GCC Water Sector


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Water trends in Saudi and the GCC

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GCC Water Sector

  1. 1. Water trends in Saudi and the GCC Draft Executive Summary Ikaraam Ullah April 2009
  2. 2. <ul><li>The Regional Market for the water industry is estimated to be worth $53bn over the next 12 years. </li></ul><ul><li>Desalination alone needs at least $5bn investment in Saudi Arabia over the long term to supply an extra 4.5 million cubic meters of water a day as the country's population grows. </li></ul>1 GCC & Saudi Market 25
  3. 3. 1 Case Study: Saudi Arabia 25 <ul><li>Regional population has grown strongly since the 1960s. Population growth & water use has outstripped supply. </li></ul><ul><ul><li>The demographic structure indicates that growth rates of more than 3% year-on-year are likely to continue </li></ul></ul>
  4. 4. 1 Demand-Side Drivers 25 <ul><li>Agricultural sector remains main user of water </li></ul>
  5. 5. <ul><li>Water is provided at prices below cost-recovery threshold. This creates incentives to consume more and supply less. </li></ul><ul><li>In Saudi Arabia, the cost per cubic meter of water ranges from $0.03 to $ 0.10 depending on the amount used. This pattern is reflected elsewhere in the region. </li></ul><ul><li>In comparison, the US (where market conditions dictate), the average cost per cubic meter of water ranges from $0.35-$0.65. </li></ul>1 Supply Side Drivers 25
  6. 6. <ul><li>End-to-End service provision hampered by revenue risks </li></ul>1 Supply Side Drivers 25
  7. 7. <ul><li>The electricity sector has experienced very similar trends of increased consumption combined with low cost-recoveries </li></ul>1 Other sectors (1) 25
  8. 8. 1 Other sectors (2) 25
  9. 9. <ul><li>Desalination plants reaching end of their design life </li></ul>1 Opportunity Landscape (1) 25
  10. 10. 1 Opportunity Landscape (2) 25 <ul><li>More than 60% of water users does not have access to piped water. </li></ul>
  11. 11. 1 Opportunity Landscape (3) 25 <ul><li>Wastewater treatment opportunity in main cities </li></ul>
  12. 12. 1 Value Chain 25 Customer Sea Water 45% 27% 28% Manufacturing Operation & Maintenance Installation, Design, Training & Support Billing Network Storage & Distribution Water Treatment Abstraction Rehabilitation Upgrading Consulting New Builds O&M
  13. 13. 1 PESTLE 25 Quasi-Public Private Ownership Private Ownership Parastatal compromise Provision balanced against fiscal sustainability Market driven provision of public goods Need takes precedence above all else Scenario Statement TRANSITION
  14. 14. 1 PESTLE 25 Cautious market liberalisation, private sector productivity up against the public sector A loosening of rentier model, encouraging endogenous growth, reduced protectionism Protectionism through regulation and exclusivity. Productivity affected. Features Drivers for change a) Rising energy subsidies b) Need to cope with demographic and climate change c) Old way of doing things is expensive/doesn’t work a) Move towards a consumer-based deregulated market supplied through the private sector b) Global acquisition and diversification in commerce a) With a view to meeting collective wants and needs of the Saudi Government and Kingdom b) To settle centres of population and patterns
  15. 15. 1 Role of the Private Sector 25
  16. 16. 1 Examples of Operating Models 25 Long-term investment financed by private sector Privately financed and publicly managed Privately financed and privately managed Publicly financed and mostly publicly managed Publicly financed and privately managed Bill, collect and operate OMM contract Uganda Operate and maintain Build, operate and maintain Design, build, operate and maintain Design, build, own, operate and maintain OML contract Philippines BO contract Colombia BOI contract Colombia DBL contract Philippines BOI contract Paraguay DBO contract Cambodia DBL contract Cambodia 50% 20% 10% 0%
  17. 17. Thank you. Draft [email_address]