India's IVRCL Begins Commercial Operation of Large-Scale Desalination Plant

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Researched by Industrial Info Resources (Sugar Land, Texas)--Infrastructure asset company IVRCL Assets & Holdings Limited (BSE:532881) (IVCRL A&H) (Hyderabad, Andhra Pradesh), the real estate subsidiary of infrastructure major IVRCL Infrastructures & Projects Limited (BSE:530773) (Hyderabad, Andhra Pradesh), has begun the commercial operation of the $134 million Minjur desalination plant near Chennai, Tamil Nadu. The project was executed on a design, build, own, operate and transfer (DBOOT) mode. The plant is designed to supply 100 million liters per day of potable water to the state-operated Chennai Metro Water Supply and Sewerage (CMWSS) Board, which has signed a 25-year purchase agreement with IVRCL A&H.

The desalination plant was set up by Chennai Water Desalination Limited (CWDL), a special purpose vehicle set up by the 75:25 joint venture between IVRCL A&H and Befesa India (Chennai, Tamil Nadu), which is a subsidiary of Befesa Construccion y Tecnologia Ambiental S.A. (Seville, Spain). The plant will use reverse osmosis technology to desalinate 240 million liters of saline water every day. Operating at an average capacity of 95%, the Minjur plant is expected to generate more than $105,000 per day.

IVRCL has two operational water projects, one of which is the Minjur project. The other is a 12 million-liter-per-day sewage treatment plant. With the successful implementation of the Minjur project, IVRCL has proved itself to be capable of handling engineering, procurement and construction contracts of large desalination plants.

IVRCL A&H is exploring similar opportunities in other coastal cities in India and is expecting to be similarly successful. "In terms of locations for desalination plants, we do see possibilities in Mumbai, Vizag and Kerala to begin with," said Managing Director S. Ramachandra of IVRCL A&H. "We are expecting tenders to come out from certain coastal states and will definitely pitch for the same. Though the process shall be slow, going forward we expect to have a first-mover advantage in this growing market for desalinated water worldwide."

The worldwide market for desalination plants is growing at about 16%, and India's Ministry of Power announced that it would give priority to projects that planned to utilize desalinated water. Ramachandra was confident that such a move would be incentive enough for gas-based power producers to consider using desalinated water in future projects. He said that many companies and ports were showing interest in the idea and IVRCL was conducting preliminary talks with the ports of Gangavaram and Kakinda, both of which are in Andhra Pradesh.

So far, 2009 saw the highest number of desalination plants being commissioned worldwide. The largest desalination plants operate in the Middle East and North Africa (MENA), which together account for about 55% of the global capacity. Of the $105 billion expected to be invested in the global desalination market in 2010-16, the MENA region is expected to utilize 50% to 60% of it. The desalination market in the MENA region is expected to be worth about $55 billion to $60 billion by 2016.

Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) account for nearly 40% of the global desalination capacity, with Saudi Arabia and the UAE at the top of the list. Most of the major projects under way are in the two countries. The average installed capacity of plants that are being set up or scheduled for construction is about 70,000 cubic meters per day for plants based on reverse osmosis, and about 300,000 cubic meters per day for those based on multistage flash distillation technology. One cubic meter is equal to 1,000 liters.

Although the desalination market looks bound for prosperity, it cannot be denied that the antiscalants and chemicals that are pumped back into the sea are a cause for concern. In spite of most of them being biodegradable, the large quantities could cause an imbalance in the local ecosystem, generating the need for mineral recovery units in the desalination plants. This would mean an additional cost to the desalination projects.

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