The Business Year

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Sweeping new reforms, including a set of higher taxes on consumption designed to reduce wasteful habits, are making water and power producers more efficient than ever.

Khaled bin Zwaid Al Qureshi

CEO, Water & Electricity Company (WEC)

In 2003, there was inadequate water supply throughout the Kingdom, so WEC was founded by the Saline Water Conversion Corporation (SWCC) and Saudi Electricity Company (SEC) to implement water infrastructure projects using the public-private partnership framework to achieve further efficiencies and bring foreign investment and experience into the water sector. The program was backed by sovereign guarantees from the Ministry of Finance to give comfort to lenders and make the projects bankable. In May 2017, COM 494 announced the expansion of WEC’s mandate as the principal off-taker of water in order to include the purchase of desalinated, purified, treated and untreated, and storage of water. The co-generation and ownership of WEC was also transferred to the Ministry of Finance, and its board of directors consists of the Minister of Environment, Water and Agriculture (MEWA), which together with representatives from the Ministry of Finance acts as chair, the Ministry of Economy and Planning, and one or two other independent members typically from the private sector. In June 2017, WEC executed a Water Purchase Agreement for the expansion of Shuaibah 2 Plant to provide an additional 250,000cbm per day of water to the Makkah region. It will be commissioned in 2Q2019. We have issued a request for proposals for four new projects, including Rabigh-3 IWP, an independent water plant with a planned capacity of 600,000cbm/day, and Shuqaiq-3 IWP, which has a planned capacity of 450,000cbm/day.

Dr. Abdullah Mohammad Al-Shehri

Governor, Electricity & Co-Generation Regulatory Authority (ECRA)

The main objective of the change in tariffs is to reflect the actual cost of the energy consumed and reduce the dependence on government support. It was based on calculating the actual cost of electricity and reflecting this in the revenue from the tariff in order to have a balance. Depending on fuel prices, we calculated the cost of electricity for various categories of consumers, including residential, commercial, and industrial, among others. It was reflected in the current tariff, and now the industries are paying their cost. Some social aspect must be implemented into this, just like it is all over the world. The commercial sector pays its actual cost, and the government pays slightly higher tariffs than the cost of electricity for government offices and buildings in order to support low-income residential consumers. Now, the revenue from the tariff is equivalent to the required revenue in order for the sector to be independent of government support based on current fuel prices. If fuel prices change, there will be a change to the tariff. The impact on consumption is not yet clear because the change to the tariff is not huge. Electricity consumption in winter and spring is generally not that high, and people have not noticed a significant change in their bills. If they practice certain measures of energy conservation they may be able to absorb some of the tariff change.

Essam Zahra

CEO, Essam Zahra

There is a new trend in Saudi Arabia toward protecting and maintaining our aquifers and reservoirs for future generations. This is the latest policy and strategy of Saudi’s decision makers, as outlined by the Deputy Minister of Water, Agriculture, and Environment. There is greater dependence on equipment that can handle water from dams, shallow water aquifers, and desalination plants. This is why we now focus on certain products that are used in dams and that require lower quantities of water while being more energy efficient. This means we no longer focus on large products, such as deep-set or large pumps. The majority of the equipment focus today is on using alternative power sources, such as solar panels on wells. We have already signed an agreement to represent a company specializing in solar systems for wells. The emphasis is on a more sustainable approach that integrates renewable energy sources into the equipment and solutions we provide. This is what NWWC focuses on and is where we see new potential in the market. We are also seeing new equipment standards being introduced into the regulations here and more restrictions on importing products. For example, there are codes for electrical and rotating equipment in Saudi, which have been upgraded to the European standard IEC4, the highest level of efficiency under that rating system. We have formed an agreement with the principals we represent in Saudi Arabia to start managing these products for them according to Saudi requirements—for example, bringing in new models of motors.



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