PROJECTS: Saudi's Yanbu-4 desalination project achieves financial close

(Updated to include water tariff and water pipeline PPP in the third paragraph, solar power capacity in the ninth paragraph)

 

Saudi Water Partnership Company (SWPC) announced on Sunday the financial close of the Yanbu-4 Independent Water Plant (IWP) project, located Southwest of the Madinah region. 

 

The IWP project, which is estimated to cost 3.3 billion Saudi Riyals ($880 million) and includes a water transmission line, was awarded to a consortium of International Power (Engie), Mowah, and Nesma, an SWPC statement said.

 

In a related press release on Monday, Engie said the consortium was awarded the Yanbu-4 IWP, located in the town of Ar Rayyis on the Red Sea coast, in February 2020 after submitting a successful bid with tariff of SAR 1.7446 halalas per cubic metre ($0.47 cents/m3) of produced water. It said the project also included the first water pipeline in Saudi Arabia developed under the public-private-partnership (PPP) structure.

 

The Build-Own-Operate (BOO) project, according to the SWPC statement, comprises a 450,000 cubic meters/day (m3/day) reverse osmosis desalination plant and the Yanbu-Rayis water transmission pipeline, called Water Special Facilities (WSF), with a capacity of 600,000 cm3/day and length of 39 km.

 

Yanbu IWP is scheduled to start commercial operations in the fourth quarter of 2023, the statement said.

 

The desalination plant would be built and operated by the consortium for a period of 25 years, while the water transmission pipeline or WSF would be transferred after construction to the Saline Water Conversion Corporation (SWCC).

 

SWPC CEO Khaled Al Qureshi said the company and the consortium succeeded in completing the financial close in cooperation with the lenders despite the fluctuations, liquidity crises, and changing global market conditions.

 

He said Yanbu-4 IWP is the first project of its kind in Saudi Arabia to "include a water transmission pipeline in addition to the desalination plant that the private sector will implement," the first desalination project to provide drinking water supply to the two holy cities of Makkah and Madinah together, and the first project to include storage tanks with a total capacity of 900,000 m3, equivalent to two days of production, to increase the availability and reliability of the water supply.

 

The project will also feature a solar power system to reduce electricity consumption from the grid. The Engie press statement said the project will include a 20-megawatt solar energy system to reduce grid electricity consumption throughout the desalination process. 

 

Al Qureshi said the project would provide 500 direct and indirect job opportunities during the construction and operation phases at a local content rate of 40 percent in the construction phase, rising to 70 percent in the operation phase.

 

"Reaching this stage in the project and starting construction works under these difficult circumstances is a complete indication of investors' confidence in the investment environment in the Kingdom of Saudi Arabia and the suitability of the investment environment for the private sector," he concluded.

 

(Writing by Anoop Menon: Editing by Seban Scaria)

(anoop.menon@refinitiv.com)

 

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