Despite the onset of the worst economic downturn in a decade, the outlook for the GCC wastewater sector remains bright with almost $10 billion of investment planned in new treatment capacity up to 2015. According to GCC Wastewater 2009, a new report published this week by MEED Insight, sewage treatment capacity will have to more than double over the next six years as utilities seek to meet robust demand and replace antiquated infrastructure. The existing wastewater infrastructure has been under severe pressure since 2004 when strong economic growth, an expanding population base and an upsurge in real estate activity led to significant increases in sewage inflows and serious overloading at treatment plants across the region. The late 2008 collapse in the oil price and subsequent real estate downturn put a brake on the runaway growth in demand, particularly in Dubai where leading real estate developers have cancelled or reduced in scope a string of sewage treatment plant (STP) projects in response to the real estate crash. “The impact on the wastewater treatment sector outside Dubai is expected to be temporary. Given the high rates of indigenous population growth in Saudi Arabia, Kuwait and Oman, the demand for new wastewater facilities is likely to remain robust,” the report said. “It is expected that an easing in the project finance market, which could take effect in the second half of 2009, would revive Saudi Arabia's and Bahrain's planned introduction of the private sector into the wastewater treatment sector for the first time.” According to the 57 page GCC Wastewater 2009 report, population growth is not the only driver of new wastewater capacity. “Across much of the region, the existing STP infrastructure is more than 20 years old and incapable of meeting the demands of today, both in terms of handling volumes and treating effluent to international standards. It has become a priority, therefore, for utility providers across the region to take existing plants out of service and replace them with new capacity.” The report forecasts that in the period 2009-15, Saudi Arabia will be the largest investor in new treatment capacity followed by the UAE and Kuwait. The good news for wastewater providers is that the cost of building this extra capacity is likely to fall by 20-30 per cent in 2009, as a result of declining material prices and increasing contractor competition, due to contracting workloads. “These costs reductions will encourage the region's utilities to press ahead with their works programs again, after serious delays were experienced in the final quarter of 2008 and the early 2009, due to the intense uncertainty over costs and in some cases, the future demand outlook,” the report said. __
