harkan
TRANSCRIPT
Providing Water and Electricity in a Growing Economy
—
The Perspective of the
Saudi Saline Water Conversion Corporation
US - Saudi Business Opportunities Forum, Atlanta - USADecember, 2011
٢
بسم اهللا الرمحن الرحيم
In the name of God, Most Gracious, Most Merciful
٣
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
� High municipal water consumption,
estimated at 250 liters per capita per day
due to a lack of awareness vis-à-vis water
scarcity issues and limited price signaling
� High rural usage (agriculture accounts for
more than 80% of the total water consumed)
� High water demand growth, estimated at
2.1% annually for 2010-2014, driven by:
– Population growth
– Increasing urbanization
– Industrialization and economic growth
Depleting Natural Water Resources
� More than 60% of the total water consumed
(not just municipal) comes from depleting ancient water aquifers
� Groundwater abstraction rates are unsustainable, estimated to be 10 times
higher than yearly replenishment rates
� The quality of surface and ground water is
deteriorating due to pollution and the overexploitation of resources
٤
SWCC was established in 1974 with a main purpose to support natural water resources by means of seawater desalination
Late King Abdulaziz ordered the first 2 desalination units with a capacity of 300 m3/day (80,000 gallons) for Jeddah to serve the Pilgrims and Jeddah population.
1928
1974The present SWCC is established by Royal Decree. Its main purpose of SWCC is to support natural water resources by means of seawater desalination in addition to electric power generation depending on technical and economic conditions
Overview of SWCC Establishment and Purpose
Vision Pioneering the Seawater Desalination Production and Transmission
MissionTo Meet the Kingdom’s Desalination Water Demand and Contribute to Economic and Social Growth through Effective Investment in Human and Physical Asset Resources
٥
SWCC is engaged in water production and transmission, power generation, and R&D in desalination
Desalinated Seawater Production
� Main activity: Planning, construction, operation and
maintenance of seawater desalination plants
� Process: Production of water either through dual or
single purpose plants (MSF, MED, RO)
� Existing assets: 27 plants in 16 locations with 3.3M
m3/day installed water capacity
Water Transmission
� Main activity: Planning, construction, operation and
maintenance of water transmission pipelines
� Existing assets: More than 5,000 km of pipelines,
29 pumping stations, 158 storage tanks (capacity: 9M
m3) and 17 blending stations
Power Generation
� Main activity: Planning, construction, operation and
maintenance of electrical power plants
� Process: Dual purpose plants
� Existing assets: 12 cogeneration plants with around
5,000MW of power generation capacity
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
N
EW
S
AL-KHAFIJI
AL-KHOBARDUBA
AL WAJH
UMLUJ
RABIGH
JEEDAH
Al-SHOAIBA
Al-BIRK
AL-SHUQAIQ
FARASAN
Aِl-AZIZIA
BURAIDAH
AL ZU
LFI
ALQAT
SHUQRA
MAJM
UA
SUDAIR
AL
HU
SI
RIYADH
MADINA MUNAWARA
MAKKAH MUKARAMA
TAIF
ABHA
KHAMIS MUSHAYAT
AL-JUBAIL
HAQL
YANBU
HAFUF
Large Plants
Satellite Plants
Water Transmission
Systems
Regional Reservoirs
Al-LEETH
Al-QUNFIDHAH
٦
Saudi Arabia is currently the largest producer of desalinated water in the world, accounting for 18% of total production
UAE
33%
KSA
41%
BAHRAIN
3%
QATAR
7%
OMAN
3% KUWAIT
13%
KSA Desalination Share in the GCC (2010)
KSA
18.00%
KUWAIT
6.46%
OTHERS
27.36%
OMAN
1.38%BAHRAIN
1.32%
SPAIN
7.64%
USA
17.80%
UAE
16.66%
QATAR
3.39%
KSA Desalination Share in the World (2010)
٧
The Saudi Government is committed to expand desalination to meet national demand for water and electricity
The Share of Desalination in the Kingdom Municipal Water Supply is Expected to Rise
34(1)27.2
KSA Population (In Millions)
63%
(5.2 Million
m3/day)
53%
(3.3 Million
m3/day)
Desalination Share in Water in KSA
8.5(2)6.8(2)
Water Demand(In Million m3/day)
20252010
(1): Assuming an average annual growth rate of 1.5%
(2): Consumption rate per capita is 250 liters/day
Cogeneration is Adopted as a Strategy for Increasing Desalination Capacity Efficiently
� Cogeneration plants combine water
production and power generation which
maximizes economic efficiency when large
investments in both power and water
supply are required to meet local demand
� In 2011, Royal Decree M/45 stipulated that
the adoption of cogeneration is compulsory in desalination projects and
coastal electricity generation projects,
except in cases where there is proof of
economic unfeasibility or no demand for
power or water
� Cogeneration currently accounts for around
20% of electricity generation in KSA
٨
SWCC is focusing on five key dimensions to meet water and electricity demands and ensure effectiveness and sustainability
� Integrated resource planning
� Timely expansion of desalination capacity
� Private sector participation in the Saudi desalination sector
� Restructuring and commercialization
� Innovation and global collaboration
1
2
3
4
5
٩
Integrated Resource Planning
Matrix of Resource Planning Approaches
Efficiency
Effectiveness and Flexibility
High
Low
Low High
Integrated Resource Planning (IRP)
�Demand and supply-
side
�Engagement of all
stakeholders
�Minimum costs
�Reliability of
supply, taking
demand for
granted
Traditional Resource Planning
�Lowest cost
options to meet
demand
Least-Cost Resource Planning
Integrated Resource Planning (IRP)
� The main aim of IRP is to maximize economic
efficiency while guaranteeing supply reliability
� An integrated planning for water resources is
required, notably desalination and groundwater
(balancing cost, national interest, availability)
� 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
between demand and supply)
� A prime example is the case of Ras-Al-Kheir
plant in KSA where the SWCC cogeneration
plant was expanded by 1,350MW to include
the industrial power needs of a local
manufacturer, which was planning to build its
own plant
Integrated resource planning for water and power maximizes value for the economy
1
١٠
SWCC is currently constructing major plants and pipelines – Ras Al-khair is the largest cogeneration project of its kind in the world
2013 / 20142,4001,025,000
2012-240,000Jeddah - RO
Ras Al-Kheir
Expected DatePower Capacity(Megawatts)
Water Capacity(m3/day)
Plant
2014913565,000Shuqaiq (Phase 2)
210369,000Al-Laith
2013 / 2014344790,000Mekkah / Taef / Jeddah
201429,000Farasan
Expected DateLength
(Kilometers)Capacity(m3/day)
Pipeline
160,000
1,000,000
350
900 2013Ras Al-Kheir / Riyadh
2013Ras Al-Kheir / Hafr El
Batn
16.8 Billion Saudi RiyalsTotal Cost of Projects Under Construction:
USD 4.48 Billion
SWCC Plants & Pipelines – Under Construction
2
١١
SWCC is also tendering several projects including a large cogeneration plant and transmission system in Yanbu
20142,500550,000Yanbu 3
2013-9,000Dhuba 4
2013-9,000
2013-9,000Rabigh 3
Haql 3
Expected DatePower Capacity(Megawatts)
Capacity(m3/day)
Plants
Expected DateLength
(Kilometers)Capacity(m3/day)
Pipeline
5,000
560,000
19
597 2015Yanbu - Madina (Ph 3)
2015Rabigh - Khulais
2
SWCC Plants & Pipelines – Under Tendering
١٢
SWCC’s expected future capacities includes commissioning seven large plants by 2024
2023102100,000Yanbu 5
2021307300,000Yanbu 4
2017250250,000
2015175175,000Shuqaiq 3
Khobar 4
Expected DatePower
(Megawatts)Water(m3/day)
Plant
220,000
650,000
320,000
220
665
320 2017Jubail 4
2024Khobar 5
2019Shoaiba 4
SWCC Plants & Pipelines – Proposed Future Capacities
2
١٣
Total Capital and Operational Investments until 2020
Desalination Sector Capex and Opex(2010 – 2020) – USD Million
Total = US$ 24.3 Billion (SR 91 Billion)
Power and water
Transmission
2,422
CAPEX OPEX
2,337
2,051
6,811
17,453
11,651
Transmission
5,802
Power
Water
Note: 1) Assuming constant ground and water supply
Source: Technical Advisor Estimation Report
2
١٤
KSA has committed to increase private sector participation in key government assets to achieve the following strategic objectives
Source: Governmental Decree Number 60 of 1/4/1418 H and Number 175 of 27/6/1424 H, Supreme Economic Council Resolution 5/23
Government’s Strategic Objectives
� Enhance competitiveness of national economy
� Encourage/increase private sector participation
� Expand the ownership of productive assets by
Saudi nationals
� Encourage investment of domestic and foreign
capital in KSA
� Create employment opportunities for nationals
� Provide quality services in a cost effective
manner
� Reduce the burden on the government budget
� Increase government revenues
Sectors Covered by KSA Privatization Program
� Water and wastewater
� Desalination� Telecommunications
� Air Transportation and related services
� Railways
� Highways
� Airport Services
� Postal Services
� Wheat Mills and storage facilities
� Port Services
� Industrial Cities Services
� Government’s shares in Public companies
� Government’s shares in the Arabic and Islamic
common investment companies
� Government Hotels
� Sports Clubs
� Municipal Services
� Education Services
� Social Services
� Agricultural Services
� Health Services
3
١٥
Status
� Commercial Operations started by
February 2009
Project InformationProject Name
Shoaiba III(West Coast)
Shuqaiq II (West Coast)
� Commissioning started by end of April
2009
� Project started operating in December
2010
� Estimated total cost: USD 1.87B
� Total Capacity: 212,000 m3/day
� 60% owned by the private sector
� 20 years BOO scheme
� Estimated total cost: USD 2.69B
� Total Capacity: 1,030,000 m3/day
� 60% owned by the private sector
� 20 years Build, Own, Operate
(BOO) scheme
Action to date: 2 Independent Water Power Producers launched 3
١٦
The 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
*) 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
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
Public
Ownership
Public/Private
Ownership Full Ownership
Partial Ownership
SWCC Holding
Trans-mission
Shoaiba-1,2
Shoaiba-4
Shuqaiq-1Shuqaiq-3
Yanbu-1,2,ROYanbu-3*
OtherR&DT, …
Khafji-2 Khafji-3
OldProductio
nPlants
Incorporate as government-owned holding
company and then possibly float on stock
exchange
Duba-4 / Haql-3 Wajh-3 Wajh-4 Umlujj-3
Jubail RO Jubail-4
Khobar-3 Khobar-4
Leith-1
Farasan-2
Qunfutha-1
Rabigh-2
Azizia-2
Introduce PSP in value creating priority
assets, following “IWPP model”
Yanbu ProdCo
RaKProdCo
KhafjiProdCo
ShoaibaProdCo
Shuqaiq ProdCo
KhobarProdCo
Jubail ProdCo
Trans-mission
OldProductionPlants
abc Existing / Built by SWCC abc To be Implemented by PPP
Ras Al-Kheir*
SatelliteProdCo
3
١٧
Preparation Steps and DetailingStudies
ApprovalsExecution of Privatization & Restructuring
Holding Company Privatization
(Completed)From 8/2004 to 8/2006
24 Months
(Completed)From 1/2007 to 7/2008
18 Months
(On-going)Started in 1/2009
≈5 Years
PHASE I PHASE II PHASE III PHASE IV
SWCC has embarked on a long and ambitious privatization, commercialization and restructuring program
Phases of the SWCC Restructuring & Privatization Program
� Prepare a report on the requirements to develop SWCC’s privatization strategy and organization restructuring
� Develop and detail privatization options and select the preferred option
� Develop privatization and restructuring plan
� Submit Privatization Strategy and Restructuring Plan reports and conduct stakeholder presentations
� Obtain approval from the SWCC Board of Directors and Supreme Economic Council – issuance of the SEC resolution no. 2/29 (29/6/1429H)
� Finalize all preparations for the launch of the execution phase
� Introduce private sector participation in the Holding Company, either through management contract(s) or through an Initial Public offering (IPO)
� Transform Transmission Business Units into a company then introduce private sector either through an IPO or through long term strategic partnership (Optional)
� Organization detailing, HR Readiness and BPR
� IT strategy and implementation
� Rollout of the new organization structure and processes
� Commercial agreements development and enactment
� Submission of the documentation required for the Royal Decree
� Creation of the Holding Company and Production Companies
� Introduction, through a phased approached, of private sector participation in Production companies
Long Term
4
١٨
� SWCC established its Research Institute in
1987 at Al-Jubail, KSA, as part of the Saudi
American Cooperation Agreement
� The Institute focuses on applied research in
chemistry, corrosion, environment, reverse
osmosis and thermal desalination
� The Institute has state-of-art labs and pilot
desalination plants
� It provides consulting, testing and
troubleshooting services to local and
regional customers
� The strategy of the Institute focuses on
promoting global collaboration to drive
advancements in desalination technology
Brief Overview of Our Research Institute
SWCC plays a key role in innovation and global collaboration in the desalination industry
Glance of SWCC Innovation and Collaboration
� 6 patents in desalination technologies.
Example:
– Patented, in the USA, a process using nano-filtration (NF) membranes to eliminate scaling and fouling, increasing production by 33% and decreasing energy usage by 30%
� 12 awards and several accreditations such
as ISO9001
� Collaboration with several universities and
main players in the global desalination
industry
� Consultant on a 30,000 m3-a-day solar-
powered desalination plant that will be the
largest in the world
Examples of Achievements in Innovation and Collaboration
5
١٩
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.
٢٠