Eng' Ahmed AlMansour

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Meeting the Water Challenge in Saudi Arabia

• Presented by
• Eng. Ahmed Al-Mansour
• MINISTRY OF WATER ELECTRICITY
• Kingdom of Saudi Arabia

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Table of Contents
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Table of Contents
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Why do Public Water Utilities Fail ?
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Why Privatization?

• Adopting international best practices
• Improved operating efficiency and reduce costs
• Helps in better management of CAPEX and OPEX
• Create enabling environment for private sector
  participation
• Build Commercially Viable Organization
• Attract International Investors/ Operators
• Manpower training, knowledge transfer and
  capacity building
• Technology applications like ERP,GIS, SCADA, CRM
  Asset Management etc.
• world Class Customer Services

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Facts about MoWE

• Population served 22 Million
• Current Daily potable water supply
  5.72 Million M3/day
• Expected water demand by 2024G 10
  Million M3/day
• Number of employees in water sector 11,000
  (Approx)
• Total number of water directorates 13
• Numbers of cities / towns / villages
  529 covered by potable water supply
• Coverage rate
• Water 90
• Sewage 40

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Table of Contents
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MoWEs Steps in Privatization
Develop new short long term NWC strategies
(Corporate, expansion, growth)
Set up NWC Branches
Involve international operators through
Management contracts / BOO / Concession
Set up enabling environments (Legal, Financial,
and Organizational frameworks)
Develop Strategic Transformation Plan (STP) and
Privatization Roadmap
Conduct Assessment, Identify gaps opportunities
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Current Coverage Versus a 100 Coverage
Water Distribution, Sewage Collection and Waste
Water Treatment Current and Under Construction
Coverage by City
Target 100
100
100
100
100
99
96
92
90
85
85
84
98
83
80
78
87
69
70
65
56
60
55
(1)
48
45
45
42
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Riyadh
Jeddah
Madinah
Dammam/
Kharj
Khobar
Water
Sewage
Treatment
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• Investment Requirements

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Total Capex requirement for 100 coverage in
KSA for next 20 years (USD 40 Billion)
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Projected Opex. for next 20 years (USD 17 Billion)
USD 17 Billion
33 (USD 5.6 Billion)
USD 1.2 Billion
USD 1.0 Billion
USD 0.9 Billion
27 (USD 4.6 Billion)
USD 0.7 Billion
USD 0.4 Billion
40 (USD 6.9 Billion)
1425H
1431H
1436H
1441H
1446H
Total
Sewage Collection
Wastewater Treatment
Water Distribution
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Table of Contents
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Continuous Learning Process
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Strategic Transformation Plan (STP) --
addressing some key components
Comparison vs. other countries
Benchmark against leading utilities and assess
the current short comings and priorities and set
reasonable objectives
Diagnosis
Water Supply / Demand balance
Propose policy options and assess economic impact
on the sector Forecast future demands the level
of investment
Policy Options
Tariffs, Coverage, Subsidies
Sector Structure

• Identify win-win opportunities to engage the
  private sector in order the accelerated reforms
• Decisions on unbundling, economies of scope and
  type of PPPs

Private Sector Participation
PPP options
Institutional Design

• Organizational redesign, Capability building,
• Set up legal, financial polices and procedures
• Study need of regulatory set up

Institutional Design
Organization
Risks, Path Milestones
Transformation Plan
Summarize, risks, hurdles, activities
and milestones along the path of reform
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Unbundling the Water Sectors Activities
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Public Private Partnership chosen models
Wastewater Treatment Plants
Network management
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Why Unbundling

• Rapid injection of capital investment in building
  new WWTPs and expanding the existing
  infrastructure
• Provide opportunity to involve specialized
  companies in wastewater treatment
• Provides equal focus and enhanced services in
  both water wastewater simultaneously
• Helps increase reuse of treated effluent and
  sludge on commercial basis
• Provides flexibility in adopting different PPP
  schemes

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MOWE preferred Option of sector unbundling
Water distribution and wastewater collection
Wastewater treatment and Reuse
Management Contract
Concession / BOO
Reuse / Sales
Existing Wastewater Treatment Plants
Water Treatment Plants
Agriculture District cooling Industries Public
Parks Aquifer recharge Non-potable use
Wells
Households
Reservoirs
P
Future WWTP based on BOO basis
Pumping, Treatment and O M
Pumping ,Treatment, Transmission, Storage ,
Distribution and Sewage Collection
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Management Contract for Water Services Sewage
Collection
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Focused Approach
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Highlights of Management Contract
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BOO / Concession / O M for Waste Water
Treatment Disposal
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Project concept for WWTP

• The Project comprises a mix of brownfield and
  greenfield WWTP assets
• NWC is the off-taker of treated water
• Ministry of Finance provides credit support for
  termination guarantee
• NWC will participate in equity in the project
  company
• Assets will be transferred to the relevant
  Project Company (SPV)
• Greenfield projects will be financed by the
  project company
• Contract duration 25 years

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Project Company commercial Structure

• NWC is the off-taker
• NWC Participates in project company equity
• Opportunity for Treated water reuse market

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Treated water Reuse Market
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Treated Water Reuse Market

• MoWE is in process of inviting international
  consultants to assist in Treated Water Re-use
  marketing
• At present, Treated water availability in Riyadh
  City is 700,000 M3 / day and around 220,000
  M3/day is reused for agriculture and industrial
  purposes
• Treated water availability in Riyadh city will be
  increased to 1.3 Million M3/day by 2013
• Around 800,000 M3/day potential market identified
  in Riyadh City
• Treated water availability in Jeddah city will be
  around 1 Million M3/day by 2013

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Potential sales turn over of Treated water Reuse
in Riyadh for next 25 years
Average Daily Availability 800,000 M3 / day
USD 5 Billion
USD 4 Billion
Investor
Investor
NWC
NWC
_at_ 0.53 USD / M3
_at_ 0.67 USD / M3
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Table of Contents
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Key Initiatives
Development of Strategic Transformation
Plan (Short-term, Long Term, Selection of PPP
models )
NWC Readiness Startup April 2008
NWC set
up (Organization set up, Commercial Orientation,
Customer Focus)
Management Contracts for Riyadh and Jeddah Cities
(Best practices, Improving operational,
Knowledge transfer )
Implementation of IT solutions like ERP, GIS,
SCADA, CRM, AMR (Automation, Control,
Reliability )
HR Change management
(Smooth transition, Capacity Building)
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National Water Company (NWC)
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National Water Company (NWC)

• January 2008 Royal Decree obtained to set up
  The National Water Company (NWC)
• NWC will have a capital of 6 billion USD
• NWC will manage all privatization initiatives and
  facilitate private sector participation
• NWC would bring about qualitative changes in
  underground water sector, distribution sector,
  collection and treatment of sewage water on a
  sound commercial basis
• Manpower and assets transfer will be based on
  gradual transfer plan

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MOWE Privatization Roadmap for Water Services
Management Contract
2007
2008
2009
Main Streams
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Riyadh PPP Contract Tendering Process
Contract Signing
Jeddah PPP Contracts Tendering Process
PPP Implementation
Contract Signing
Greater Dammam, Madinah Makkah PPP Tendering
Process
Contract Signing
Other Major Cities PPP Tendering Process
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MOWE Privatization Roadmap for Wastewater
Treatment Plants BOO / Concession
2007
Main Streams
2008
2009
2010
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Riyadh WastewaterTreatment plants on Concession
/ BOO basis
Contract Signed
Tendering process
Jeddah wastewater treatment plants on Concession
/ BOO basis
PPP Implementation
Contract Signed
Greater Dammam wastewater treatment plants on
Concession / BOO basis
Tendering process
Tendering process
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Business Opportunities
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Project Locations
Dammam-Management Contract for Water service
Sewage Collection
Riyadh-- WWTP BOO/Concession/O M
Madinah-- Management Contract for Water service
Sewage Collection
Dammam- WWTP BOO/Concession
Jubail Al Hufof Full Audit Project
Abha Khamis Mushayit Full Audit Project
Makkah- Management Contract for Water service
Sewage Collection
Jeddah- WWTP BOO/Concession
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Why NWC will be one of the leading water
utility in the region ?

• Establishment of comprehensive privatization
  model
• Developed robust STP and privatization Roadmap
• Successful implementation and accomplishments of
  many initiatives
• Setting up enabling environment
• Gaining market credibility
• Attracting international leading operators
  investors
• Selection of performance based PPP contracts with
  clear KPIs quick wins
• Change management and capability building
• Implementation technology solutions for
  automation
• the size and no. of initiatives (15 cities)
  during next 3-4 years, NWC will be the biggest
  water utility in the region

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Reach International Best Practices Performance
Low
Good
Excellent
2014
2012
2010
2008
Coverage, Continuity of Service, Quality of Water
and Treatment, Losses Reduction, Demand Management
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Examples of Best Practices in KSA
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NWCs ICT Integration Strategy

• Process Flow
• Data Flow

• Automation through technology solutions
• Paperless environment
• Control and reliability

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Lessons learnt
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Lessons learnt

• Launching parallel initiatives in different areas
  increases the chance that key ideas will survive
• Objective and continuous progress monitoring and
  review
• Anticipating the unexpected when developing the
  programs design to mitigate the risk during
  execution
• Employees master complex change not only by
  reading or thinking but through experience
• Choosing the right PPP option, tailored to meet
  the local objectives

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• Thank You
• for Your Attention