Private sector participation in water provision : a reform policy to meet rapid growth and development, with reference to Arriyadh City, Saudi Arabia

Abstract

Constant increase in water demand, scarcity of resources, insufficient public finance, and the country's geographical position in one of the most and regions of the world have combined to create considerable problems in the provision of water to Saudi Arabia. This is in addition to the enormous and rapid increase in population growth, which is the main driver of demand and which was accompanied in the past by an increase in urbanisation, placing the country among the most highly urbanised countries. These conditions have instigated new patterns of demand that undermine the principle of sustainability. The high per capita consumption of water coupled with the low tariff levied by the government all represents a challenge for efficient management of water services around the country. As water provision in Saudi Arabia relies greatly upon government financing, any reduction of spending on the sector by the government is likely to mean shortage of supply and under-provision of services. The objective of this study is to increase the understanding of how the initial course of action might be explored, when seeking reform in order to promote private sector investment in the process of water services delivery. This entails potential, practicable reforms in the operation of the urban water system so as to put forward a model for such participation by the private sector, showing alternative long-term policies and institutional frameworks for the water industry and drawing key inferences concerning a new structure that will most benefit the country. Saudi Arabia is the case study, and its capital city Arriyadh is used as an example to show the impact of rapid growth upon water resources and services, and the associated implications. Basically, the case study is an intensive strategy used to access detailed knowledge in certain areas of science. To achieve the aims and objectives of this research, and to address its issues and questions a combination of primary and secondary procedures were employed to obtain the required knowledge, collection, analysis and interpretation of data. These include a literature survey, analysis of relevant documents, and focused interviews, as the objective was related to existing circumstances with a view to proposing new policies. This study finds that in the light of existing conditions, water demand will continue to increase due to projected population growth. This must mean the growing importance of seawater desalination in the future. Meeting demand with desalinated water entails new and significant expansion for the industry, and this will require vast investments which the government might not be able to provide. Given that, private sector involvement appears to offer a viable option for developing and running large-scale projects for water production. This study also indicates the importance of synchronised fundamental changes, with such participation including water tariff restructuring and effective control of network leakage, among others. Not surprisingly such changes in the water sector are both possible and expected, given the trend for this and other governments to increase the private sector's contribution to economic activities. The study offers a range of guiding principles that should be considered in line with the prospective changes in the country's water services. Finally, recommendations are made to support policy-makers in reaching appropriate decisions with respect to this vital resource, together with the intention of achieving greater sustainability in water development and management programmes.