Saudi Arabia Investing Heavily To Meet Utility Demand
Saudi Arabia continues to invest heavily in order to meet water and electricity demand in the Kingdom. The country is directing extensive capital in expanding its desalination and electricity capacity, with most projects being funded by the government rather than private investors, as is seen frequently in other Gulf Cooperation Council (GCC) countries.
The award of two new desalination plants supports our view that desalinated water capacity will increase notably over the next few years, growing at an annual average rate of 4% per annum between 2012 and 2016.
|Investing To Meet Demand|
|Saudi Arabia Water & Electricity Forecasts|
The latest project to move forward is Yanbu III - a combined desalination and power plant on Saudi Arabia's Red Sea Coast. Separate contracts have been awarded for the various components of the plants. Doosan Heavy Industries & Construction was awarded the US$1bn Engineering Procurement Construction (EPC) contract for the desalination plant on November 14 th 2012. Yanbu III will have the capacity to produce 550,000 cubic metres a day (m 3/d), enough to meet the daily demand of 1.8mn people. The contract is for design, manufacturing, installation and testing, with the plant to be completed in March 2016.
Yanbu III will also have the capacity to generate 2,500 megawatts of electricity. The US$3bn contract to build the oil-fired power plant has also been awarded, although not without generating controversy. The contract for the power plant has been awarded to a consortium including Samsung Engineering, Shanghai Electric and local contractor Saudi Al Toukhi Company for Industry Trading And Contracting. However, following a hotly debated bidding process, which saw disputes over price and technology, the announcement of the winner resulted in a group of bidders that lost out filing a complaint with the anti-corruption authority, stating that they were excluded in favour of a less competitive deal from a consortium including a local player, according to Global Water Intelligence. The Saline Water Conversion Corporation has refuted the claims, stating that it followed the legal procurement guidelines in the tendering process.
This contract is the second desalination project to be awarded in the space of just over a month in Saudi Arabia. In October 2012, Acciona Agua was awarded the contract for the SWRO-4 desalination plant in cooperation with local contractor Saudi Binladin Group. The unit will have the capacity to produce 100,00m 3/d when it comes online at the end of 2014.