As Saudi Arabia celebrated Ramadan and Eid over the last month, the Kingdom also marked ﬁve years to the month since the launch of the Vision 2030 program, aimed at rewriting the county’s economy and management in a post-oil world.
The brainchild of Mohammed Bin Salman, later to become crown prince, Vision 2030 was a strategic framework aimed at reducing the Kingdom’s reliance on income from oil sales by diversifying the economy, boosting the role of the private sector, and developing public infrastructure. The highest-proﬁle part of the program was the IPO and listing of state oil company Saudi Aramco, eventually carried out in Five years after the launch of the Vision 2030 program and the consequent National Transformation Program (NTP) that laid out benchmark ﬁgures, GWI reviewed the progress of the new practices that have changed the landscape in one of the world’s largest water markets.
- Private ﬁnance in procurement: The use of private ﬁnance to fund major desalination projects was dropped in 2010 after the rising price of oil pushed state-owned bodies to invest in infrastructure directly. The 2016 changes saw a revitalization of the program, with a string of high- proﬁle desalination and wastewater treatment projects awarded in the years since, as competing private project developers pushed down costs in a move that has reshaped the regional infrastructure market. The Water and Electricity Company (later Saudi Water Partnership Company) that was established to procure and sign off on the new projects has become one of the world’s most signiﬁcant water procurement bodies. Plans to expand the private ﬁnance model to new areas of infrastructure such as smaller treatment plants, water transmission systems, and water storage have also been developed, albeit more slowly.
- The privatization of desalination company SWCC: In 2016, the authorities announced that the huge desalination portfolio owned by state desal company the Saline Water Conversion Corporation would be privatised through an asset sale process. This would be followed by the privatisation of SWCC through an IPO on the Saudi bourse. Five years on and the sale of the ﬁrst SWCC asset, the Ras Al-Khair power and water complex, is still ongoing, although SWCC is hopeful of a breakthrough before the end of the year. Instead of pursuing the IPO, the non asset-holding parts of SWCC’s business such as water.
- The elimination of operating tariff subsidies: One of the trickiest issues facing the restructuring process was the fact that income from water tariffs represented just 30% of the cost of operating the water network. One of the key targets in the NTP was the complete elimination of operating subsidies by 2020. However, initial moves to restructure water tariffs proved extremely unpopular with the Saudi population, and the tariff reform program was dialled back in scope. Combined watr and wastewater tariffs since 2016 have remained at a modest (by world standards) average level of $0.13/m3.
- Reduction in water consumption: With an average per capita water consumption of 265 l/c/d in 2016, Saudi Arabia had one of the highest levels of domestic water usage in the world. The aim under the NTP was to reduce this ﬁgure to 200 l/c/d by 2020. The personal consumption target was, however, one of the measures dropped from the later performance target indicators. Statistics from the Ministry of Environment, Water and Agriculture indicated that in 2018 (the most recent ﬁgure available), around 275 l/c/d of water was supplied to municipal users, although this ﬁgure does not account for losses and other non-revenue water.
- 2017’S CHANGE OF TARGETS The original National Transformation Program published in 2016 as part of the national Vision 2030 initiative outlined an array of extremely ambitious water performance targets to be achieved by 2020. An updated version published in October 2017 dialled back on the targets, with a large number of benchmarks dropped and the ones remaining often watered down.
* Included in 2016 NTP
** Reduced from 65% in 2016 NTP
- Change in the role of the NWC: At the time of the launch of the Vision 2030 program, the National Water Company was a utility that had been lauded for performance improvements, but whose remit covered only the cities of Riyadh, Jeddah, and Mecca/Taif. Regular attempts over the previous decade to expand coverage and introduce more extensive partnerships with the private sector struggled to gain traction. In the years since, the NWC has had its remit expanded, taking over responsibility for potable water distribution and wastewater collection and treatment for the whole country after absorbing the responsibilities previously held by the water directorates run directly by the Ministry. Perhaps more signiﬁcantly, it has also made serious progress on a privatisation process that had been discussed in-depth for many years. Splitting the NWC’s country-wide service area into six areas, plans are now well underway to award regional management contracts to private teams that will oversee operations for a number of years before setting the stage for full regional concessions. The ﬁrst of the management ‘cluster’ contracts were awarded at the end of 2020, and the process of awarding the remaining ﬁve by the end of 2021 is ongoing.
- Expansion of service coverage: The targets outlined under the National Transformation Program were watered down in 2017, but the targets for more realistic for reaching the levels of coverage outlined in the original targets for 2020. Expansion of service coverage will be one of the key challenges for the private managers being brought in for regional cluster contracts.
- Personnel changes: The implementation of the new water goals, particularly relating to water tariffs, caused initial friction that led to the departure of a number of high-proﬁle players in the sector. Following public pushback on the initial attempts to introduce higher water tariffs, Water and Electricity Minister Abdullah Al-Hussayen and National Water Company CEO Loay Al-Musallam were moved on. The moves that followed in the years since have seen relative outsiders bring a new approach to key roles. Abdulrahman Al-Fadhli, the new water minister, had previously been CEO of dairy giant and heavy water user Almarai, while the arrival of Khaled Al-Qureshi from industrial city utility Maraﬁq brought a new lease of life to the privatization body WEC (later the Saudi Water Partnership Company).