Veolia Environnement's water unit, Veolia Water, said it has won a six-year SR240 million contract to produce and supply drinking water and to collect wastewater in Riyadh, Saudi Arabia, that will result in total estimated revenues of $60 million over the period. The contract, awarded by the National Water Company (NWC) in behalf of the Saudi government, involves expanding the drinking water network to serve 4.5 million people, up from 2 million in 2007, and to reduce leaks accounting for 50 percent loss in the total water pumped in the distribution network. Saudi Minister of Water and Electricity Abdullah Al-Hussayen said the signing of contract, which is the first-of-kind in Saudi Arabia, was aimed at achieving the continuity of water supply water to Riyadh residents and better services that would partly form the performance indicators for Veolia. Under the six-year contract, Veolia will offer its services to the NWC on incentive based system linked to performance and savings achieved. Loay Al-Mussalam, NWC CEO and CEO of Veolia Water America Patrice Fonlladoza, who is also executive vice president and member of the executive committee, Veolia Water, signed the contract. Bertrand Besancenot, French Ambassador and a large number of invited guests were also present. The contract provides for overseeing the development, management, operation and maintenance of water distribution and underground water systems and sanitation. It also includes management and development of customer service and revenue collection, reduce leakages, development, training and rehabilitation of existing staff and upgrading the performance of the sector. Al-Hussayen said the ministry will also sign contracts with a number of international water companies for similar projects in Jeddah, Makkah, Madina, Dammam and Al-Khobar. NWC will sign the contract for Jeddah after two weeks from now, he added. “Similar contracts will also be signed with different international companies for the supply and collection of sewage water for cities such as Makkah, Madina, Dammam and Al-Khobar which together comprised of 60 percent of the total water consumption in Saudi Arabia,” he said. The per capita water consumption in the Kingdom is around 240 liters and 300 liters per day, which is higher than 140 liters in the European countries. Under the agreement Veolia will be paid based on performance indicators such as faster services, management and reduction of leakage in the distribution network, deployment of experts in the strategic locations such as for management of wastewater collection system and water treatment plants among others, he further said. Al-Hussayen noted the water tariff has nothing to do with the contract, though the government subsidizes water tariff by around 95 percent. “We should remember that Saudi Arabia like many other countries in the region has arid areas and low rainfall hence water is scarce. Besides, we have very high cost of water production,” he said. He said there is a need for constant education about the importance of water conservation in the Kingdom. The heavy subsidy is not encouraging water conservation, he said adding that when the Ministry of Water and Electricity was established one of its bylaws was to revise the water tariff structure “and we are working on it.” Fonlladosa said the demand of water in the Kingdom is increasing at an annual rate of around six percent that required a sustainable and professional management of drinking water production and distribution. He said the first priority for Veolia would be to offer round-the-clock quality services and to implement technical solutions meet the challenge of yield from drinking water networks leakage reduction. “Veolia Water will, of course, use all expertise gained from its worldwide presence and offer it to the Riyadh residents,” he said. He said Veolia will set up a training center in Saudi Arabia for the NWC, discover local talent and train them to work professionally in the water sector. Al-Hussayen said no Saudi employees will be laid off following the signing of a contract with Veolia. He said all the existing employees will be undergo a training program and then transferred to the new management entity. There are around 4,000 employees currently working and will be transferred to occupy new jobs. Riyadh has an annual population growth rate of four percent, a statement said. The city has recorded an unprecedented expansion which from 20 square kilometers in 1980s stretched now to over 536 square kilometers (five times the size of Paris), he said. Around two million residents received water connections in 2007 but some areas in the city are supplied with water only once every four days. __
