The Sharjah Electricity and Water Authority (SEWA) has signed its first Build-Operate-Transfer (BOT) agreement for the development of a seawater reverse osmosis (SWRO) desalination plant – hoping to set an example for future public-private projects in the emirate.
Sharjah-based Alpha Utilities FZE won the BOT contract to develop a 2.2 MIGD (million imperial gallons per day) SWRO plant in Kalba, SEWA’s chairman Dr. Eng. Rashid Alleem told Thomson Reuters Projects in an interview last week.
“Now we are in progress with design,” he said, speaking on the sidelines of a SEWA partners meeting.
“This is the second one (BOT project) in Sharjah, but in SEWA this is the first, and the idea is to encourage such things now.”
Kalba, part of the emirate of Sharjah, touches the borders of the emirate of Fujairah and the Gulf state of Oman.
The new plant is part of plans put in plans to provide support for new and upcoming projects, such as the Kalba Waterfront Mall and other hospitality developments.
Alpha Utilities develops, owns and operates small scale utility projects in the region, while it also provides project finance to select partners and developers on a per project basis.
Rolling out the red carpet for PPPs
Historically, oil-producing Gulf Arab governments have funded most of their infrastructure spending without having to look to the private sector for support. However, the plunge in crude prices and slower economic growth has spurred the six-nation Gulf Cooperation Council (GCC) to seek alternative means to fund infrastructure projects.
While common globally, experts have said governments need to do more to attract private sector investment, especially with regard to risk allocation.
And SEWA is doing just that, Alleem said.
“Governments – and SEWA being a government owned – we are moving (from) red tape and bureaucratic decision making, to more red carpet,” he explained.
“One of the best practices globally is the practice of BOTs or PPPs, so we have taken this decision.”
The government utility provider hopes that its first BOT project will set a precedent and pave the way for future PPP projects within the organisation, and across the United Arab Emirates (UAE).
“We have run it through almost a full year of study… studying all the pluses and minuses… and we thought this is hopefully going to be a project to set an example for other businesses and government organisations in Sharjah,” Alleem said.
He added that he has already noted a “paradigm shift” among local officials, moving away from a risk-averse PPP mindset towards a partnership-friendly model.
“It (the mindset) is very much changing, and that’s why we see a lot of BOT or BOOT (Build-Own-Operate-Transfer) projects in the United Arab Emirates,” Alleem said.
“It (public-private projects) is not new in general – it’s been around the last 20 years. It was on a low scale before but now it’s becoming bigger because now even the government is giving its full support and passion behind such initiatives.”
The chairman added that various other public-private projects are also under consideration.
“By all means, there are a lot of things in the pipeline and there’s different ways and means of working with partners,” Alleem said, adding that SEWA has its own research, development and study department to evaluate projects as well as implement global best practices.
“We are studying (models for other projects) – for electricity generation, transmission and distribution, and for water production, transmission and distribution.”
United Nations Development Goals
The United Nations Development Programme (UNDP) in 2015 recommended the UAE look at the possibility of using public-private partnerships to spur investment in infrastructure for sustainable development – advice authorities took very seriously, Alleem said
“This takes us all back together to September 2015, when the United Nations came up with the 17 global goals,” Alleem said. The goals include the utilities sector, clean water and sanitation targets and affordable and clean energy objectives.
SEWA is also the first Arab organisation to be qualified for ISO 50001 standards, which required concrete commitment in terms of energy strategies, he added.