Rabigh water project ushers in new wave of private finance in Saudi Arabia

LONDON: Saudi Arabia plans to build a major new desalination plant north of Jeddah using private finance, as the Kingdom seeks to draw investment into big water projects.
Saudi utility company Water & Electricity is inviting expressions of interest to build and operate the Rabigh 3 desalination plant under a 25- year concession, according to a circular.
The return to using public-private partnerships (PPP) to procure major water projects comes as the government seeks to diversify the economy away from oil while at the same time attract greater participation from private sector companies.
“There is a big push toward PPP in Saudi Arabia now and there is a reasonable pipeline of projects going forward,” said one Dubai-based construction lawyer. “The oil price is not what it was so there is now more of a case to use private finance.”
With one of the world’s fastest growing populations, the water sector in Saudi Arabia is under pressure to constantly add new capacity to cope with demand.
The plant is expected to have a capacity of about 600,000 cubic meters of potable water per day which would be expandable to 1.2 million cubic meters — which would make it one of the biggest in the world.
The use of private finance in the desalination sector in Saudi Arabia got off to a faltering start with the 2005 award of a €1.8 billion contract to Siemens to build the Shuaibah power and water plant.
It was the largest single order that Siemens had won in the region up until that point, however the use of public-private partnerships to fund more projects in the ensuing decade failed to live up to expectations. But now the procurement method is once again back in favor as the government turns to the private sector to help deliver major infrastructure projects.
Potential bidding consortia have until Aug. 21 to submit an expression of interest. Pre-qualification documents are then expected to be issued by the following month. Banque Saudi Fransi is the financial adviser on the project while DLA Piper is legal adviser.