasson, GWI publisher

It is difficult not to feel a sense of outrage about the departures of Saudi Minister of Water and Electricity Abdullah Al-Hussayen and the head of the National Water Company Loay Al-Musallam. They have both been fired to assuage public anger about the new water tariff regime introduced in January this year.

In my view, this tariff reform is the acid test of whether Saudi Arabia can be a viable country in the 21st century. Hitherto, water in Saudi Arabia cost 10 halalas/m3 ($0.03/m3) for the first 50m3 consumed per month. The average household – consuming around 45m3/month (twice the global per capita average) would expect a water bill of $1.35 a month. Under the new arrangements, the average monthly bill should have risen to $25.05: this is no longer negligible, but given that the full cost of producing and transporting a cubic metre of water is closer to $10, it seems reasonable.

What blindsided Al-Hussayen and Al-Musallam was the number of customers who reported on social media that their new water bills were more than SAR5,000 ($1,332) after the tariff hike. To reach that level of bill, a household would have to be using at least 528m3 in a month. It would either have to be a family of fish who were being billed, or there would have to be a significant leak on the property. The latter are absolutely the people the new tariff scheme was aimed at. Years of lecturing on the need to save water and distributing water-saving kits clearly had no impact on them. They were draining the wealth of the nation without a care: the real cost of 528m3 of water to the Saudi economy is more than $5,000. Furthermore, wasting water like this does not just go against the economic future of the country; it also goes against Islam. The Prophet recommended extreme conservation “even on the banks of a fast-flowing river”. He himself performed Wudu (ritual washing before prayer) with less than two thirds of a litre of water.

My theory of what happened is that the tariff rise was pushed forward by the reformist deputy Crown Prince Mohammed bin Salman Al Saud, but it was not run past the notables of the Shura Council, who have traditionally enjoyed the role of advising the king on policy matters. It meant that the establishment was not fully behind the minister and the CEO when SAR5,000 water bills started trending on social media.

Either way, I think it is wrong that Al-Hussayen and Al-Musallam should be leaving office without a full appreciation of their contribution to the cause of water in Saudi Arabia. When I look across the world, I don’t see any water ministers who have done as much as Al-Hussayen in such difficult circumstances. Most of them are politicians on the make, with very little real interest in water. You see them at conferences reading from speeches written by their minions, and then scooting off without taking questions. In the Gulf region, there are some heads of water agencies which don’t even reach that level of engagement with what water is about. They are focused entirely on keeping their boss (the ruler) happy, and leave the actual business of water to expatriates.

Al-Hussayen’s main job was also keeping the ruler happy, but his great skill was to do this while pushing dramatic reforms across the water sector. He opened the Saudi desalination sector to private finance, created the National Water Company as a modern utility, and tirelessly made the case for water conservation. I remember giving a presentation in Jeddah at a conference six or seven years ago with Al-Hussayen sitting in the front row. Ironically I was advocating a new tariff structure very similar to what has been introduced. After the presentation, Al-Hussayen was invited on stage to respond to the proposal. His argument was that there was still plenty of benefit to be had from voluntary conservation efforts  before price-driven conservation became necessary.

I have had a close relationship with Loay Al-Musallam since we first met in 2005, when he was Deputy Minister for Planning at the Ministry of Water and Electricity. We got on well immediately, throwing ideas around about how the Saudi water sector could be recreated. I thought that I had met a fellow dreamer, until he became CEO of the NWC and made it all a reality. He introduced management contracts to drive the immediate performance of city business units. He created a business out of selling recycled wastewater – and charged more for it than he could charge for desalinated seawater. He developed alternative water resources, dug deep sewer tunnels, and created strategic storage reserves. He was running a water utility like a Silicon Valley start-up. Although a few contractors complained about the chopping and changing this entailed, all would agree that he has changed the Saudi water sector dramatically – and for the better.

Although it is a shame to see Al-Hussayen and Al-Musallam go, the fact that they were there in the first place – and that they remained in position for so long – are grounds for optimism. It shows that although Saudi Arabia might be an autocracy at the top, beneath the king it is a meritocratic technocracy.

SWCC Governor Abdulrahman Al-Ibrahim, who is now acting CEO of the NWC, is another brilliant man. Temperamentally more cautious than Al-Musallam, he is equally astute in his vision for change, and effective in his delivery. By combining the two top jobs, he is now in an ideal position to address the next big challenge for the Saudi water sector: making way for private investment. At the moment, the NWC does not pay SWCC for the water it uses, which makes it difficult to privatise SWCC’s desalination fleet, or ensure that the NWC operates on a truly economic basis. Preparing Saudi Arabia’s water sector for the next stage of privatisation is a huge intellectual challenge, and Al-Ibrahim is definitely up to it.

One only hopes that he does not get derailed by Riyadh’s twittering fish population.