Depletion of fresh water sources prompts investments in water infrastructure
- Saudi Arabia: Tuesday, September 18 - 2012 at 13:11
- PRESS RELEASE
Saudi Arabia is one of the most arid countries in the Middle East and North Africa (MENA) region and its freshwater resources are rapidly depleting. The country has a population of 26.1 million and continues to grow at a rate of 1.53%. Urban centres account for approximately 82% of the total population and the rate of urbanisation is approximately 2.5% (2005-2010).
New analysis from Frost & Sullivan, Assessment of the Water and Wastewater Sector in Saudi Arabia, finds that the market earned revenues of $1.94bn in 2011 and estimates this to reach $3.66bn in 2015.
The frenetic pace of development has attracted participation and investments from the private sector. Despite the political unrest in the Middle East, the government's allocation of substantial funds towards water and wastewater projects has assuaged foreign and private investors' concerns to some extent.
The water infrastructure in Saudi Arabia is better than in other MENA countries, but the government still needs to adopt best practices to better manage water resources and meet international standards.
The government charges only about only 25 cents (10 halalas) per cubic meter of water, even though the cost of water production per cubic meter is around $2.6- $4.0 (SR10 to SR 15). This translates to higher per capita consumption.
With a proper water ministry in place, the legislation or regulations are expected to become stringent. The authorities hope to achieve complete water coverage throughout the country with the enforcement of the National Water Law and by-laws and further investments as part of its Ninth Development Plan.
"The National Water Company (NWC) is planning to invest $23.00bn in Saudi Arabia's sewage collection and treatment infrastructure over the next 20 years," said Frost & Sullivan Environment and Building Technologies Analyst. "This investment aims to increase wastewater network coverage to 100.0% from the current 45%."
Large industries and municipalities mostly outsource the water and wastewater treatment plant services as they can afford the high capital and operational costs. Due to low product differentiation, market participants tend to resort to competitive pricing to standout in the market.
Customers in Saudi Arabia are highly price sensitive but expect treatment systems to be fully compliant to their needs. They also look for prompt after-sales service and technical support.
"Reliability and efficiency are the other key factors considered by end users while choosing water and wastewater equipment suppliers," noted Frost & Sullivan Analyst. "Further, a company that provides complete solution and lowers the operational cost to the end user will occupy the central position in the market."
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