Saudi’s Red Sea gigaproject to blaze a trail for power and water projects in the Middle East, says GlobalData’s MEED

(WK-intern) – Following the news that the power, water and wastewater-purchase agreements on Saudi Arabia’s Red Sea Project could be signed before the end of the year;

Jennifer Aguinaldo, Energy & Technology Editor at GlobalData’s MEED, offers her view:

“The project to develop the utilities infrastructure catering to Saudi Arabia’s vast Red Sea Project is unprecedented in terms of scope, technology and procurement model. One giant contract will cover renewable energy, seawater reverse osmosis desalination, wastewater and solid waste treatment, and district cooling facilities, along with the networks that connect them.

“It was a hotly contested contract, estimated to be worth close to $1bn, that saw homegrown utilities developer Acwa Power prevail over an equally determined team led by the United Arab Emirates (UAE) Masdar and France’s Engie. The timeline for the Red Sea Project means the contract must be awarded soon.

“Many laud the approach that The Red Sea Development Company (TRSDC) has adopted for implementing its utilities infrastructure. By dealing with only one team to run its entire utilities infrastructure, it could boost efficiency and balance risks, especially given that TRSDC is a real estate company not a government utility.

“The company arguably could have obtained better value if it tendered each component separately. However, the chosen route allows for more coordinated delivery and implementation.

“There is also a concern over what legal framework will apply to the contract, with Saudi Arabia yet to approve the final draft of its planned Private Sector Participation (PSP) Law. Nevertheless, given the scope of the project, it is likely the contract to be signed between the TRSDC and Acwa Power will be more comprehensive than a standard independent power and water contract or water and power purchase agreement.

“It will also be interesting to watch which partners Acwa Power brings into the consortium to ensure it delivers the project on time and within budget. Saudi Arabia’s other gigaprojects are already following the Red Sea Project’s utilities model, with bids under evaluation for a similar project for Qiddiya entertainment city, and a tender for Amaala’s multi-utilities contract expected before the end of the year.”

PR: GlobalData