“Water Market Middle East 2010” highlights challenges the region will face in the future
The Middle East region may be facing a water crisis, but it is the wastewater sector that will see the fastest growth over the next few years, according to a new report, “Water Market Middle East 2010,” published by Global Water Intelligence.
Water availability in the region is less than 20% of the world average, and with fast-growing populations, the emphasis over the past five years has been on desalination. This has grown into an $8-billion-per-year market in the region since 2004.
Today, governments in the Middle East are looking beyond water production to improve their efficiency across the water cycle. This will lead to a dramatic increase in investment in wastewater reuse. Total capital expenditure on wastewater will grow from $5.3 billion in 2009 to $13.3 billion in 2016, the report predicts.
The report also highlights a number of structural challenges that the water sector is facing in the Middle East:
• In many countries (such as Saudi Arabia, Bahrain and Egypt) tariffs are less than 10% of the cost of producing and delivering water.
• Despite low water availability, the region’s per-capita water footprint is nearly 12% higher than the world average.
• There has been an historic bias towards large capital projects instead of maintenance of existing facilities. Leakage rates are very high, and many treatment plants have ceased to operate.
Water sector reform and private sector participation is being pushed out across the region as a means of improving utility performance. This coincides with a significant increase in operating costs as new water production facilities come on line and water reuse programs are put into action. The result is a significant opportunity for the private sector. Private operators are expected to enjoy annual growth rates averaging nearly 20% over the next eight years.
The report is essential reading for anyone doing business in the international water sector. The Middle East is the largest market for advanced water technologies. Fast-growing populations, strong capital surpluses and critical water scarcity are strong market drivers. However, lower oil prices, reduced investment in real estate and political risk create a complex overall picture.