Solving the Kingdom’s H2O problem

Its population is growing faster than any other Gulf country, but its water supply isn’t. Ghazi Al Gosaibi, KSA’s Minister of Water, outlines the kingdom’s plan to deal with one of its most urgent problems.

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By  Massoud Derhally Published  March 6, 2003

|~||~||~|Saudi Arabia is moving ahead with force to meet all its water needs by becoming self-sufficient. At the helm of the project is Ghazi Al Gosaibi, the former Saudi ambassador to London, now the Minister of Water. Al Gosaibi, say insiders, is a doer, reformist, and a man who rises up to the challenge.

The kingdom, which is mainly desert, has scarce fresh water resources and is the world’s largest producer of desalinated water, contributing 30% of global production, according to official statistics. The country produced more than 857.4 million cubic meters of desalinated water in 2001, a 60% increase compared to figures from the previous year.

Saudi Arabia decided to create a separate ministry to manage water resources and encourage private investment in water projects in 2001. The Agricultural and Water Resources Ministry, which was responsible for the water sector in the past, oversaw plans to build several water purification and desalination stations at a cost of almost US $200 million dollars.

The kingdom had excess water in 1998 and exported drinking water to Jordan because of shortages caused by contamination of one of Jordan’s water plants. In the same year, Crown Prince Abdullah of Saudi Arabia inaugurated one of the world’s largest dams built to irrigate the fertile Beesha valley in the south of the country. The dam which cost more than US $61 million to build, is and second in size in the world, after the Aswan High Dam in Egypt, which has a capacity of more than three-hundred million cubic metres of water.

In the summer of 1999, however, Saudi Arabia struggled to cope with water shortages and it was widely reported that people in some areas were being supplied with fresh water only once a week. At the time, the port city of Jeddah was badly hit as high temperatures sent demand soaring, with reports of residents racing to fill containers during a two hour period every week when main supplies were working. One study says water consumption has risen five-fold in the last thirty years, and there are suggestions that low charges encourage waste.

Today, the Minister of Water, who sparked controversy in 2002 by writing a poem in praise of Palestinian suicide bombers, wants to address the kingdom’s water needs. His task has been to review water use and conservation. Those who know him best say he is an early riser who is up at 6:00 am and is at work between 8:00 and 8:30 am. They describe him as organised and disciplined. “The days are long with the new ministry and he often leaves work with two to four briefcases of paperwork which he takes home with him,” says one person who is close to Al Gosaibi. “It is not unusual for him to finish the additional work at around midnight or later.”

Al Gosaibi rarely accepts dinner and other social invitations, in order to have enough time to finish all that needs to be done for the ministry. Before assuming his post in the kingdom Al Gosaibi used to read an average of two to three books a week. The picture today is a bit different, as water shortage in the kingdom has become such a serious issue.

Water scarcity affects business and holds back economic development. When the ministry of water was established, the cabinet charged it with developing a comprehensive water plan that would set detailed policies regarding both demand and supply.

“The ministry is engaged now in developing this plan with the help of experts from the World Bank, as well as Saudi experts,” says Al Gosaibi. “I hope that in two years we will have a fully-fledged plan. In the meantime, we continue to look for new sources of water: both conventional and non-conventional, and to introduce ways and means of rationalising the use of available water.”

Agriculture in Saudi Arabia requires a perpetual supply of water for irrigation purposes. In Saudi Arabia, 89% of the water consumed is for agricultural purposes, although produce exports are sold at 30% of their cost to be consumed on the global market, water experts told Arabian Business in 2002. For Saudi Arabia, as well as other Gulf countries, desalination has been a viable option. In Saudi Arabia, the government has demonstrated its ability thus far to pay for desalination plants.
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According to official figures, every day the country’s 30 desalination plants pump almost 600 million gallons of water through nearly 2,000 miles of pipeline, meeting 70% of the Kingdom’s needs for drinking water.

The Saline Water Conversion Corporation (SWCC) plans 20 more such plants. The kingdom recently signed a 10 year US $10 billion contract for the project management of all the water and waste water work in the Mecca province. The city suffers from a chronic shortage of water resources and a severe lack of sanitation. According to SUEZ, arguably the world’s largest water-related solutions provider, less than 20% of the city is equipped with a sewer system. At present, the untreated waste water is discharged directly into the sub-soil by wells; the infiltration capacity of the soil has become saturated and the impact on the environment is now discernible.

Despite the money spent so far, Saudi Arabia still needs to invest a lot more in desalination. “They need investment in water alone of at least SR25-30 billion in the coming five to six years,” says Muhammad Younas, senior economist, National Commercial Bank “They need two or three more desalination plants and if you look at the domestic banking capacity for project finance and corporate lending, it’s not that great,” he says.

On top of that, there is the gas initiative. Companies use gas to fuel desalination plants and develop the water sector.

If for any reason, the current gas initiative is delayed, Al Gosaibi, say both the Ministry of Water and the Ministry of Industry and Electricity, will invite international and local companies to build multi-purpose desalination plants on a BOT [build operate transfer] basis. “If you look on a consolidated basis, Saudi Arabia needs at least SR50-60 billion of investment for these projects [water, electricity, and gas] besides what Saudi Arabia already allocates from its budget,” says Younas.

So how are people and to a larger extent the industry managing and who is providing the financing? “So far water has been made available to the agricultural sector at no cost and there are even subsidies for digging wells,” says Al Gosaibi. “This situation can no longer be sustained. The new plan will feature a tariff for agricultural use. This tariff is being now carefully studied with businessmen in the field of agriculture, and their input is crucial in formulating the tariff.”

The problem with desalinated water is that the cost of production is very high, says Younas. “Its about SR5 per cubic metre, whilst it is provided at 12-15 Hilalas per cubic metre,” he says. “So there is a huge amount of subsidy and it has to be worked out what the pricing levels will be. This is a sensitive area because they cannot increase prices immediately to SR5 per cubic metre,” adds Younas.

There are geopolitical undertones to the water scarcity issue, which Al Gosaibi is well aware of. “A brief study of the Israeli-Arab conflict indicates how crucial water has been as a factor in the conflict throughout,” says the minister.
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“The tensions between Turkey and its Arab neighbours are, by and large, water related. Things in the Nile valley are volatile. I think the geopolitical implications of water are self-evident. A strategic decision was taken years ago and we are still bound by it. Saudi Arabia should not rely on any outside source for the water it needs,” Al Gosaibi adds. In August 2002, Israel entered into an agreement with Turkey to secure a supply of water from a basin adjacent to the Euphrates.

The deal as reported by the Associated Press, says Israel agreed to buy about 1.75 billion cubic feet of water from Turkey annually for the next 20 years to alleviate its growing water shortage.
Some say this allows Israel to benefit at the expense of the Arabs. When asked whether he foresaw any cooperation between Arab states and Turkey to try and reach a similar framework, Al Gosaibi is straight to the point. “There is talk about all kinds of projects, and most of it just that: talk. We in Saudi Arabia will continue our policy of total self reliance,” he says.

Last year Saudi Arabia put the city of Jizan, which is situated on the Red Sea coast, under the public spotlight in the hope of attracting foreign direct investment in agriculture. The Jizan initiative depends on the availability of water. Authorities in Saudi Arabia, according to Al Gosaibi, envisage the building of dams that will provide renewable water for Jizan, a step forward to becoming self-sufficient.

The question, then, is how much will it cost Saudi Arabia to finance projects that sustain its water needs? While Al Gosaibi said he would be able to give us an accurate figure in a few months, he did say that in the past the water sector was fragmented among many ministries, and reliable figures are scarce.

“What is clear, however, is that the government will be unable to offer water almost free of charge, as it has been doing so far. A new tariff is needed – as well as much more participation by the private sector.”

Things will need to change. Agricultural produce, if substantial, say some, could help contribute to the diversification of the kingdom’s economy. Al Gosaibi agrees.

“The figures may be disputed, but there is no doubt that agriculture provides an important economic activity and is a significant source of employment,” he says.

“Our water policies with regard to the agricultural sector are not aimed at hampering it. They are intended to rationalise both the consumption of water and the choice of products.” ||**||

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