It is hard for many of us to image living without sanitation and access to electricity and reliable water supplies. We consider the availability of power, fresh water and wastewater collection as basic requirements in life. But their absence is a daily reality for many living in the Middle East and North Africa region and a huge challenge that utility providers need to overcome.
Engaging the private sector with its ready finances and expertise is increasingly being regarded as the fastest and most effective method of bringing utility services up to scratch. Private firms can move faster than public companies, which are weighed down by bureaucratic procedure and have to go through lengthy tendering processes.
Understandably though, governments have been cautious in opening up these critical infrastructure services to outside investors, and most have so far limited private sector involvement to independent power and water projects, which only concern the production side, or to wastewater collection services. But as fears of a region-wide shortfall of electricity and water mount, legislation is being put in place to facilitate a broader privatisation of these sectors.
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And it is Saudi Arabia that is leading the charge: the privatisation of the kingdom’s water sector took a decisive step forward with the recent awarding of its first delegated management contract. The Ministry of Electricity and Water has now handed over control of part of its water distribution network to Veolia Water.
Under a six-year performance-based contract, the French firm will manage the water production and distribution and wastewater collection for the city of Riyadh.
At present, some areas of the capital only receive water once every four days. The city has been experiencing strong economic development for the past several years which is attracting hoards of new residents, all looking for a better life. According to estimates, the population of Riyadh is growing by 4% each year. At the beginning of the 1980s, the city covered 20 km2, but it now stretches over 536 km2 and is eventually expected to cover more than 2,200 km2.
It is no surprise then that the water authority has become overwhelmed, unable to keep pace with demand for water and unable to extend distribution networks in line the city’s ever-expanding girth.
But this US $60 million deal will change the lives of millions of residents in the Saudi capital forever.
Veolia Water will work to reduce leakages, to hook up more customers to the wastewater collection network and to improve continuous water supplies and customer service. The firm will be responsible for 4.5 million residents and 10,000 km of water distribution network and 4,500 km of wastewater pipes.
Further deals are in the offing for the kingdom’s other major settlements, including Jeddah and Medina, as the entire country is suffering a similar fate on the back of unprecedented growth fuelled by its oil revenues.
Saudi Arabia had to act first and take a bold step into the unknown as it is already suffering from an acute lack of water. It simply could not afford to continue having more than half of the water sent for distribution seeping out of leaky, ageing pipes.
Enlisting the help of a private company on a performance-based contract will have dramatic results: Veolia Water has to deliver in order to get paid. The results will be tangible and swift.
Other countries in the Middle East and North Africa with under-developed or antiquated networks will be watching the outcome closely and this ground-breaking contract is certain to become the template for the flurry of deals likely to follow.
Afterall, failure to provide for basic needs such as power and water can lead to social unrest and scare off potential foreign investors. And for a region looking to diversify away from a reliance on hydrocarbons, that would spell nothing short of a disaster.
Elizabeth Bains is the editor of Utilities Middle East.
Staff Writer
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and...
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Saudi’s private treatment
It is hard for many of us to image living without sanitation and access to electricity and reliable water supplies.
It is hard for many of us to image living without sanitation and access to electricity and reliable water supplies. We consider the availability of power, fresh water and wastewater collection as basic requirements in life. But their absence is a daily reality for many living in the Middle East and North Africa region and a huge challenge that utility providers need to overcome.
Engaging the private sector with its ready finances and expertise is increasingly being regarded as the fastest and most effective method of bringing utility services up to scratch. Private firms can move faster than public companies, which are weighed down by bureaucratic procedure and have to go through lengthy tendering processes.
Understandably though, governments have been cautious in opening up these critical infrastructure services to outside investors, and most have so far limited private sector involvement to independent power and water projects, which only concern the production side, or to wastewater collection services. But as fears of a region-wide shortfall of electricity and water mount, legislation is being put in place to facilitate a broader privatisation of these sectors.
Â
And it is Saudi Arabia that is leading the charge: the privatisation of the kingdom’s water sector took a decisive step forward with the recent awarding of its first delegated management contract. The Ministry of Electricity and Water has now handed over control of part of its water distribution network to Veolia Water.
Under a six-year performance-based contract, the French firm will manage the water production and distribution and wastewater collection for the city of Riyadh.
At present, some areas of the capital only receive water once every four days. The city has been experiencing strong economic development for the past several years which is attracting hoards of new residents, all looking for a better life. According to estimates, the population of Riyadh is growing by 4% each year. At the beginning of the 1980s, the city covered 20 km2, but it now stretches over 536 km2 and is eventually expected to cover more than 2,200 km2.
It is no surprise then that the water authority has become overwhelmed, unable to keep pace with demand for water and unable to extend distribution networks in line the city’s ever-expanding girth.
But this US $60 million deal will change the lives of millions of residents in the Saudi capital forever.
Veolia Water will work to reduce leakages, to hook up more customers to the wastewater collection network and to improve continuous water supplies and customer service. The firm will be responsible for 4.5 million residents and 10,000 km of water distribution network and 4,500 km of wastewater pipes.
Further deals are in the offing for the kingdom’s other major settlements, including Jeddah and Medina, as the entire country is suffering a similar fate on the back of unprecedented growth fuelled by its oil revenues.
Saudi Arabia had to act first and take a bold step into the unknown as it is already suffering from an acute lack of water. It simply could not afford to continue having more than half of the water sent for distribution seeping out of leaky, ageing pipes.
Enlisting the help of a private company on a performance-based contract will have dramatic results: Veolia Water has to deliver in order to get paid. The results will be tangible and swift.
Other countries in the Middle East and North Africa with under-developed or antiquated networks will be watching the outcome closely and this ground-breaking contract is certain to become the template for the flurry of deals likely to follow.
Afterall, failure to provide for basic needs such as power and water can lead to social unrest and scare off potential foreign investors. And for a region looking to diversify away from a reliance on hydrocarbons, that would spell nothing short of a disaster.
Elizabeth Bains is the editor of Utilities Middle East.
Staff Writer
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and... More by Staff Writer
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