Saudi Arabia is turning to PPP models to finance and deliver vast transmission and storage networks to secure supply amid growing demand
As the world’s largest desalinator, Saudi Arabia’s water sector is intrinsically linked to its world-scale desalination complexes. Yet, desalination is only one part of the story. With potable water demand projected to reach 17.08 million cubic metres a day (cm/d) by 2030, an often-overlooked challenge is the efficient transmission and storage of desalinated water after it has been produced.
Historically, procurement of these enormous water conveyance and storage systems has been implemented through conventional engineering, procurement and construction (EPC) contracts. But now, for the first time in the kingdom and the region, the government is employing the public-private partnership (PPP) framework to deliver these giant projects.
At present, 70% of Saudi Arabia’s water supply comes from desalinated seawater, with the bulk produced on the Gulf coast, over 400 kilometres from Riyadh and its 7 million residents, while Jeddah, Mecca and Medina are served by plants on the Red Sea.
The infrastructure linking production and consumption centres is not secondary to the system. It is the system. Two asset classes carry that responsibility: water transmission pipelines, which move desalinated water from coastal plants to inland demand centres, and strategic reservoirs, which store it near cities and absorb demand spikes that pipeline flow alone cannot meet, particularly during peak periods, such as the pilgrimage season, when Mecca’s population surges.
PPP expansion
While Saudi Arabia’s use of the PPP model to deliver desalination plants is not new, the extension of the framework into water transmission and storage is being employed for the first time.
This adoption of the PPP model beyond desalination is driven by the National Water Strategy 2030, under which Saudi Arabia aims to attract over SR204bn ($64bn) in private sector investment across its five water asset classes by 2030.
Responsibility for the procurement of transmission and storage PPPs falls under SHARAKAT – the new name of Saudi Water Partnerships Company, the kingdom’s designated offtaker of desalinated water.
As with desalination, it tenders pipeline and storage PPP projects publicly, starting with inviting expressions of interest from developers and contractors, then on to a prequalification process, and finally through the issuing of requests for proposals.
Similarly, the entire process is open to local, regional and international companies, with participating companies, prices and winners announced in a fully transparent fashion.
Under the independent water transmission pipeline (IWTP) and independent strategic water reservoir (ISWR) PPP frameworks, developers are paid through availability-based payments. Provided the infrastructure meets agreed operational performance standards, developers receive fixed-capacity payments from SHARAKAT over the concession period, typically 30-35 years. As revenues are tied to asset availability rather than water demand, this structure significantly reduces demand risk for investors while ensuring reliable infrastructure availability for the kingdom’s water system.
Pipeline projects
SHARAKAT’s first water transmission PPP scheme is the Rayis-Yanbu conveyance system, commissioned in 2024. At 42km in length and with a transmission capacity of 630,000 cm/d, it is the kingdom’s first IWTP project, and a template for other IWTPs to come.
The next two IWTPs are already under construction: Rayis-Rabigh at 151km targets operations in 2026, and Jubail-Buraydah at 587km follows in 2029. The former was awarded in 2023 to Spain’s Cobra Instalaciones y Servicios and Saudi Arabia’s Alkhorayef Water & Power Technologies Company in a deal worth SR7.78bn. The latter was awarded to Vision International, Gulf Investment Corporation and Taqa Company in a deal worth about SR1.5bn.
Four more IWTPs are in tender: Riyadh-Qassim (859km, 685,000 cm/d), Qassim WTS (348km, 840,650 cm/d), Shuqaiq-Jazan (531km, 600,000 cm/d), and Ras Mohaisen-Baha-Mecca (328km, 515,000 cm/d).
Together, these seven projects will extend the kingdom’s water transmission network by 2,847km and deliver 4.39 million cm/d of capacity by 2030, building on Rayis-Yanbu’s commissioning in 2024.
Storage buildout
This additional capacity requires massive new investment in water storage facilities, comprising tanks, storage dams and strategic reservoirs as part of the kingdom’s objective to increase strategic potable water storage capacity from three days to seven by 2030.
For the first time, these projects will be delivered under the ISWR framework.
The first is the Juranah ISWR. With a total capacity of 2.5 million cubic metres under a 30-year build-own-operate-transfer (Boot) structure, it is due to be commissioned in 2027.
It will be followed by the Al-Ahsa (1.39 million cubic metres) and Dammam (3.13 million cubic metres) ISWRs, both scheduled for full operations by 2028.
Additional ISWR projects have been announced, developing the strategic reservoir projects into a major kingdom-wide infrastructure initiative. Planned schemes include Al-Ahsa and the Eastern (Dammam), with RFP issuance pending and commercial operations targeted for 2028.
The extension of Saudi Arabia’s successful PPP model into water storage and transmission reflects its success in attracting international and local investors into new segments of its economy. With the first IWTP operational and the first ISWR under construction, they represent an attractive emerging opportunity for developers looking to invest in secure and low-risk water assets.
