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10 February, 2019

INTERVIEW - Integrated water management can help Gulf countries tackle competing water needs

IWRM to generate $7bln worth of projects in Saudi Arabia up to 2021, says Acciona Agua executive

Julio De La Rosa, Acciona Agua Business Development Director for the Middle East

Julio De La Rosa, Acciona Agua Business Development Director for the Middle East

Acciona Agua handout via Thomson Reuters Projects

10 February 2019
Integrated Water Resources Management (IWRM) for managing water resources remains a work-in-progress in the Middle East region, according to Julio De La Rosa, ACCIONA Agua Business Development Director for the Middle East.

The Spain-headquartered company focuses on water treatment and reverse osmosis (RO) desalination.

De La Rosa defined IWRM as "supply of water to citizens according to the resources in a sustainable way, environmentally and financially."

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Speaking to Thomson Reuters Projects on the sidelines of the Abu Dhabi Sustainability Week (ADSW) last month, he pointed out that the arid countries in the region are dependent on desalination for potable water supply.

A World Bank study issued last year said the Middle East and North Africa (MENA) region is home to six percent of the world's population but less than one percent of its drinking water. Also, the region also accounts for more than nearly half the world's desalination capacity, making it the largest desalination market in the world.

"Just to avoid water scarcity, we need to do IWRM," said De La Rosa while noting that water reuse, which is yet to gain widespread acceptance in the region, is integral to IWRM and can be a solution to water scarcity.

"Compared to desalination, not enough attention has been paid to wastewater treatment and reuse. But I think that picture is changing because money is not unlimited anywhere, and countries are getting serious about taking care of their resources and investments," he said.

Large-scale upgrades of sewage treatment plants in the Gulf and Egypt have driven strong growth in reuse, according International Desalination Association's water security handbook issued last month.

Opportunities in IWRM

Recharge of aquifers and reduction of Non-Revenue Water (NRW) are the two major IWRM-related project opportunities in the region, according to the ACCIONA Agua Executive.

"For example, in Bahrain, seven percent of the reuse water is used to recharge aquifers. I think it is only a matter of time before other countries start injecting reuse water in their aquifers. You may need 10-15 years for the water to regenerate but you will regenerate the full aquifer."

Commenting on NRW losses, he said countries in the region are yet to come to grips with the scale of the problem.

NRW is water that is pumped and then lost or unaccounted for, according to the World Bank.

"The biggest challenge is that either you don't know the problem that you have, or you don't know how big a problem it is. It is estimated that in some cases, NRW losses can reach up to 60 percent of the water produced," he explained.

NRW rates in Europe range between three percent and five percent, while those in the Middle East range between 13 percent and 35 percent, according to an April 2017 press statement from Frost & Sullivan.

However, technologies like Internet of Things (IoT), Big Data and Machine Learning can be applied to "know easily how much water is lost in the network," opined De La Rosa.

And plugging NRW losses, he continued, is one of the key drivers behind Saudi Arabia's water distribution privatisation programme.

He elaborated: "They have split the country into six different regions and there would be two different contracts. In the first stage, there would be management contracts lasting between three and five years. In the second stage, the contracts would be converted long-term services agreements lasting between 20-30 years.

The programme had gathered pace in February last year with the appointment of a advisory team comprising of Mizuho Bank, Atkins and White & Case by National Water Company (NWC) to bring in private companies into the water distribution sector. The same team was appointed in September 2017 to provide advisory services to NWC on three wastewater treatment projects that marked the state-owned firm's first privatisation project.

He said the reason for splitting the contracts into two stages is to help the companies "understand how the current situation of the service is and what measures should be taken to improve the service and understand your future customers," in the initial three to five year management period

The problem they are trying to solve is the supply of drinking water in the most efficient way, he added.

Developing a new market

De La Rosa commended Saudi Arabia's water distribution privatisation programme as game changer in the region terms of its "scale and scope."

Elaborating further, he noted that in the UAE, the Abu Dhabi Sewerage Services Company is privatising Operations and Maintenance (O&M) and in last tender, they included some kind of capital investment but the ownership belongs to Abu Dhabi "in any case."

"In Saudi Arabia, they are going a step ahead. While the private sector owns the generation plants, the network for a certain period of time...we cannot say would be owned by the private sector but would be its main responsibility," he said.

He said he hoped to see a total of three packages to be issued this year under the programme with the first package expected to be launched before the end of February, and the remaining three expected to be launched in 2020.

In August 2018, Reuters reported that NWC had invited local and international water companies to participate in a market-sounding exercise to gauge the interest of potential investors in privatisation of water distribution services.

"In Saudi Arabia alone, speaking about IWRM, from now to 2021, we expect $7 billion worth of projects and in the UAE too, we expect something similar to happen," said De La Rosa.

In the UAE's case, he continued, Law 20 of 2018 and creation of Emirates Water and Electricity Company (EWEC) represents the first step in the country's IWRM journey. He also praised Abu Dhabi's underground aquifer project which will provide 180 litres water for one million people for 90 days.

A key building block to ensure that IWRM implementations stay on course is clear legislation in terms of "who is accountable for what", he stressed.

"There should be a single super authority in charge of the supervision and coordination of whole water cycle starting from potable water generation, transportation, purification, wastewater treatment plant, reuse water and supply of reuse water - this will speed up the decisions that are necessary."

De La Rosa also pointed out that a clear technical, legal, commercial and financial framework and lowering of the risk profile of projects are critical to getting best prices from the private sector.

"A sovereign guarantee for such projects will lower their risk profile. If we are marrying for 25 years, I would like to know the project is backed by the government," he said.

(Reporting by Anoop Menon; Editing by Mily Chakrabarty)

(anoop.menon@refinitiv.com)


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