Saudi Arabia's Acwa Power to develop $677.3 million desalination project on Red Sea coast

Project's financial close is expected during the third quarter of this year

The Acwa Power stand at Wetex in Dubai. The utility's Rabigh 4 water plant will service the Makkah and Madinah regions. Ruel Pableo / The National

Saudi Arabia's private utility Acwa Power will develop a 2.54 billion Saudi riyal ($677.3 million) desalination plant on the kingdom's Red Sea coast, as it continues to bid for new projects.

The Riyadh-based utility signed water purchase agreements with the Saudi Water Partnership Company to develop the Rabigh 4 Independent Water Plant.

The SWPC is a government off-taker and the sole buyer of services for the project.

The reverse-osmosis plant will service the Makkah and Madinah regions, where a sharp rise in demand is typically registered during Ramadan and the Hajj pilgrimage season, Acwa Power said on Thursday.

“We expect that Rabigh 4 will directly serve pilgrims from around the world in the holy cities of Makkah and Madinah, and serve households in the wider region,” said Abdulrahman Al-Fadli, Saudi Arabia's Minister of Environment, Water and Agriculture.

“We hope that this project … shows how the private sector can improve the quality of services, realise investment efficiencies and foster innovation — all of which are objectives of Vision 2030.”

Acwa Power won the contract for the Rabigh 4 project, which has a capacity of 600,000 cubic metres per day, after responding to a request for proposals put forward by the off-taker.

Acwa Power currently operates 16 desalination plants in four countries, with 10 of these in Saudi Arabia, where the company meets 30 per cent of the kingdom’s water demand.

In 2022, Acwa Power added 5.44 gigawatts of power generation capacity and 600,000 cubic metres per day of water desalination capacity in Saudi Arabia, Egypt and Uzbekistan after signing new agreements, the largest capacity additions in a single year in the company’s history.

The financial close for the Rabigh 4 project is expected during the third quarter of 2023 and the plant is expected be operational in 2026.

“Rabigh 4 has been designed to use less electricity, lower operating costs and support local content across both supply chain and employment,” said SWPC chief executive Khalid Al Quraishi.

Saudi Arabia's sovereign wealth fund, the Public Investment Fund, is the biggest shareholder in Acwa Power, with a 50 per cent stake.

The company also has seven other stakeholders, including the Saudi Public Pension Agency.

Last month, Acwa Power said its net profit for 2022 more than doubled on higher operating income and lower impairment charges.

Net profit attributable to equity holders after zakat and tax stood at 1.54 billion riyals, compared with 759 million riyals in 2021.

Acwa Power is present in 12 countries in the Middle East, Africa, Central Asia and South-East Asia.

It has 68 projects in operation or an advanced stage of development, with an investment value of 256.5 billion riyals and the capacity to generate 44.4 gigawatts of power and manage 6.2 million cubic metres per day of desalinated water.

Last month, the company also announced that it had signed a partnership agreement with Kazakhstan’s Ministry of Energy and Samruk-Kazyna, the sovereign wealth fund of Kazakhstan, to lead and develop a one-gigawatt wind energy and battery storage project in the Central Asian country.