Saudi Arabia's utility developer Acwa Power won a contract to develop the Rabigh 3 independent water-desalination plant (IWP) located on the kingdom's Red Sea coast.
The Riyadh-based company submitted the lowest price among five bidders and its consortium with Saudi Brothers Commercial Company was selected to develop the desalination plant, Acwa Power said in a statement on Tuesday.
"Rabigh 3 IWP will deliver potable water at the lowest cost achieved to date for reverse-osmosis while consuming the least amount of power for each cubic meter of water produced," Mohammad Abunayyan, chairman of Acwa Power, said.
Reverse osmosis refers to a water purification technology that uses membranes to separate particles from untreated water.
Acwa Power, the developer of electricity and water projects in the Middle East, Africa and Southeast Asia, was expecting to submit bids for about $4 billion worth of project tenders in the second half of this year. The company counts Saudi sovereign wealth fund, the Public Investment Fund, as a shareholder and has more than $30 billion of assets under management.
The Rabigh 3 desalination plant, which will have a capacity of 600,000 cubic meters per day, will meet demand for water in Mecca and Jeddah, specifically during peak seasons such as the fasting month of Ramadan and the Hajj pilgrimage, according to the statement.
The plant is scheduled to begin commercial operations in December 2021.
The project will have a 25-year concession period with the Saudi state-owned Water and Electricity Company as the off-taker.
WEC last month announced the consortium of Acwa Power and Saudi Brothers Commercial Company as the preferred bidder for the development, design, financing, construction, commissioning, operation and maintenance of the Rabigh 3 desalination plant and associated electrical special facilities, according to a statement on WEC's website.
Gulf states such as Saudi Arabia and the UAE are increasingly relying on desalinated water to meet domestic and industrial demand, to supplement existing ground water reserves. Desalination is one of the biggest drivers of energy consumption in the region. Some states such as the UAE have explored the option of reducing energy intensity of such processes by introducing renewable sources.