Water and Desalination Projects in Middle East Likely to Attract $120 Billion in Investments by 2020

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Researched by Industrial Info Resources (Sugar Land, Texas)--Wastewater treatment and the construction of desalination plants are seeing a big boom in the Middle East because of a 6% average annual increase in demand for water. The global average for growth in water demand is a mere 3%. Flourishing economies and soaring populations of countries in the Middle East have led to a rise in demand for water. To meet this growing demand, countries across the Gulf region are investing heavily in water and power infrastructure. An estimated $100 billion is being spent currently on water projects across the region with a staggering $15 billion worth of wastewater treatment projects being executed in the United Arab Emirates alone.

The region offers tremendous market potential for wastewater treatment plants. Recycled water is widely used in landscaping and district cooling. Concorde Corodex Group (Dubai, United Arab Emirates), a leading solution provider for wastewater treatment that offers services in air treatment, purification and fire protection, has recently bagged a contract worth more than $42 million from Abu Dhabi Sewerage Services Company to construct a sewage treatment plant in the region. Concorde Corodex will be responsible for designing, fabricating, constructing and commissioning the plant, which will supply water to the largest proposed labor housing complex in United Arab Emirates. Nearly 70% of the country's water consumption comes from desalination plants. Dubai produces more than 58.8 million gallons per day and has an installed capacity to pump 188 million gallons per day. The country is also home to the world's largest desalination plant in Jebel Ali (Phase II), which is capable of pumping 2,500 gallons of water per second, or 300 million cubic meters of water per year.

Veolia Water, a unit of leading water-services firm Veolia Environnement (NYSE:VE) (Paris), bagged two projects worth $91 million from the Abu Dhabi Water and Electricity Authority to construct and operate two wastewater treatment plants. The plants will be built in Abu Dhabi and Al Ain with capacities of 300,000 cubic meters per day and 130,000 cubic meters per day, respectively.

GDF Suez SA (EPA:GSZ) (Paris), which is involved in electricity generation, transmission and natural gas production, recently won a contract to construct and operate the Al Dur 1 power generation and seawater desalination plant in Bahrain. The greenfield project, designed to produce 1,234 megawatts of electricity and 218,000 cubic meters of water per day is slated to be operational by 2011.

According to industry sources, more than $120 billion will be spent on water and wastewater treatment projects by 2020 in the Middle East. Saudi Arabia, the world's largest producer of desalinated water, contributing to about 30% of global production, has 30 desalination plants with an installed capacity of 600 million gallons per day. Saudi Arabia requires $53 billion to enhance its installed desalination capacity to 10.7 million cubic meters per day by 2020.

Investments in power infrastructure are also being made to meet the surge in demand. A $1.1 billion power grid under construction is expected to link all of the Gulf states by mid-2009. Saudi Arabia will attract an investment of $6 billion annually over the next 15 years in order to meet power requirements whereas Kuwait plans to invest $4 billion annually for the next decade on power projects. The United Arab Emirates proposes to use nuclear energy to generate power.

The global liquidity crunch has had little effect on water projects in the region as services firms are tying up with domestic investment giants for financing. Veolia, for instance, partnered with Mubadala Development Company (Abu Dhabi) while Suez entered into an agreement with the Al Quadra Group (Abu Dhabi) to execute water contracts.

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