05 November 2009
The GCC water infrastructure is vital for the region due to the lack of natural water resources. The growing population in the region is adding to the demand and several projects in the sector have been put on hold or have been cancelled due to the financial crisis, according to a new report by Markaz.
The report titled "GCC Infrastructure - Water, Crucial for Sustainability of Growth" said the GCC has a two-fold water issue.
The fresh water resources available in the region are lower than one per cent of the total available global fresh water. However, the region is home to five per cent of the world's population. Coupled with this, the population growth is one of the highest in the world.
For GCC as a whole, the population growth rate CAGR between 1990 and 2009 was at three per cent. This is in comparison to a 1.8 per cent growth rate in India and a 0.8 per cent growth rate in China, as per the data given by Markaz.
The low water availability in the GCC can be mainly attributed to severe desertification of land. The only source of fresh water in the region is the various acquifiers, which are non-rechargeable in nature.
This has resulted in the GCC countries having the lowest levels of renewable water resources in the world at an average of 600 cubic metres per year.
As the fresh water availability is low, the proportion of freshwater withdrawal to total renewable water resources stands out with values more than 100 per cent in all the GCC countries, except Oman, indicating that more water is withdrawn than the quantity annually renewed on a long-term basis, thus depleting the freshwater resources.
At a country level, Kuwait has the highest rate at 2075 per cent, meaning that large use is made of fossil groundwater. The very low availability of fresh water and its high depletion rate coupled with a rapid increase in population resulted in a focus towards augmenting supplies. Supplies are enhanced by way of developing groundwater, desalination and waste water treatment.
All GCC countries have a limited number of large deep acquifiers. These contain non-renewable supplies of fossil water. These fossil waters have two limitations: finite lifetime and quality limitations.
In the past, there has been significant deterioration of fossil water due to an increase in exploration activities for oil, breach of sea water and natural evaporation. World Bank estimates that this water resource availability will shrink by half of its current size by 2030. Even though a costly process, currently desalination seems to be the only practical solution available for GCC countries to increase supplies of water. The six GCC countries collectively spent more than $40 billion (Dh147bn) over the past 25 years to expand desalination capacities.
The GCC has 50 per cent of the world's desalination capacity. Saudi Arabia leads the world in terms of total desalination capacity at 5.01 million cubic metres per day.
The current extent of waste water treatment for re-use is low at 17 per cent of the total water produced. Currently, the extent of waste water recycling is varying across the six countries. In Saudi Arabia, waste water recycling is at about five per cent of the total water. However, Qatar and Kuwait recycle upto 50-55 per cent of the total water.
Due to extreme dryness of ground soil, a significant amount of water is required for agricultural purposes in the GCC. It is estimated that 85 per cent of water requirement in the region is for agricultural purposes.
This extreme usage of water towards agriculture in decertified soil can be attributed to the government's ambition towards food security and food self-sufficiency. However, governments are cutting down agricultural projects due to water problems.
Cost escalation
There have been significant cost escalations from the budgeted values.
For example, the King Abdullah Economic City: Desalination and MBR plant was originally estimated to cost $50 million (Dh183.6m). This has currently been increased to $75m. Such cost escalations in the current financial crisis is expected to lead to more projects getting delayed.
The reversal in population growth is also impacting the water sector. The UAE, which witnessed a 5.7 per cent CAGR growth in its population from 1990 to 2008 is all set to record its largest decline in growth rate for 2009 at -4 per cent. According to IIF, the population of UAE is set to reduce from 4.69 million to 4.48 million in 2009.
Also, Qatar which was witnessing a rapid growth in population with a CAGR of seven per cent from 1990 to 2008 and a high growth of 18 per cent in 2008 is expected to witness a slowdown in growth rates to three per cent in 2009 and 2010 respectively.
Water investment
The total investments in the water segment is estimated at $51.23 billion (Dh188bn) between 2002 and 2015. This includes projects completed, currently under execution and future planned projects.
Bulk of this investment is split between future projects and current work in progress. The financial crisis has impacted 11 projects negatively with an aggregate value of $2.8bn.
In terms of geographies, the highest amounts of investments are being made in Qatar at $13.72bn, this form 31 per cent of the total investments in the water segment in the GCC.
The total investments in Qatar inclusive of the completed projects since 2002 is at $15.31bn. The UAE is a closest second with a total investment of $11.13bn, almost equally split between projects in progress and future planned projects.
Of this amount, $2.21bn worth of projects has witnessed cancellations. The UAE has witnessed the highest value of projects getting cancelled in the recent past. On the regional level, GCC water grid is the only project being planned at a GCC level. The shareholders of this project are the governments of all the six GCC countries. The total cost of the project is estimated at $4bn and is scheduled to be completed in 2012.
The plan is to build a pan-GCC water network to enable the GCC states to trade water in both normal and emergency situations. The project includes a 1,324km water pipeline from Sohar in Oman to Khafji in the Divided Zone.
Connected to the respective national water networks of each of the GCC states, the pipeline will allow water authorities to obtain between 23-40 per cent of their daily total potable water demand from the grid in emergency situations, such as war, desalination plant breakdowns and coastal oil spills.
On a country level, in 2004 Saudi Arabia announced a plan to launch 10 IWPPs by 2016, at $16bn. Four IWPPs worth more than $8bn have already been approved.
The combined production capacity of the four projects (valued at around $8bn) is expected to reach 600 million gallons daily, and boost the kingdom's total desalination capacity by 80 per cent between 2008 and 2010.
Other proposed IWPPs include a 150 million gallons per day facility (Yanbu-2), first announced in November 2006; a second phase IWPP, with up to 22 million gallons per day capacity is reportedly being planned by Marafiq; 150 million gallons per day facility at Rabigh-2; and 23 million gallons per day Shuqaiq-3 extension. Among the projects that are being executed currently, the Riyadh waste water treatment plant is the largest in Saudi Arabia.
Even in terms of future projects, Phase II of the Riyadh waste water project is the largest in Saudi Arabia. It is expected to cost $600m is slated to be completed in second quarter of 2012.
There have been very few project cancellations in Saudi Arabia. The only project which has been placed on hold due to the financial crisis is that of Emaar - King Abdullah Economic city: desalination and MBR plant.
In the UAE, seven projects which were planned or were under study have been put on hold. The aggregate value of these projects is at about $2.21bn. This forms almost 66 per cent of the total value of projects being cancelled in the GCC. In Qatar, the desalination capacity has been increased through IWPPs. The Ras Laffan A project is a 30 million imperial gallons per day plant, which commenced operations in May 2004.
Qatar has 21 water projects that are currently being executed with an aggregate value of $7.58bn. The largest one is of Ministry of Municipal Affairs and Agriculture called Integrated Solid Waste Management Facility.
Qatar leads the GCC countries in terms of the aggregate value of future projects that have been planned. A total of 10 projects have been planned so far at an estimated aggregate value of $6.13bn. Qatar has not witnessed any project cancellations so far.
On the other hand, Bahrain has the lowest number and aggregate value of projects that are being currently executed in the water segment. Three projects are being executed at an aggregate value of $1.05bn, the largest project in terms of value is Waste Incineration Plant by the Ministry of Works and Housing.
In terms of future projects too, Bahrain has lowest number of projects in the GCC and also of aggregate lowest value. Four water related projects have been planned so far at an aggregate value of $610m.
Bahrain has witnessed one project being cancelled due to the financial crisis. The project from Tabreed at an estimated cost of $150m has been on hold.
The Kuwaiti Ministry of Electricity and Water had approved a plan that entailed the construction of new water desalination plants between 2006 and 2012 to accommodate the anticipated increase in water consumption.
Kuwait has the world's largest wastewater treatment and reuse plant at Sulaibiya 4. The water capacity expansion initiatives include phase three of the Subbiya distillation plant project, which includes four water units having the capacity to distill 50 million gallons each.
Kuwait has a sizeable number of projects that are being currently executed. The numbers of projects are 12 and with an estimated value of $1.38bn.
Kuwait has planned ten projects in the water and waste segment worth $3.9bn. Among the future projects that have been planned, the second desalination plant in Al Zour has the highest value at $1.14bn. The estimate completion of the project is in 2012 with a slated capacity of 102 million gallons per day of desalinated water. Kuwait has not seen any project cancellations so far.
In Oman, the big projects are Barka Power and Desalination Station Project, Sohar Power and Desalination Station Project and Phase II of the Barka Power and Desalination Plant.
Currently, there are 18 projects with an aggregate estimated size of $2.5bn. Oman has planned 12 projects at an estimated value of $1.49bn.
Oman has witnessed two stalled water projects that were either cancelled or put on hold. Both the projects had a similar size of $200m.
The GCC water infrastructure is vital for the region due to the lack of natural water resources. The growing population in the region is adding to the demand and several projects in the sector have been put on hold or have been cancelled due to the financial crisis, according to a new report by Markaz.
The report titled "GCC Infrastructure - Water, Crucial for Sustainability of Growth" said the GCC has a two-fold water issue.
The fresh water resources available in the region are lower than one per cent of the total available global fresh water. However, the region is home to five per cent of the world's population. Coupled with this, the population growth is one of the highest in the world.
For GCC as a whole, the population growth rate CAGR between 1990 and 2009 was at three per cent. This is in comparison to a 1.8 per cent growth rate in India and a 0.8 per cent growth rate in China, as per the data given by Markaz.
The low water availability in the GCC can be mainly attributed to severe desertification of land. The only source of fresh water in the region is the various acquifiers, which are non-rechargeable in nature.
This has resulted in the GCC countries having the lowest levels of renewable water resources in the world at an average of 600 cubic metres per year.
As the fresh water availability is low, the proportion of freshwater withdrawal to total renewable water resources stands out with values more than 100 per cent in all the GCC countries, except Oman, indicating that more water is withdrawn than the quantity annually renewed on a long-term basis, thus depleting the freshwater resources.
At a country level, Kuwait has the highest rate at 2075 per cent, meaning that large use is made of fossil groundwater. The very low availability of fresh water and its high depletion rate coupled with a rapid increase in population resulted in a focus towards augmenting supplies. Supplies are enhanced by way of developing groundwater, desalination and waste water treatment.
All GCC countries have a limited number of large deep acquifiers. These contain non-renewable supplies of fossil water. These fossil waters have two limitations: finite lifetime and quality limitations.
In the past, there has been significant deterioration of fossil water due to an increase in exploration activities for oil, breach of sea water and natural evaporation. World Bank estimates that this water resource availability will shrink by half of its current size by 2030. Even though a costly process, currently desalination seems to be the only practical solution available for GCC countries to increase supplies of water. The six GCC countries collectively spent more than $40 billion (Dh147bn) over the past 25 years to expand desalination capacities.
The GCC has 50 per cent of the world's desalination capacity. Saudi Arabia leads the world in terms of total desalination capacity at 5.01 million cubic metres per day.
The current extent of waste water treatment for re-use is low at 17 per cent of the total water produced. Currently, the extent of waste water recycling is varying across the six countries. In Saudi Arabia, waste water recycling is at about five per cent of the total water. However, Qatar and Kuwait recycle upto 50-55 per cent of the total water.
Due to extreme dryness of ground soil, a significant amount of water is required for agricultural purposes in the GCC. It is estimated that 85 per cent of water requirement in the region is for agricultural purposes.
This extreme usage of water towards agriculture in decertified soil can be attributed to the government's ambition towards food security and food self-sufficiency. However, governments are cutting down agricultural projects due to water problems.
Cost escalation
There have been significant cost escalations from the budgeted values.
For example, the King Abdullah Economic City: Desalination and MBR plant was originally estimated to cost $50 million (Dh183.6m). This has currently been increased to $75m. Such cost escalations in the current financial crisis is expected to lead to more projects getting delayed.
The reversal in population growth is also impacting the water sector. The UAE, which witnessed a 5.7 per cent CAGR growth in its population from 1990 to 2008 is all set to record its largest decline in growth rate for 2009 at -4 per cent. According to IIF, the population of UAE is set to reduce from 4.69 million to 4.48 million in 2009.
Also, Qatar which was witnessing a rapid growth in population with a CAGR of seven per cent from 1990 to 2008 and a high growth of 18 per cent in 2008 is expected to witness a slowdown in growth rates to three per cent in 2009 and 2010 respectively.
Water investment
The total investments in the water segment is estimated at $51.23 billion (Dh188bn) between 2002 and 2015. This includes projects completed, currently under execution and future planned projects.
Bulk of this investment is split between future projects and current work in progress. The financial crisis has impacted 11 projects negatively with an aggregate value of $2.8bn.
In terms of geographies, the highest amounts of investments are being made in Qatar at $13.72bn, this form 31 per cent of the total investments in the water segment in the GCC.
The total investments in Qatar inclusive of the completed projects since 2002 is at $15.31bn. The UAE is a closest second with a total investment of $11.13bn, almost equally split between projects in progress and future planned projects.
Of this amount, $2.21bn worth of projects has witnessed cancellations. The UAE has witnessed the highest value of projects getting cancelled in the recent past. On the regional level, GCC water grid is the only project being planned at a GCC level. The shareholders of this project are the governments of all the six GCC countries. The total cost of the project is estimated at $4bn and is scheduled to be completed in 2012.
The plan is to build a pan-GCC water network to enable the GCC states to trade water in both normal and emergency situations. The project includes a 1,324km water pipeline from Sohar in Oman to Khafji in the Divided Zone.
Connected to the respective national water networks of each of the GCC states, the pipeline will allow water authorities to obtain between 23-40 per cent of their daily total potable water demand from the grid in emergency situations, such as war, desalination plant breakdowns and coastal oil spills.
On a country level, in 2004 Saudi Arabia announced a plan to launch 10 IWPPs by 2016, at $16bn. Four IWPPs worth more than $8bn have already been approved.
The combined production capacity of the four projects (valued at around $8bn) is expected to reach 600 million gallons daily, and boost the kingdom's total desalination capacity by 80 per cent between 2008 and 2010.
Other proposed IWPPs include a 150 million gallons per day facility (Yanbu-2), first announced in November 2006; a second phase IWPP, with up to 22 million gallons per day capacity is reportedly being planned by Marafiq; 150 million gallons per day facility at Rabigh-2; and 23 million gallons per day Shuqaiq-3 extension. Among the projects that are being executed currently, the Riyadh waste water treatment plant is the largest in Saudi Arabia.
Even in terms of future projects, Phase II of the Riyadh waste water project is the largest in Saudi Arabia. It is expected to cost $600m is slated to be completed in second quarter of 2012.
There have been very few project cancellations in Saudi Arabia. The only project which has been placed on hold due to the financial crisis is that of Emaar - King Abdullah Economic city: desalination and MBR plant.
In the UAE, seven projects which were planned or were under study have been put on hold. The aggregate value of these projects is at about $2.21bn. This forms almost 66 per cent of the total value of projects being cancelled in the GCC. In Qatar, the desalination capacity has been increased through IWPPs. The Ras Laffan A project is a 30 million imperial gallons per day plant, which commenced operations in May 2004.
Qatar has 21 water projects that are currently being executed with an aggregate value of $7.58bn. The largest one is of Ministry of Municipal Affairs and Agriculture called Integrated Solid Waste Management Facility.
Qatar leads the GCC countries in terms of the aggregate value of future projects that have been planned. A total of 10 projects have been planned so far at an estimated aggregate value of $6.13bn. Qatar has not witnessed any project cancellations so far.
On the other hand, Bahrain has the lowest number and aggregate value of projects that are being currently executed in the water segment. Three projects are being executed at an aggregate value of $1.05bn, the largest project in terms of value is Waste Incineration Plant by the Ministry of Works and Housing.
In terms of future projects too, Bahrain has lowest number of projects in the GCC and also of aggregate lowest value. Four water related projects have been planned so far at an aggregate value of $610m.
Bahrain has witnessed one project being cancelled due to the financial crisis. The project from Tabreed at an estimated cost of $150m has been on hold.
The Kuwaiti Ministry of Electricity and Water had approved a plan that entailed the construction of new water desalination plants between 2006 and 2012 to accommodate the anticipated increase in water consumption.
Kuwait has the world's largest wastewater treatment and reuse plant at Sulaibiya 4. The water capacity expansion initiatives include phase three of the Subbiya distillation plant project, which includes four water units having the capacity to distill 50 million gallons each.
Kuwait has a sizeable number of projects that are being currently executed. The numbers of projects are 12 and with an estimated value of $1.38bn.
Kuwait has planned ten projects in the water and waste segment worth $3.9bn. Among the future projects that have been planned, the second desalination plant in Al Zour has the highest value at $1.14bn. The estimate completion of the project is in 2012 with a slated capacity of 102 million gallons per day of desalinated water. Kuwait has not seen any project cancellations so far.
In Oman, the big projects are Barka Power and Desalination Station Project, Sohar Power and Desalination Station Project and Phase II of the Barka Power and Desalination Plant.
Currently, there are 18 projects with an aggregate estimated size of $2.5bn. Oman has planned 12 projects at an estimated value of $1.49bn.
Oman has witnessed two stalled water projects that were either cancelled or put on hold. Both the projects had a similar size of $200m.
By Shuchita Kapur
© Emirates Business 24/7 2009
