An IFC-supported desalination plant helped Saudi Arabia’s busiest airport lower the cost of water and improve its supply.
Travelers to King Abdulaziz International Airport (KAIA) often mention its architecturally notable Hajj terminal, made up of open-air, tent-like structures housing shops, a mosque, and other offerings. It’s the point of entry for hundreds of thousands of Islamic pilgrims who make the trip in accordance with religious obligations. But the rest of the airport accommodates millions more travelers year-round. In 2015, more than 30 million people passed through KAIA, and airport officials expect that number to reach 80 million in 2018.
Regardless of the reason for or length of their time at the airport, each traveler needs food, beverages, and bathroom accommodations. That’s always been a problem—because the city of Jeddah, KAIA’s home, faces huge water shortages. KAIA’s passenger numbers, however, keep growing.
IFC helped KAIA guarantee that it could continue to accommodate its patrons for years to come. We advised airport officials on a public-private partnership (PPP) for a new energy-efficient, environmentally friendly desalination plant that opened in 2010.
The project significantly lowered the cost of water and introduced international best practices to operate the plant, leading to a more sustainable and better-quality water supply for KAIA. The plant is expected to save the General Authority for Civil Aviation (GACA), which runs the airport, between $80 million and $100 million over the life of the 20-year project.
KAIA, built in 1981, is the main international gateway and hub for Saudi Arabian Airlines. GACA approached IFC because the local municipality of Jeddah was unable to supply water to the airport due to a lack of adequate production and network. GACA relied on its internal desalination plants and funded and operated these plants using its own resources. Over the years, GACA built three captive desalination plants, with a total capacity of 33,000 cubic meters per day.
But all three desalination plants owned and operated by GACA were nearing the end of their economic life. GACA wanted to concentrate on its core activities of airport operation, increase water production to meet projected growth in demand, and improve service quality and reliability while lowering production costs.
IFC assessed the situation and advised that building a new reverse osmosis (RO) plant was the right course of action. Our research showed GACA that the plant would be energy efficient; would require lower capital cost; was easier to maintain; had the flexibility to expand capacity easily to meet demand; and required a smaller footprint. As part of the agreement, the investor also decommissioned the old plant and rehabilitated and beautified the site.
When GACA appointed IFC as lead advisor to structure and implement this PPP at KAIA, it became our first-ever advisory transaction in the desalination sector. Because we were setting a standard for the future, our work on the KAIA PPP reached beyond assessment and advice on the technical requirements – we also created procedures for a transparent bidding process.
To this end, we instituted procedures to assure that all bidders were treated fairly and received all of the information disseminated on the project. Due to the public opening of the commercial bid, the bidders were confident that no one in particular would be favored, and the transparency of the process ensured credibility and produced a positive result for GACA.
The plant started commercial operations two months ahead of schedule and is providing millions of tired and thirsty travelers with safe and reliable water.
To learn more about IFC’s work in public-private partnerships, visit www.ifc.org/ppp
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Published in March 2017