Boston, MA -- (SBWIRE) -- 05/08/2013 -- There are serious moves underfoot to privatise much of the Kingdom's water assets, with talks reportedly under way between National Water Company (NWC) and a leading international adviser. This has led BMI to become increasingly confident that Saudi Arabia's water authorities are serious about bringing in the private sector to drive the much-needed expansion of capacity in desalination and wastewater segments. NWC is already committed to spending US$500mn in the near term on improving services to the capital Riyadh, and with state coffers flush, the Kingdom should be able to attract the biggest and best, providing contractual terms are clear.

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Saudi Arabia is set to confirm its position as the region's most active water market in 2013, dominating contract awards in water desalination, water supply and wastewater management sectors in the Gulf, which is itself a vibrant market for international developers. According to regional business weekly MEED, the Kingdom saw contracts worth US$1.8bn in 9M12, dominated by floodwater prevention facilities in Jeddah.

The key themes in Saudi Arabia's water sector are:

- Moving through Q113, the pressing requirement for rolling out new capacity, as well as the flush liquidity enjoyed by public authorities involved in implementing water schemes, should underpin an attractive market for developers and contractors alike. NWC has a kitty with US$500mn to spend on new water extraction and supply facilities focused on the capital Riyadh. This will result in at least two new water treatments plants - a response to the severe water shortages experienced in the summer of 2012.
- The Riyadh groundwater strategy will seek to boost water supply in Riyadh ahead of the coming onstream of the major new desalination plant under construction at Ras al-Khair. The plant will provide more than 1mn cubic metres a day (m3/d) of desalinated water to Riyadh when it comes onstream in 2014.
- PricewaterhouseCoopers (PwC) is due to have been awarded the advisory mandate on the part privatisation of Saudi Arabia's water and wastewater assets in Q412. Speculation that negotiations were ongoing between NWC and PwC also indicate that the firm will be tasked with dividing the privatisation into two, with Riyadh primed for the initial phase and then the remaining assets in Jeddah, Makkah and Taif to follow. According to the original schedule, NWC hopes to announce a strategic private sector to steer the process by 2014. Within a year from that date, the assets would be transferred to the private sector, heralding the most significant boost for private-led infrastructure development in the Kingdom for many years.

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