PARIS, April 29, 2008 -- Veolia Water, through its subsidiary Veolia Water AMI, has won a contract awarded by Saudi Arabia's Ministry of Water and Electricity for water production and distribution and wastewater collection in the capital, Riyadh, Saudi Arabia.
This is the first time Saudi Arabia has awarded a contract for water services to a private operator, and it is also one of the most important contracts in terms of the number of people served (4.5 million inhabitants) and in the length of the drinking water network (10,000kms), as well as wastewater (4,500kms) that has been entrusted to Veolia Water in the world.
Under the six-year contract, Veolia Water will provide its services to the National Water Company on the basis of an incentive system linked to the performance and savings achieved. The contract will represent total estimated cumulative revenue of €40 million (US$60 million).
Riyadh has been undergoing strong demographic and economic growth for the past several years. Its population increases by around 4% every year, and the surface area of the city is recording unprecedented growth. Whereas it covered about 20 square kilometers at the beginning of the 1980s, Riyadh now stretches over 536 square kilometers (five times the size of Paris) and is eventually expected to cover more than 2,200 sq. km.
Veolia Water's assignment is part of a vast program to rehabilitate and develop the city's water and wastewater system infrastructure, and to improve operating practices. The aim is to provide the city with more efficient services that will be more in keeping with its high level of economic growth.
The main objectives set out in the contract cover the reduction of leaks caused by technical faults which currently account for over 50% of the water sent into the distribution network; the development of connections to the wastewater system (2 million residents were connected in 2007); continuous water supply, as at the moment some areas receive water only once every four days; and improvements to customer service.
Under the terms of its contract, Veolia Water will put in place a team of managers and operating experts that will be deployed in strategic areas such as the management of the water distribution networks and wastewater collection systems, water production plants, capital investment planning and works supervision, customer management and human resources management. Almost 4,000 employees who currently work for public authorities will be transferred to the new management entity. In the long term, it is also planned to set up a training center that will mainly focus on water service technologies and management.
Commenting on the contract, Antoine Frérot, Chief Executive Officer of Veolia Water outlined the importance of the contract. "We are particularly pleased to have the opportunity to implement our expertise into accompanying the development of a city like Riyadh, which is undergoing a very strong demographic and economic growth. This first contract won by Veolia Water in the capital of Saudi Arabia, demonstrates how the Gulf countries are opening up to the idea of delegated management of public services in order to meet their residents' new needs and requirements as regards services and comfortable living standards," he said.
Since 2006, Veolia Water has significantly expanded its activities as an operator of water services in the Middle East. In the Emirate of Ajman, it won the first ever contract for wastewater service management to be awarded to a private company in the Gulf countries (management of the wastewater collection system, in Feb. 2006). Next, in the Sultanate of Oman, in June 2006 it won a performance-based contract with the Oman Wastewater Services Company for services in Muscat and, in Jan. 2007, a contract to build and operate the reverse osmosis desalination plant in Sur. Lastly, in Fujairah, United Arab Emirates, it won the contract to operate the Qidfa desalination plant in Dec. 2007.
Veolia Water, the water division of Veolia Environnement, is a world leader in water and wastewater services.
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