ACCIONA EYES $8BN IN MIDDLE EAST PROJECTS

▶ Spanish firm is looking to bid for schemes in the UAE and Saudi Arabia

Spanish company Acciona is eyeing up to $8 billion worth of projects in the utilities and infrastructure sectors in the Middle East this year as regional governments ramp up investment on vital developments.

Large-scale multibillion dollar desalination schemes on the Saudi east coast, the Jeddah to Riyadh land bridge, sewage treatment schemes announced recently by the Dubai utilities regulator and Jordan’s plan to link the Red Sea and the Dead Sea are some of the projects Accciona plans to bid for in the region.

“All together, if everything came this year, we’ll be bidding between $5 and $8 billion worth of projects. If you look conservatively, that will be between $3bn and 5bn,” said Jesús Sancho

Carrascosa, Acciona managing director for the Middle East, to The National.

Saudi Arabia, the region’s biggest economy, announced earlier this year plans to develop nine desalination plants along its Red Sea coast at a total cost of more than two billion Saudi riyals ($530m).

The developments are parallel to mega-projects such as the $20bn oil-to-chemicals complex and other industrial schemes it is developing as part of efforts to diversify its economy away from oil income. Opportunities such as the planned $500bn Neom city project straddling Egypt and Jordan as well as the proposed $200bn solar scheme that Saudi Arabia recently signed with Japan’s SoftBank have whetted the appetite of several international players.

Acciona, whose Gulf turnover for the financial year 201718 is close to $800 million to $900m, derives around 10 to 15 per cent of its global business from the region, a portfolio it expects to reach $2bn to $3bn over the next five years.

In 2018, Acciona is preparing to bid for Saudi Arabia’s Yanbu, Rabigh and Shuqaiq desalination schemes with a collective capacity of around 1.5 million cubic metres per day that are currently under tender.

“They should be awarded by Q4, 2018 and completion will take at least 13 months, so we’re talking about 2021, [when] they will be already commissioned and ready for revenue,” said Mr Sancho.

For this scheme to take shape, he estimated a capital expenditure cost of around $1.5bn to $2bn.

In Abu Dhabi, Acciona is preparing to participate in the 100 million imperial gallons per day capacity Taweelah desalination project announced by the emirate’s utilities regulator in January.

Request for proposals to advance the project will be released in the third quarter of this year, and Mr Sancho expects the project to be awarded “within the first quarter of 2019”.

Acciona, which normally participates in schemes that allow for “design and build” and typically have up to four or five other competitors, is currently preparing with its business partner to be part of the estimated $10bn Red Sea-Dead Sea project in Jordan.

The ambitious scheme will transport water from Jordan’s Red Sea port city of Aqaba to the shrinking Dead Sea via the Lisan peninsula in the kingdom. The project, which has been put on the back burner for several years because of its expense and regional turmoil, was revived by Jordan earlier this year, despite the fact that Israel, a partner on the scheme, withdrew its participation. Once completed, the project would supply drinking water to the arid regions of Jordan, Palestine and Israel.

“We’re really hopeful and we’re very committed to that project. The idea is brilliant, it is much needed and it has an ecological component and to help the Dead Sea to not disappear. Many countries of the world are waiting for this idea,” said Mr Sancho.

The Spanish player is also “definitely” interested in being part of Neom, for which it would look to mobilise its power, water, healthcare and transportation units. It is waiting for the right market opportunities to dive into the renewables market space opening up in Saudi Arabia.

The Saudi energy ministry’s new renewable energy development office is set to tender around 4GW of solar photovoltaic and wind projects this year. However, for the Spanish company, the record low tariffs seen in the GCC in the renewables sector have proven a “challenge,” said Mr Sancho.

“An extremely low tariff for the production of energy means that the return on investment will be directly proportional to that,” said Mr Sancho.

Acciona derives around 10 to 15% of its global business from the region, and expects to reach $2bn to $3bn in five years