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Saudi Arabia creates SR22b water company

JEDDAH - A new SR22 billion water company - the National Water Company (NWC) - has been formed, and part of its shares are likely to be offered in an IPO at a later stage.

Licensed by the Cabinet last week, NWC will be fully owned by the government and will cover all parts of the Kingdom in three years, according to Water and Electricity Minister Abdullah Al Hussayen.

Al Hussayen described the Cabinet decision as a historic one as it would bring about qualitative changes in water production and distribution in the country.

He said the new company will have 2.2 billion shares, each with a nominal value of SR10, and a paid-up capital of SR6.84 billion.

"The Council of Ministers will look into the possibility of selling the company's shares in an IPO in light of proposals to be made by the Ministry of Water and Electricity in coordination with the Finance Ministry and other authorities," he said.

Al Hussayen said the new company would replace directorates of water in cities and regions. An international firm will be appointed for five years to manage the company. The company's board of directors will select that firm.

NWC's activities will start from Riyadh, the largest consumer of water in the Kingdom, as the company will take over groundwater resources, sewage network and sewage treatment plants in the region. Within three months the company will move to Jeddah, then to Dammam, and the Holy Cities of Makkah and Madinah. "These five cities account for 65 per cent of water consumption in the country," he added.

The new company will have a seven-member board of directors chaired by the minister of water. It will have two members each from the Ministry of Water and Electricity, the Ministry of Finance and the private sector.

Al Hussayen said the ministry has plans to revise the water tariff, and added that an advisory body will look into the matter. He said the ministry would have a special department to carry out public awareness campaigns to promote wise consumption of water and prevent wastage.

Saudi Arabia is the world's largest producer of desalinated water. According to a Cabinet statement, NWC will provide all services related to underground water sector, drinking water distribution sector and collection and treatment of sewage water on a sound commercial basis. "The company will receive all its dues, including charges for its services in the specified time from all subscribers without exception," the statement said.