What are SWCC's strategies involving privatization, and what role will the private sector play in further developing Saudi Arabia's desalinization efforts?
The privatization strategy consists of transforming the SWCC into a state-owned holding company with subsidiary production companies, and potential private sector participation in both the holding company and its subsidiaries. The holding company will be structured around a corporate core as well as smaller business units. The business units consist of old production areas, transmission business units, research institutes, and training centers. Private sector participation will be gradually introduced to increase value by creating production assets following the Independent Water and Power Project (IWPP) model. Privatized assets will consist of a bundle of existing production assets with new ones that should be developed. SWCC will retain a 40% stake in the new companies. Private sector participation will not be introduced in water transmission assets, the research institute, the training center, and some old production plants. The last phase of the privatization and restructuring program will focus on the introduction of private sector participation in the holding company, either through management contracts or through an IPO.
What opportunities are there for foreign investors within the sector?
The desalination industry in Saudi Arabia provides many investment opportunities. For example, construction opportunities exist for new desalination plants, such as the Rabigh 3, Jeddah 4, Jubail 3, and Haql 3 projects, among many others. Additionally, there are rehabilitation projects for existing SWCC plants. Opportunities also exist for the procurement of desalination equipment and chemicals. Capacity building for the training of Saudi engineers and joint research programs with the Saline Water Desalination Research Institute also provide additional opportunities for foreign partners. Finally, foreign investors have the opportunity with regard to coupling renewable energy—such as solar, wind, and nuclear energy—with desalination technologies such as membrane and thermal.
How do Saudi Arabia's desalination efforts work together with its renewable energy initiatives?
Water is an essential and important commodity for human survival. Today it has become the most precious commodity on earth. The majority of the population of the world doesn't have sufficient access to it and 70% of it is even without fresh water. The Kingdom of Saudi Arabia, which falls in an arid region, also faces several challenges in water sectors such as the rapid increase in population, increase in water demand, high per-capita consumption, limited natural water sources, and industrialization. Desalination technology is an energy intensive process. SWCC plants use either gas or oil as source of energy and energy costs contribute almost 50% towards the cost of water. SWCC consumes around 3% of the daily kingdoms oil production. Hence, a great deal of attention is also being paid to tap alternative resources, such as renewable energy sources like solar, wind, and nuclear. Among the many options for renewable, solar energy is most suited for the Kingdom as everyone knows that intensity and brightness of sunshine in most parts of Kingdom is high and can be tapped for its energy, which is about 2,000 KW/sqm per year. Thus, to execute the SWCC's strategy for energy efficiency and diversification, numerous initiatives have been launched, such as joint collaboration agreements with national and international organizations, companies and universities, such as Hitachi Zosen, King Saud University, King Abdullah-City for Atomic and Renewable Energy, and the King Abdul-Aziz City for Science and Technology (KACST). SWCC supports the efforts being made to find alternative renewable energy sources.