Investment needed in Saudi Arabia

If Saudi Arabia is to meet its rising domestic demand, then it needs to raise its investments in its power and water supplies industries by a third to at least US$266.7 billion through 2025, according to Banque Saudi Fransi.

Demand for water and power is growing around eight percent annually in the most populous Gulf Arab country of 25 million.

The kingdom, which accumulated huge reserves during a six year oil price boom, wants to spend more than US$400 billion over five years to upgrade infrastructure - airports, roads and power plants.

The world's top oil exporter is expected to spend US$79.9 billion alone on power generation, US$53.3 billion on water desalination projects and US$53.3 billion on sewerage, the Riyadh based bank said.

In a report the bank said: "In our perspective, this US$186.6 billion is certainly a step in the right direction - but at least a third more in funding would be required to bolster capacity in a way that comfortably cushions demand."

The kingdom's power generation capacity stood at around 45,000 megawatts in 2009 and Saudi Electricity Co's capacity is seen rising to 70,000 megawatts by 2020, Arabian Business reports.

Public-private partnership

Credit Agricole's Saudi affiliate said to strike a balance between power and water supply and demand, Saudi Arabia would need to engage in more public-private partnerships.

The private sector is getting more involved in the power sector through independent power producer (IPP) projects. It is also overseeing the development of the water sector.

Water resources have also been stretched with available water per capita dwindling by almost a quarter in the past decade, coinciding with greater industrial, agricultural, and personal use, the bank said.

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