High and dry

It is vital that the Middle East region learns to manage its existing water resources more efficiently, but will the region overcome critical challenges and harness new infrastructure and technology to vastly improve its underdeveloped water systems and processes?

“There is clearly a role that effectively structured public private partnerships can play in addressing some of the various issues”
-Kathy Shandling, International Private Water Association (IPWA)

The MENA region is home to six percent of the global population, but currently has access to less then one percent of the planet's renewable freshwater reserves – with an average of only 1400 cubic meters of renewable water resources per capita, the region is far below the World Bank average of 8500. Indeed, the region also consumes almost 80 percent of the fresh water they have, which is in stark contrast with regions such as Latin America where countries consume only about two percent of the volume available.  

With such short supplies many countries in the region supplement the growing need for potable water with the desalination of seawater. Countries like Kuwait, Saudi Arabia and the UAE in particular depend on desalination for potable water requirements. This heavy usage leaves little room to accommodate an expanding population, which in turn means it is vital that the region learns to manage its existing water resources more efficiently, take advantage of new technologies and improve on its relatively young and underdeveloped systems.

"There is no question that the water and wastewater side in Saudi Arabia, and even in Dubai, are undeveloped," says Eric Jankel, former CEO of Aqualyng Holdings. "The physical facilities and the treatment capacity is not at modern day standards. And there's going to be quite a bit of work to bring the wastewater treatment systems up to those modern standards and apply wastewater reuse technologies and programmes to those networks." Jankel, who has over 30 years experience in the water business, goes on to explain that in most cases each of the countries in the MENA region has made positive policy changes in the last two to three years. "In Abu Dhabi they're privatising the wastewater system. In Oman they've brought in management contractors to improve service delivery and improve the technology. Even in Egypt they're trying to get financial backing for a new Cairo project. So there are certainly examples where there has been a change in direction and a momentum going forward to upgrade the standards of the systems," says Jankel.

However, despite the huge desire to improve the water and wastewater systems in the Gulf region there are still critical challenges to overcome. Specifically, the Middle East needs to find ways to manage existing water resources more efficiently. To move forward with this goal the region must improve and expand its focus on a number of issues, including increasing water reuse options, better water conservation efforts, more desalination project development and improved irrigation modernisation. Ark Pang, Chief Development Office for Kharafi National, believes that firstly, greater awareness and implementation of water conservation measures must be seen in the region in order to help preserve fresh water stocks. "It is often said that seawater is the unlimited reservoir and desalinated water will solve mankind's water scarcity problem.  On the flip side municipal wastewater is also a highly reliable source of water and if properly treated should be a critical resource in the governments overall water management scheme."

Pang goes on to suggest water metering and a review of subsidised water tariffs in order to improve systems and services. Kathy Shandling, Executive Director of the International Private Water Association (IPWA) agrees, saying that it is vital the region moves towards a full cost recovery for water services in order to achieve long-term, sustainable systems. She explains that this will involve the implementation of viable AMR systems to better ensure a more effective billing system including the collection of payment for water/wastewater services rendered. Certainly countries in the region are increasingly seeing their government turn to the private sector to meet their water and wastewater needs. Shandling believes that when the right partnership is created it can have a very positive impact – although there is a flip side to that – and a variety of public private partnerships (PPP) are being implemented throughout the region.

"There is clearly a role that effectively structured public private partnerships (PPP) can play in addressing some of the various issues," says Shandling. "PPP's can take the form of concessions, management contracts, corporatised local water companies and so on. A newer PPP initiative will most likely involve different players – particularly the smaller and more specialised private companies. The new PPP's will more likely mirror strategic alliances or partnerships rather than the older, more traditional PPP model that outlines a broader and total outsourcing contract to one particular company."

Desalination

Even as the structures behind the infrastructure changes to make systems more efficient with the introduction of PPP's and water meters for example, it is the technology producing the clean, safe water that is becoming increasingly important. The UAE, for example, has virtually no sources of surface water, such as rivers, so desalination is the major source of water supply. According to Lisa Henthorne, immediate past-president of the International Desalination Association (IDA), the world's largest desalination plants, both online and in the planning stages, are those seawater facilities located in the Middle East region. The largest production from an individual desalination installation is the Shoaiba 3 project on the west coast of Saudi Arabia, producing 880,000 cubic meters per day. Seven other commissioned or contracted plants have capacities in excess of 400,000 cubic meters per day. In addition, Ras Azzour, on the east coast of Saudi Arabia, has a planned capacity of one million cubic meters per day.

"We tend to build these desalination plants in phases, adding onto facilities as demand grows," she explains. "The Jebel Ali complex in Dubai is a good example, where an additional 600,000 cubic meters per day of capacity was recently contracted."

Seawater desalination represents a US$10 billion industry today, and is forecast to be worth some US$16 billion by 2020. According to Henthorne, while the global economic downturn caused the rate of growth in desalination plants to slow somewhat in 2008-2009, population and economic growth, pollution of existing water resources and climate change continue to drive the need for new and reliable sources of water. "Desalination is one of the answers," she says. "It continues to be an increasingly important part of global water solutions for the 21st century and for a better world."

Indeed, desalination is especially important to countries on the Arabian Gulf. Together, the countries of the Arabian Gulf – the GCC plus Iraq and Iran – account for approximately 40 percent of the world's desalination capacity. For example, IDA estimates that 95 percent of Dubai's water supply is produced through desalination. At the same time, the unique configuration of the Arabian Gulf – a semi-closed water body with limited fresh water inflow from rivers – requires diligent attention to potential effects of the process.

In response, IDA has announced plans to form a task force to explore the environmental effects of desalination on the Arabian Gulf and recommend strategies to mitigate potential impacts. According to Henthorne, the task force is part of a larger initiative that IDA is organising to examine best practices, as well as available and future technologies, to address environmentally-related aspects of desalination such as energy consumption, safeguarding of marine life, and concentrate disposal, and promote ways to mitigate potential environmental impacts of desalination around the world. "In many regions, including the Arabian Gulf, desalination is the only way to supply fresh, clean water to growing populations and economies," she says. "IDA is committed to environmentally responsible practices in desalination, which has become an increasingly important part of the solution to water issues around the world."

Decentralisation

However, Jankel believes that while desalination has proved a good solution to some of the water problems in the MENA region, many of the challenges seen in the water systems today relate to the fact that too many of these desalination plants use thermal technology steamed from power plants, which means they are co-located with power station sites. "In the summer, the power demand is twice – the peak demand can be twice the base load demand in the winter, whereas the demand for water is relatively constant year-round. This poses some challenges and certainly increases the cost of water production in the winter months, when steam is produced simply for the purposes of desalinating the water," he explains. Jankel goes on to explain that this is why reverse osmosis technologies are one of the big trends in the region at the moment – it doesn't use steam and doesn't have to be co-located at a power plant site and is fundamentally a more cost effective option. However, from an operational point of view, he highlights the advantages, including that companies have been using the thermal technology for 25-30 years, are comfortable with it and able to deal with the challenges it presents.

"Reverse osmosis is certainly more challenging and more difficult to operate on a day-to-day basis because of the pre-treatment system, so in some cases there's been a willingness to take reverse osmosis and go forward and in some cases a little bit of hesitancy to embrace the technology. However, where these real estate developments are coming on like the Palm Deira, certain portions of the Palm are served by reverse osmosis plants as opposed to desalination, and likewise in the northern Emirates, basically the government has told developers you can go forward and build your project, but you will not be getting electricity and water form the public sources -you'll have to make your own as part of your project."

These circumstances have led to a decentralisation of some of the systems taking place as a result. In many cases this has helped to promote wastewater reuse. Historically a wastewater plant would be out in the desert, away from the community and the wastewater would be piped out to that plant, treated and piped back. However, with a decentralised system, out on one of the islands in Abu Dhabi for example, the treatment plant is close by as part of the island development, and then the wastewater reuse can be piped back quickly and used effectively. "It makes the economics of wastewater reuse much more advantageous when the plant can be built closely to the ultimate end user of the reuse project," adds Jankel.  

The systems in the region are undoubtedly becoming more rationalised with efficiency becoming a more important criteria, and likewise the technologies for both water production and for wastewater treatment more cost effective. In that sense the cost profile is coming down and helping participate in a more rational framework for water production, supply and waste treatment, and in particular water reuse, which is a huge factor in the overall cycle of how economies and governments can efficiently use the water resources available.

Jankel explains that the industry is set to remain fractured in the near future. Indeed, with the current systems set up, there are utility companies that own and operate the system, engineering companies that do the design work and then there are equipment suppliers who sell various technologies and equipment to the market. "However," he says. "I do believe that the governments around the region are beginning to harness the private sector from both a technology and financing point of view, and that can only be a good thing."

The growth of desalination

The global desalination market is growing at a record rate. The total capacity of plants now on-line is 59.9 million m3/d, a 6.6 million m3/d increase on last year and representing the largest amount of desalination capacity brought on-line in a single year. Seven hundred new plants were commissioned around the world during the year – including the largest in the world, the 880,000m3/d Shoaiba 3 project in Saudi Arabia – and there are now 14,451 desalination plants on-line, while a further 244 plants with a capacity of 9.1 million m3/d are known to be under contract or in construction.

The greatest increase has come from seawater desalination. Since November 2007, the installed capacity of seawater desalination plants has expanded by 29.6 percent to 35.9 million m3/d. To date in 2009, 4.6 million cubic meters per day of seawater
desalination capacity was added, and demand for seawater desalination is forecast to grow dramatically.

Case study: Jordan

In 2000, the government of Jordan set up the Aqaba Special Economic Zone (ASEZ) in the city of Aqaba. The institutional changes embedded in the establishment of the zone opened the doors for other significant changes in Jordan, including some that were to affect the water and sanitation sector.

Prior to the zone being set up, central government agencies were responsible for developing and managing the port, the airport and the utility services, including water and sanitation. The law establishing the zone brought about a direct challenge to the status quo as it explicitly allocated this responsibility to the Aqaba Special Economic Zone Authority (ASEZA).

The opportunities opened up by the ASEZ law for entrepreneurs in economic and political organisations in Aqaba were also perceived by many as a threat to central government organisations operating in the city. Consequently, intense negotiations were held between the parties to find ways to implement the law while protecting their respective interests. The corporatisation of water and sanitation services was part of these negotiations. The negotiating parties were the Ministry of Water and Irrigation (MWI) and the Water Authority of Jordan (WAJ) on one side, and ASEZA on the other.

The Aqaba precedent had ripple effects in the water sector, as it was a major factor in the corporatisation of Amman services. Aqaba's services were corporatised in 2004 and Amman's in 2007. In Aqaba, the government set up the Aqaba Water Company (AWC) to replace a local agency from the Water Authority of Jordan (WAJ), while in Amman the government created MIYAHUNA to replace LEMA, a private company operating under a management contract with WAJ.

"It's critical for countries to be able to make progress in other areas of economic development. I can think of a number of sectors that won't be able to develop properly if there is no good water service. Tourism for one in a country like Jordan is critical, and certainly so in industry of various sorts. So to us it is important that the international lending agencies and donor agencies continue to pay attention to the water sector reform," says Jorge Segura, Managing Partner of Segura Consulting, the international consulting firm that was involved in the Amman water management project.