Saudi Arabia needs to raise its investments in its power and water supply industries by a third to at least SR1 trillion ($266.7bn) through 2025 to meet rising domestic demand, Banque Saudi Fransi said.
Demand for water and power is growing around 8 percent annually in the most-populous Gulf Arab country of 25 million.
The kingdom, which accumulated huge reserves during a six-year oil price boom, wants to spend more than $400bn over five years to upgrade infrastructure — airports, roads and power plants.
The world’s top oil exporter is expected to spend SR300bn alone on power generation, SR200bn on water desalination projects and SR200bn on sewerage, the Riyadh-based bank said.
“In our perspective, this 700 billion riyals is certainly a step in the right direction — but at least a third more in funding would be required to bolster capacity in a way that comfortably cushions demand,” the bank said in a report. The kingdom’s power generation capacity stood at around 45,000 megawatts in 2009 and Saudi Electricity Co’s capacity is seen rising to 70,000 megawatts by 2020.
Credit Agricole’s Saudi affiliate said to strike a balance between power and water supply and demand Saudi Arabia would need to engage in more public-private partnerships.
The private sector is getting more involved in the power sector through independent power producer (IPP) projects. It is also overseeing the development of the water sector. The bank said reforms of agriculture policies are needed to conserve water.
Saudi Arabia has urged companies to invest in farm projects abroad after abandoning a 30-year old programme for self sufficiency in wheat in 2008. The programme depleted the desert kingdom’s scarce water supplies.
The decision forced many local agricultural companies growing wheat for the domestic market to explore alternatives to compensate for the drop in revenues
