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Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
Business Forum: Opportunities in Water and Electricity - Al-Harkan
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Business Forum: Opportunities in Water and Electricity - Al-Harkan

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Presentation at the US-Saudi Business Opportunities Forum (Dec 5-7, 2011, Atlanta, GA). Abdul Latif Al-Harkan, General Manager of Human Resources, SWCC, presented at the panel titled, "Opportunities …

Presentation at the US-Saudi Business Opportunities Forum (Dec 5-7, 2011, Atlanta, GA). Abdul Latif Al-Harkan, General Manager of Human Resources, SWCC, presented at the panel titled, "Opportunities in Water and Electricity".

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  • 1. Providing Water and Electricity in a Growing Economy — The Perspective of the Saudi Saline Water Conversion Corporation US - Saudi Business Opportunities Forum, Atlanta - USA December, 2011
  • 2. ٢ ‫ﺍﻟﺮﺣﻴﻢ‬ ‫ﺍﻟﺮﲪﻦ‬ ‫ﺍﷲ‬ ‫ﺑﺴﻢ‬ In the name of God, Most Gracious, Most Merciful
  • 3. ٣ The water sector in Saudi Arabia faces the dual challenge of high water demand and depleting non-renewable water resources Main Challenges in the Saudi Water Sector High Demand for Water High municipal water consumption, estimated at 250 liters per capita per day due to a lack of awareness vis-à-vis water scarcity issues and limited price signaling High rural usage (agriculture accounts for more than 80% of the total water consumed) High water demand growth, estimated at 2.1% annually for 2010-2014, driven by: – Population growth – Increasing urbanization – Industrialization and economic growth Depleting Natural Water Resources More than 60% of the total water consumed (not just municipal) comes from depleting ancient water aquifers Groundwater abstraction rates are unsustainable, estimated to be 10 times higher than yearly replenishment rates The quality of surface and ground water is deteriorating due to pollution and the overexploitation of resources
  • 4. ٤ SWCC was established in 1974 with a main purpose to support natural water resources by means of seawater desalination Late King Abdulaziz ordered the first 2 desalination units with a capacity of 300 m3/day (80,000 gallons) for Jeddah to serve the Pilgrims and Jeddah population. 1928 1974 The present SWCC is established by Royal Decree. Its main purpose of SWCC is to support natural water resources by means of seawater desalination in addition to electric power generation depending on technical and economic conditions Overview of SWCC Establishment and Purpose Vision Pioneering the Seawater Desalination Production and Transmission Mission To Meet the Kingdom’s Desalination Water Demand and Contribute to Economic and Social Growth through Effective Investment in Human and Physical Asset Resources
  • 5. ٥ SWCC is engaged in water production and transmission, power generation, and R&D in desalination Desalinated Seawater Production Main activity: Planning, construction, operation and maintenance of seawater desalination plants Process: Production of water either through dual or single purpose plants (MSF, MED, RO) Existing assets: 27 plants in 16 locations with 3.3M m3/day installed water capacity Water Transmission Main activity: Planning, construction, operation and maintenance of water transmission pipelines Existing assets: More than 5,000 km of pipelines, 29 pumping stations, 158 storage tanks (capacity: 9M m3) and 17 blending stations Power Generation Main activity: Planning, construction, operation and maintenance of electrical power plants Process: Dual purpose plants Existing assets: 12 cogeneration plants with around 5,000MW of power generation capacity Research and Development R&D Institute: Largest Middle East R&D center pioneering in seawater desalination technologies Training Center: Ensures continuous transfer of knowledge to the sector N EW S AL-KHAFIJI AL-KHOBAR DUBA AL WAJH UMLUJ RABIGH JEEDAH Al-SHOAIBA Al-BIRK AL-SHUQAIQ FARASAN ِAl-AZIZIA BURAIDAH AL ZU LFI ALQAT SHUQRA M AJM UA SUDAIR AL H U SI RIYADH MADINA MUNAWARA MAKKAH MUKARAMA TAIF ABHA KHAMIS MUSHAYAT AL-JUBAIL HAQL YANBU HAFUF Large Plants Satellite Plants Water Transmission Systems Regional Reservoirs Al-LEETH Al-QUNFIDHAH
  • 6. ٦ Saudi Arabia is currently the largest producer of desalinated water in the world, accounting for 18% of total production UAE 33% KSA 41% BAHRAIN 3% QATAR 7% OMAN 3% KUWAIT 13% KSA Desalination Share in the GCC (2010) KSA 18.00% KUWAIT 6.46% OTHERS 27.36% OMAN 1.38%BAHRAIN 1.32% SPAIN 7.64% USA 17.80% UAE 16.66% QATAR 3.39% KSA Desalination Share in the World (2010)
  • 7. ٧ The Saudi Government is committed to expand desalination to meet national demand for water and electricity The Share of Desalination in the Kingdom Municipal Water Supply is Expected to Rise 34(1)27.2 KSA Population (In Millions) 63% (5.2 Million m3/day) 53% (3.3 Million m3/day) Desalination Share in Water in KSA 8.5(2)6.8(2) Water Demand (In Million m3/day) 20252010 (1): Assuming an average annual growth rate of 1.5% (2): Consumption rate per capita is 250 liters/day Cogeneration is Adopted as a Strategy for Increasing Desalination Capacity Efficiently Cogeneration plants combine water production and power generation which maximizes economic efficiency when large investments in both power and water supply are required to meet local demand In 2011, Royal Decree M/45 stipulated that the adoption of cogeneration is compulsory in desalination projects and coastal electricity generation projects, except in cases where there is proof of economic unfeasibility or no demand for power or water Cogeneration currently accounts for around 20% of electricity generation in KSA
  • 8. ٨ SWCC is focusing on five key dimensions to meet water and electricity demands and ensure effectiveness and sustainability Integrated resource planning Timely expansion of desalination capacity Private sector participation in the Saudi desalination sector Restructuring and commercialization Innovation and global collaboration 1 2 3 4 5
  • 9. ٩ Integrated Resource Planning Matrix of Resource Planning Approaches Efficiency EffectivenessandFlexibility High Low Low High Integrated Resource Planning (IRP) Demand and supply- side Engagement of all stakeholders Minimum costs Reliability of supply, taking demand for granted Traditional Resource Planning Lowest cost options to meet demand Least-Cost Resource Planning Integrated Resource Planning (IRP) The main aim of IRP is to maximize economic efficiency while guaranteeing supply reliability An integrated planning for water resources is required, notably desalination and groundwater (balancing cost, national interest, availability) An integrated planning for the water and electricity sectors is required so that the timing, location and size of cogeneration facilities is optimized (taking into account interrelation between demand and supply) A prime example is the case of Ras-Al-Kheir plant in KSA where the SWCC cogeneration plant was expanded by 1,350MW to include the industrial power needs of a local manufacturer, which was planning to build its own plant Integrated resource planning for water and power maximizes value for the economy 1
  • 10. ١٠ SWCC is currently constructing major plants and pipelines – Ras Al-khair is the largest cogeneration project of its kind in the world 2013 / 20142,4001,025,000 2012-240,000Jeddah - RO Ras Al-Kheir Expected Date Power Capacity (Megawatts) Water Capacity (m3/day) Plant 2014913565,000Shuqaiq (Phase 2) 210369,000Al-Laith 2013 / 2014344790,000Mekkah / Taef / Jeddah 201429,000Farasan Expected Date Length (Kilometers) Capacity (m3/day) Pipeline 160,000 1,000,000 350 900 2013Ras Al-Kheir / Riyadh 2013 Ras Al-Kheir / Hafr El Batn 16.8 Billion Saudi RiyalsTotal Cost of Projects Under Construction: USD 4.48 Billion SWCC Plants & Pipelines – Under Construction 2
  • 11. ١١ SWCC is also tendering several projects including a large cogeneration plant and transmission system in Yanbu 20142,500550,000Yanbu 3 2013-9,000Dhuba 4 2013-9,000 2013-9,000Rabigh 3 Haql 3 Expected Date Power Capacity (Megawatts) Capacity (m3/day) Plants Expected Date Length (Kilometers) Capacity (m3/day) Pipeline 5,000 560,000 19 597 2015Yanbu - Madina (Ph 3) 2015Rabigh - Khulais 2 SWCC Plants & Pipelines – Under Tendering
  • 12. ١٢ SWCC’s expected future capacities includes commissioning seven large plants by 2024 2023102100,000Yanbu 5 2021307300,000Yanbu 4 2017250250,000 2015175175,000Shuqaiq 3 Khobar 4 Expected Date Power (Megawatts) Water (m3/day) Plant 220,000 650,000 320,000 220 665 320 2017Jubail 4 2024Khobar 5 2019Shoaiba 4 SWCC Plants & Pipelines – Proposed Future Capacities 2
  • 13. ١٣ Total Capital and Operational Investments until 2020 Desalination Sector Capex and Opex (2010 – 2020) – USD Million Total = US$ 24.3 Billion (SR 91 Billion) Power and water Transmission 2,422 CAPEX OPEX 2,337 2,051 6,811 17,453 11,651 Transmission 5,802 Power Water Note: 1) Assuming constant ground and water supply Source: Technical Advisor Estimation Report 2
  • 14. ١٤ KSA has committed to increase private sector participation in key government assets to achieve the following strategic objectives Source: Governmental Decree Number 60 of 1/4/1418 H and Number 175 of 27/6/1424 H, Supreme Economic Council Resolution 5/23 Government’s Strategic Objectives Enhance competitiveness of national economy Encourage/increase private sector participation Expand the ownership of productive assets by Saudi nationals Encourage investment of domestic and foreign capital in KSA Create employment opportunities for nationals Provide quality services in a cost effective manner Reduce the burden on the government budget Increase government revenues Sectors Covered by KSA Privatization Program Water and wastewater Desalination Telecommunications Air Transportation and related services Railways Highways Airport Services Postal Services Wheat Mills and storage facilities Port Services Industrial Cities Services Government’s shares in Public companies Government’s shares in the Arabic and Islamic common investment companies Government Hotels Sports Clubs Municipal Services Education Services Social Services Agricultural Services Health Services 3
  • 15. ١٥ Status Commercial Operations started by February 2009 Project InformationProject Name Shoaiba III (West Coast) Shuqaiq II (West Coast) Commissioning started by end of April 2009 Project started operating in December 2010 Estimated total cost: USD 1.87B Total Capacity: 212,000 m3/day 60% owned by the private sector 20 years BOO scheme Estimated total cost: USD 2.69B Total Capacity: 1,030,000 m3/day 60% owned by the private sector 20 years Build, Own, Operate (BOO) scheme Action to date: 2 Independent Water Power Producers launched3
  • 16. ١٦ The strategy for Private Sector Participation in SWCC was approved in 2008 and offers several investment opportunities Strategy for Private Sector Participation in SWCC Significant investment opportunities for private sector *) Due to the present economic situation and the difficulties in ensuring financing, Yanbu -3 and Ras Al-Kheir are tendered as an EPC contract by SWCC Old Production Plants: Jeddah-3, 4, RO1 and RO2, Jubail-1, 2 A and 2 B, Birk-1, Haql-2, Khobar-2, Rabigh-1+TR1, Wajh-2+TR1-3, Farasan-1+TR1, Umlujj-2, Duba- 3, Azizia-1 Public Ownership Public/Private Ownership Full Ownership Partial Ownership SWCC Holding Trans- mission Shoaiba- 1,2 Shoaiba-4 Shuqaiq-1 Shuqaiq-3 Yanbu- 1,2,RO Yanbu-3* OtherR&DT, … Khafji-2 Khafji-3 Old Productio n Plants Incorporate as government-owned holding company and then possibly float on stock exchange Duba-4 / Haql-3 Wajh-3 Wajh-4 Umlujj-3 Jubail RO Jubail-4 Khobar-3 Khobar-4 Leith-1 Farasan-2 Qunfutha-1 Rabigh-2 Azizia-2 Introduce PSP in value creating priority assets, following “IWPP model” Yanbu ProdCo RaK ProdCo Khafji ProdCo Shoaiba ProdCo Shuqaiq ProdCo Khobar ProdCo Jubail ProdCo Trans- mission Old Production Plants abc Existing / Built by SWCC abc To be Implemented by PPP Ras Al- Kheir* Satellite ProdCo 3
  • 17. ١٧ Preparation Steps and Detailing Studies Approvals Execution of Privatization & Restructuring Holding Company Privatization (Completed) From 8/2004 to 8/2006 24 Months (Completed) From 1/2007 to 7/2008 18 Months (On-going) Started in 1/2009 ≈5 Years PHASE I PHASE II PHASE III PHASE IV SWCC has embarked on a long and ambitious privatization, commercialization and restructuring program Phases of the SWCC Restructuring & Privatization Program Prepare a report on the requirements to develop SWCC’s privatization strategy and organization restructuring Develop and detail privatization options and select the preferred option Develop privatization and restructuring plan Submit Privatization Strategy and Restructuring Plan reports and conduct stakeholder presentations Obtain approval from the SWCC Board of Directors and Supreme Economic Council – issuance of the SEC resolution no. 2/29 (29/6/1429H) Finalize all preparations for the launch of the execution phase Introduce private sector participation in the Holding Company, either through management contract(s) or through an Initial Public offering (IPO) Transform Transmission Business Units into a company then introduce private sector either through an IPO or through long term strategic partnership (Optional) Organization detailing, HR Readiness and BPR IT strategy and implementation Rollout of the new organization structure and processes Commercial agreements development and enactment Submission of the documentation required for the Royal Decree Creation of the Holding Company and Production Companies Introduction, through a phased approached, of private sector participation in Production companies Long Term 4
  • 18. ١٨ SWCC established its Research Institute in 1987 at Al-Jubail, KSA, as part of the Saudi American Cooperation Agreement The Institute focuses on applied research in chemistry, corrosion, environment, reverse osmosis and thermal desalination The Institute has state-of-art labs and pilot desalination plants It provides consulting, testing and troubleshooting services to local and regional customers The strategy of the Institute focuses on promoting global collaboration to drive advancements in desalination technology Brief Overview of Our Research Institute SWCC plays a key role in innovation and global collaboration in the desalination industry Glance of SWCC Innovation and Collaboration 6 patents in desalination technologies. Example: – Patented, in the USA, a process using nano-filtration (NF) membranes to eliminate scaling and fouling, increasing production by 33% and decreasing energy usage by 30% 12 awards and several accreditations such as ISO9001 Collaboration with several universities and main players in the global desalination industry Consultant on a 30,000 m3-a-day solar- powered desalination plant that will be the largest in the world Examples of Achievements in Innovation and Collaboration 5
  • 19. ١٩ Summary The Saudi Water Sector is growing, benefiting from the full support of the government to meet the strategic aims of supply security and reliability, production efficiency and private sector participation The water sector presents real opportunities for private sector participation – Potential local and international investors can look for a reasonable return, flexible payment terms, well defined risk allocation, clearly defined responsibilities & obligations of both parties (stakeholders & the private sector), through a fair and a transparent bidding process The Saline Water Conversion Corporation is committed to national and global collaboration and private sector participation in the desalination sector – Private sector local and international participation in the desalination sector benefits the broadest range of players: investors, financing institutions, operators, EPC contractors, equipment and materials providers etc.
  • 20. ٢٠

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