Water Infrastructure Investment in the GCC

02 Nov


The Middle East is one of the most water-scarce regions in the world. The region’s challenge is twofold. On one hand, natural water resources are close to zero, and on the other, water consumption rates in the GCC region are one of the highest in the world.

Freshwater resources available in the region are lower than 1% of the total available global freshwater supplies. However, the region is home to almost 6% of the world’s population. Furthermore, its population growth is one of the highest in the world. The GCC population grew at a 10-year CAGR*1 of 3% (to 2010) whereas world population growth has fallen to 1.1% in 2011. It is now 1.8% in India and 0.8% for China. According to The Economist Intelligence Unit, the region’s population is expected to grow from an estimated 39.6 million in 2008 to 53.4 million in 2020—a 12-year CAGR of 3%.

Saudi Arabia has little water when compared with the United States, but the average Saudi uses nearly one-half as much water as the average American.*2 The average daily water consumption per capita is 250 liters in Saudi Arabia.*3 A similar situation exists in other GCC countries as well. In a recent study by Maplecroft, the GCC countries Bahrain, Qatar, Kuwait, and Saudi Arabia were rated as the world’s most water-stressed countries, with the least available water per capita. Growing scarcity of groundwater in the GCC has resulted in water extraction exceeding the availability of natural renewable water resources.

High population growth is therefore making it a necessity for GCC governments to thrust momentum on faster execution of water projects. Thus, it comes as no surprise that the Partnerships Technical Bureau (PTB) of Kuwait selected a power and water scheme as well as a wastewater treatment facility to be included in its first wave of projects. Investment is urgently needed to build new infrastructure.4

Water in the GCC is mainly produced from desalination. Even though this is a very costly process—as it requires higher amounts of energy to convert sea water into drinking water—compared with pumping water out of the ground, it is still the most practical solution for the GCC. The GCC already accounts for  approximately 57% of world’s total desalination capacity. Saudi Arabia, which operates 30 desalination plants and produces 24 million cubic meters of water per day, is the world’s largest producer of desalinated water. The GCC region is bestowed with high oil and gas reserves which make desalination projects relatively less costly when compared with the rest of the world.

However, alternatives are being sought. There is an urgent need for alternative and improved water management practices. To better manage this scarce and costly resource, these countries are looking at new options. Some projects for wastewater treatment and recycling are planned. Kuwait showed the way in this area as far back as 2004, with its Sulaibiya wastewater treatment works. With a capacity of 425,000 cubic meters per day, it was at that time the largest wastewater treatment and reclamation project in the world.

Pricing is a crucial and politically charged issue. The GCC-wide estimate for producing and supplying a cubic meter of water is US$2. However, depending on the country, customers currently pay, on a non-weighted average basis, only around 60% of this cost.*5 This varies from 2% for Saudi Arabia to almost the full cost in the UAE (except Abu Dhabi).

*1 -Compounded annual growth rate.
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Posted by on November 2, 2011 in Oil, Water


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