The document discusses water and electricity challenges in Saudi Arabia and the role of the Saudi Saline Water Conversion Corporation (SWCC) in addressing them. SWCC was established in 1974 to support natural water resources through seawater desalination and electric power generation. It is now the largest producer of desalinated water in the world, accounting for 18% of total global production. The Saudi government is committed to expanding desalination capacity to meet growing national demand for water and electricity in a sustainable manner.

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. ‫ﺑﺴﻢ ﺍﷲ ﺍﻟﺮﲪﻦ ﺍﻟﺮﺣﻴﻢ‬
In the name of God, Most
Gracious, Most Merciful
٢

3. 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 Depleting Natural Water Resources
High municipal water consumption, More than 60% of the total water consumed
estimated at 250 liters per capita per day (not just municipal) comes from depleting
due to a lack of awareness vis-à-vis water ancient water aquifers
scarcity issues and limited price signaling
Groundwater abstraction rates are
High rural usage (agriculture accounts for unsustainable, estimated to be 10 times
more than 80% of the total water consumed) higher than yearly replenishment rates
High water demand growth, estimated at The quality of surface and ground water is
2.1% annually for 2010-2014, driven by: deteriorating due to pollution and the
– Population growth overexploitation of resources
– Increasing urbanization
– Industrialization and economic growth
٣

4. SWCC was established in 1974 with a main purpose to support
natural water resources by means of seawater desalination
Overview of SWCC Establishment and Purpose
Late King Abdulaziz ordered the first 2 desalination units with a capacity of 300
1928
m3/day (80,000 gallons) for Jeddah to serve the Pilgrims and Jeddah population.
The present SWCC is established by Royal Decree. Its main purpose of SWCC is to
1974 support natural water resources by means of seawater desalination in addition to
electric power generation depending on technical and economic conditions
Vision Pioneering the Seawater Desalination Production and Transmission
To Meet the Kingdom’s Desalination Water Demand and Contribute to Economic and
Mission
Social Growth through Effective Investment in Human and Physical Asset Resources
٤

5. SWCC is engaged in water production and transmission, power
generation, and R&D in desalination
N
Desalinated Seawater Production
W E
Main activity: Planning, construction, operation and
maintenance of seawater desalination plants
S
Process: Production of water either through dual or
single purpose plants (MSF, MED, RO)
LF
I AL-KHAFIJI Existing assets: 27 plants in 16 locations with 3.3M
HAQL ZU m3/day installed water capacity
AL UA AL-JUBAIL
M
AJ
DUBA M IR Water Transmission
SI
BURAIDAH DA
U
AL-KHOBAR
SU
H
AL
AL WAJH Main activity: Planning, construction, operation and
ALQAT
UMLUJ
maintenance of water transmission pipelines
SHUQRA RIYADH HAFUF Existing assets: More than 5,000 km of pipelines,
MADINA MUNAWARA
29 pumping stations, 158 storage tanks (capacity: 9M
YANBU
m3) and 17 blending stations
ِAl-AZIZIA
Large Plants RABIGH MAKKAH MUKARAMA Power Generation
JEEDAH
TAIF Main activity: Planning, construction, operation and
Satellite Plants
Al-SHOAIBA
Al-LEETH maintenance of electrical power plants
Regional Reservoirs Al-QUNFIDHAH Process: Dual purpose plants
Water Transmission
Al-BIRK KHAMIS MUSHAYAT Existing assets: 12 cogeneration plants with around
ABHA
Systems AL-SHUQAIQ 5,000MW of power generation capacity
FARASAN
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
٥

6. Saudi Arabia is currently the largest producer of desalinated water
in the world, accounting for 18% of total production
KSA Desalination Share KSA Desalination Share
in the World (2010) in the GCC (2010)
OM AN
BAHRAIN 1.38%
1.32% KSA
QATAR SPAIN 18.00% KSA
3.39% 7.64% 41% UAE
33%
UAE
OTHERS 16.66%
27.36% OMAN
3% KUWAIT
KUWAIT BAHRAIN QATAR 13%
USA
6.46% 3%
17.80% 7%
٦

7. The Saudi Government is committed to expand desalination to
meet national demand for water and electricity
The Share of Desalination in the Kingdom Cogeneration is Adopted as a Strategy for
Municipal Water Supply is Expected to Rise Increasing Desalination Capacity Efficiently
2010 2025 Cogeneration plants combine water
production and power generation which
KSA maximizes economic efficiency when large
Population (In 27.2 34(1) investments in both power and water
Millions) supply are required to meet local demand
In 2011, Royal Decree M/45 stipulated that
Water Demand the adoption of cogeneration is
(In Million 6.8(2) 8.5(2) compulsory in desalination projects and
m3/day) coastal electricity generation projects,
except in cases where there is proof of
economic unfeasibility or no demand for
Desalination 53% 63% power or water
Share in Water (3.3 Million (5.2 Million
Cogeneration currently accounts for around
in KSA m3/day) m3/day)
20% of electricity generation in KSA
(1): Assuming an average annual growth rate of 1.5%
(2): Consumption rate per capita is 250 liters/day
٧

8. SWCC is focusing on five key dimensions to meet water and
electricity demands and ensure effectiveness and sustainability
1 Integrated resource planning
2 Timely expansion of desalination capacity
3 Private sector participation in the Saudi desalination sector
4 Restructuring and commercialization
5 Innovation and global collaboration
٨

9. 1 Integrated resource planning for water and power maximizes
value for the economy
Integrated Resource Planning
Matrix of Resource Planning Approaches Integrated Resource Planning (IRP)
High
Integrated Resource The main aim of IRP is to maximize economic
Planning (IRP) efficiency while guaranteeing supply reliability
Demand and supply-
Effectiveness and Flexibility
An integrated planning for water resources is
side
required, notably desalination and groundwater
Engagement of all
(balancing cost, national interest, availability)
stakeholders
Minimum costs 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
Traditional Least-Cost
between demand and supply)
Resource Planning Resource Planning
Reliability of Lowest cost A prime example is the case of Ras-Al-Kheir
supply, taking options to meet plant in KSA where the SWCC cogeneration
demand for demand plant was expanded by 1,350MW to include
granted the industrial power needs of a local
Low
manufacturer, which was planning to build its
Low High own plant
Efficiency
٩

10. 2SWCC is currently constructing major plants and pipelines – Ras
Al-khair is the largest cogeneration project of its kind in the world
SWCC Plants & Pipelines – Under Construction
Water Capacity Power Capacity
Plant Expected Date
(m3/day) (Megawatts)
Jeddah - RO 240,000 - 2012
Ras Al-Kheir 1,025,000 2,400 2013 / 2014
Capacity Length
Pipeline Expected Date
(m3/day) (Kilometers)
Ras Al-Kheir / Riyadh 1,000,000 900 2013
Ras Al-Kheir / Hafr El
160,000 350 2013
Batn
Al-Laith 9,000 6 2103
Mekkah / Taef / Jeddah 790,000 344 2013 / 2014
Shuqaiq (Phase 2) 565,000 913 2014
Farasan 9,000 2 2014
Total Cost of Projects Under Construction: 16.8 Billion Saudi Riyals
USD 4.48 Billion
١٠

11. 2 SWCC is also tendering several projects including a large
cogeneration plant and transmission system in Yanbu
SWCC Plants & Pipelines – Under Tendering
Capacity Power Capacity
Plants Expected Date
(m3/day) (Megawatts)
Rabigh 3 9,000 - 2013
Haql 3 9,000 - 2013
Dhuba 4 9,000 - 2013
Yanbu 3 550,000 2,500 2014
Capacity Length
Pipeline Expected Date
(m3/day) (Kilometers)
Yanbu - Madina (Ph 3) 560,000 597 2015
Rabigh - Khulais 5,000 19 2015
١١

12. 2 SWCC’s expected future capacities includes commissioning
seven large plants by 2024
SWCC Plants & Pipelines – Proposed Future Capacities
Water Power
Plant Expected Date
(m3/day) (Megawatts)
Shuqaiq 3 175,000 175 2015
Khobar 4 250,000 250 2017
Jubail 4 320,000 320 2017
Shoaiba 4 650,000 665 2019
Yanbu 4 300,000 307 2021
Yanbu 5 100,000 102 2023
Khobar 5 220,000 220 2024
١٢

13. 2 Total Capital and Operational Investments until 2020
Desalination Sector Capex and Opex
(2010 – 2020) – USD Million
17,453
Transmission
5,802
Power and 6,811
water 11,651 2,422 Water
2,337 Transmission
2,051 Power
CAPEX OPEX
Total = US$ 24.3 Billion (SR 91 Billion)
Note: 1) Assuming constant ground and water supply ١٣
Source: Technical Advisor Estimation Report

14. 3KSA has committed to increase private sector participation in key
government assets to achieve the following strategic objectives
Sectors Covered by KSA Privatization Program Government’s Strategic Objectives
Water and wastewater Enhance competitiveness of national economy
Desalination Encourage/increase private sector participation
Telecommunications
Air Transportation and related services Expand the ownership of productive assets by
Railways Saudi nationals
Highways Encourage investment of domestic and foreign
Airport Services capital in KSA
Postal Services Create employment opportunities for nationals
Wheat Mills and storage facilities
Provide quality services in a cost effective
Port Services
manner
Industrial Cities Services
Government’s shares in Public companies Reduce the burden on the government budget
Government’s shares in the Arabic and Islamic Increase government revenues
common investment companies
Government Hotels
Sports Clubs
Municipal Services
Education Services
Social Services
Agricultural Services
Health Services
Source: Governmental Decree Number 60 of 1/4/1418 H and Number 175 of 27/6/1424 H, ١٤
Supreme Economic Council Resolution 5/23

15. 3 Action to date: 2 Independent Water Power Producers launched
Project Name Project Information Status
Estimated total cost: USD 2.69B Commercial Operations started by
Total Capacity: 1,030,000 m3/day February 2009
Shoaiba III
(West Coast) 60% owned by the private sector
20 years Build, Own, Operate
(BOO) scheme
Estimated total cost: USD 1.87B Commissioning started by end of April
Total Capacity: 212,000 m3/day 2009
Shuqaiq II
(West Coast) 60% owned by the private sector Project started operating in December
20 years BOO scheme 2010
١٥

16. 3The 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 Incorporate as government-owned holding
company and then possibly float on stock SWCC Holding
exchange
Yanbu RaK Satellite Khafji Shoaiba Shuqaiq Khobar Jubail
ProdCo ProdCo ProdCo ProdCo ProdCo ProdCo ProdCo ProdCo Old
Trans-
Trans- Old
Duba-4 / Productio Other
Leith-1 mission
mission Production R&DT, …
Yanbu- Haql-3 Farasan-2 Shoaiba- n
Plants
Ras Al- Khafji-2 Shuqaiq-1 Khobar-3 Jubail RO Plants
1,2,RO Wajh-3 Qunfutha-1 1,2
Kheir* Rabigh-2 Khafji-3 Shuqaiq-3 Khobar-4 Jubail-4
Yanbu-3* Wajh-4 Shoaiba-4
Umlujj-3 Azizia-2
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
Introduce PSP in value creating priority
assets, following “IWPP model”
abc Existing / Built by SWCC abc To be Implemented by PPP
Public Public/Private Partial Ownership
Ownership Ownership Full Ownership
*) 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
١٦

17. 4 SWCC has embarked on a long and ambitious privatization,
commercialization and restructuring program
Phases of the SWCC Restructuring & Privatization Program
(Completed) (Completed) (On-going)
From 8/2004 to 8/2006 From 1/2007 to 7/2008 Started in 1/2009 Long Term
24 Months 18 Months ≈5 Years
PHASE I PHASE II PHASE III PHASE IV
Preparation Steps Execution of
Holding Company
and Detailing Approvals Privatization &
Privatization
Studies Restructuring
Prepare a report on the Submit Privatization Organization detailing, HR Introduce private sector
requirements to develop Strategy and Restructuring Readiness and BPR participation in the Holding
SWCC’s privatization Plan reports and conduct IT strategy and implementation Company, either through
strategy and organization stakeholder presentations Rollout of the new organization management contract(s) or
restructuring Obtain approval from the structure and processes through an Initial Public
Develop and detail SWCC Board of Directors Commercial agreements offering (IPO)
privatization options and and Supreme Economic development and enactment Transform Transmission
select the preferred option Council – issuance of the Submission of the documentation Business Units into a
Develop privatization and SEC resolution no. 2/29 required for the Royal Decree company then introduce
restructuring plan (29/6/1429H) Creation of the Holding Company private sector either
Finalize all preparations for and Production Companies through an IPO or through
the launch of the execution long term strategic
Introduction, through a phased
phase partnership (Optional)
approached, of private sector
participation in Production
companies ١٧

18. 5 SWCC plays a key role in innovation and global collaboration in
the desalination industry
Glance of SWCC Innovation and Collaboration
Brief Overview of Our Research Institute Examples of Achievements in Innovation and
Collaboration
SWCC established its Research Institute in 6 patents in desalination technologies.
1987 at Al-Jubail, KSA, as part of the Saudi Example:
American Cooperation Agreement – Patented, in the USA, a process using
The Institute focuses on applied research in nano-filtration (NF) membranes to
chemistry, corrosion, environment, reverse eliminate scaling and fouling, increasing
osmosis and thermal desalination production by 33% and decreasing
energy usage by 30%
The Institute has state-of-art labs and pilot
12 awards and several accreditations such
desalination plants
as ISO9001
It provides consulting, testing and
Collaboration with several universities and
troubleshooting services to local and
main players in the global desalination
regional customers
industry
The strategy of the Institute focuses on
Consultant on a 30,000 m3-a-day solar-
promoting global collaboration to drive
powered desalination plant that will be the
advancements in desalination technology
largest in the world
١٨

19. 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.
١٩

20. ٢٠