WATER OPPORTUNITIES IN SAUDI ARABIAUS-SAUDI BUSINESS OPPORTUNITIES FORUM LOS ANGELES, CALIFORNIA, 18TH SEPTEMBER 2013

Eng.Yasser Jeddawi, MBA,PMPyjeddawi@nwc.com.sawww.nwc.com.sa

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KSA WATER OVERVIEW1

NWC, INCEPTION AND FUTURE2

NWC MAJOR ACHIEVEMENTS3

NWC PROJECTS PORTFOLIO INFORMATION4

BLUEPRINT FOR THE FUTURE / OPPORTUNITIES5

OPPORTUNITIES & FACILITIES OFFERED BY NWC6

AGENDA

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Saudi Arabia falls under absolute water scarcity countries due to limited water sources such as

Surface Water. (rainfall average is estimated at 70 mm/year).

Ground Water (represent around 30% of supplied potable water)

We depend highly on Desalinated Sea Water (18% of Global Production)

Water consumption stood at 7 million cubic meters per day (m3/d) in 2012, and is expected to reach 20 million m3/d by 2020

With daily water consumption that exceed 250 liters per capita, Saudi Arabia ranks in the world third behind the U.S. and Canada as the largest consumer of water.

The renewable groundwater represents 11.7% of the groundwater reserves in the Saudi Arabia.

The non-renewable groundwater represents 88.3% of the groundwater reserves in the Saudi Arabia.

The water Tariff is highly subsidized by the KSA government.(below table of different segments Tariff)

KSA- WATER OVERVIEW

Segment m3/month Price US $ 1 1-50 0.027 2 51-100 0.04 3 101-200 0.53 4 201-300 1.07 5 301+ 1.6

NWC, INCEPTION AND FUTURE

(RIYADH, JEDDAH, MECCA AND TAIF)(MADINAH, DAMMAM AND KHOBOR, NEAR FUTURE)

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Key Milestones in the Privatization of the Water and Wastewater Sector (2005-2012)

2005 2007 2013 2008 2010

NWC launches the PPP agreement for Makkah / Taif partnering with Saur Group & Al Zamil.

MOWE develops the Strategic Transformation Plan (STP) to introduce private sector participation in the water sector

NWC is created by Royal Decree M-1 (13/1/1429H)

NWC launched 1st PPP agreements for the water sector in Riyadh and Jeddah, partnering with Veolia France & Suez Group respectively

Timeline

NWC to cover the rest of the 14 cities in KSA for 65% population coverage.

PPP Model expected to evolve to complex and more collaborative arrangements with TSE & O&M joint venture.

2012

RFP Launched – Riyadh, Jeddah-Makkah-Taif for business case & transformation of the TSE & O&M BU.

5 years plan

FTE ≈ 7184

THE KINGDOM’S PRIVATIZATION PROGRAM HAS TARGETED THE WATER SECTOR BY INTRODUCING KEY CHANGES FROM 2005 TO 2013, ONWARDS

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INTRODUCTION

“TO PROVIDE EXCEPTIONAL WATER AND WASTEWATER SERVICES IN A RELIABLE, SUSTAINABLE AND COST-EFFECTIVE MANNER, FOCUSING ON THE SATISFACTION OF OUR CUSTOMERS, EMPLOYEES AND COMMUNITIES, TO DELIVER STRONG PERFORMANCE THROUGH A COMMERCIALLY VIABLE ORGANIZATION”.

NWC MISSION:

NWC VISION

“ TO BE A WORLD-CLASS WATER UTILITY COMPANY”.

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NWC WAS CREATED TO SERVE THE STRATEGIC GOALS & OBJECTIVE AS :

Development of sustainable water & wastewater system and distribution in the major cities in KSA.

Redirect the sector from governmental sector to lucrative investment platform to attract investors, both domestic & international.

Enhancement of the existing infrastructure system to ensure the delivery of excellent service to the society.

AS PART OF ITS INITIAL GOALS, NWC HAS LAUNCHED AMBITIOUS PLANS TO COMPLETE AND FURTHER EXPAND THE EXISTING NETWORKS TO:

Increase the coverage.Reduce leakage in the network through leak detection & control program.Reduce operation cost as well as improving efficiencies.

INTRODUCTION

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INTRODUCTION

NWC VALUES

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OVERVIEW OF CURRENT AN NEW CITIES TO MANAGED BY NWC

Riyadh

Taif

MeccaJeddah

Madinah

JubailDammam

NajranAbha

HailTabuk

Aljouf

Under Operation

Under Study

KSA population (Million) ≈ 29,195*Annual Expected Growth Rate between 3% to 5 %

*Central department of Statistics and Information

AlKhobar

NWC is managing now four Cities out of 18 targeted Cities.

Buraidah

PPP StatusCity

PopulationMillion

Daily potable water supply (M3/day)

% of KSA population

Under operationRiyadh 5,841 1,848,80720

Under operationJeddah 3,866 1,056,56713.2

Under operationMakkah & Taif

2,952 695,01710.1

Under Due Diligence process

Madinah 1,307 4.5 383,547

Dammam & Al Khobar

1,647 708,3635,6

Total (7 cities) 15,613 3,547,49253.4

NWC MAJOR ACHIEVEMENTS

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2012 TOP STRATEGIC / OPERATIONAL ACHIEVEMENTS

115 M m3 Amount of water saved through leak detection and repairs

1,270 M m3 Annual Water supply

19/20 Days Average time to install Water & Wastewater connections respectively

98.7% Quality of water testing compliance

83% Customer satisfaction

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2012 – PERFORMANCE OF CUSTOMER FOCUS AND OPERATIONS RELATED KPIS (1 OF 2)

Customer Satisfaction Index (%)

2009

84%

2008

83%

2012

85%

45%

83%

20112010

Conducted by, a reputed 3rd Party company

Volume of Water Saved due to Leak Detection (Million m3)

115.4

67.553.9

23.07.2

2012201020092008 2011

Quality of Water Testing Compliance (%) Water Supply (Million m3)

98.7%

20122010

99.3% 99.3%

20112009

99.1%

2008

82.0%1,270

1,002942827753

2010 2011 20122008 2009

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2012 – PERFORMANCE OF CUSTOMER FOCUS AND OPERATIONS RELATED KPIS (2 OF 2)

Average Time to Install Wastewater Connection (Days) Average Time to Install Water Connection (Days)

20234760

180

201120102008 2009 2012

19243030

70

2008 2009 201220112010

TSE Revenue (Million USD)

9.9

2.9

2011 2012

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SUCCESSFUL LAUNCH & COMMISSIONING OF ACCELERATED RIYADH WATER SUPPLY PROJECT

RWSP was initiated as an emergency measure to increase the water supply in the city of Riyadh by 200,000 m3/day before the onset of Summer 2013.

It is a 425 Million USD program which was launched on 15th June 2012.

This project includes digging 43 new wells, establishing 27 new WTPs, and building 29 storage tanks and 6 Filling Stations in six months only.

Nearly 1.6 Million man-hours of work has gone into this program.

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DRYING AND DE-SLUDGING OF WW LAKES – STEPS TOWARD ENVIRONMENT PROTECTION

• Size of the lake was 5 Million m2

• Completely dried up in a record 2 months

• All removed sludge has been treated

Drained the Jeddah wastewater lake, treated the contaminated soils ahead of the scheduled time by 9 months…

Jeddah Lake

Al Nathem Lake Before During After

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LAUNCHED ONE OF THE BIGGEST SEWAGE INFRASTRUCTURE PROJECT WORTH MORE THAN USD 2.1 BILLION IN JEDDAH

• Combined total treatment capacity for Jeddah WWTP to reach 100,000m³/day.

• A total of 132,000 house connections and 2,500 kilometers of networks, pipelines & mainlines.

• The biggest Lift Station in the region with capacities topping 1,000,000 m³/day and a depth of 80 meters.

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IMPLEMENTING THE LATEST IT TECHNOLOGY

• COMPASS, a valuable tool towards customer service excellence.

• It integrates - CC&B, ERP, EAM, GIS & SCADA.

• Project was completed in in a record time of 14 months only.

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OPENING OF REGIONAL CENTERS FOR CUSTOMER SERVICES & AWARENESS

• Completion of Al Nuzha Integrated Complex which includes:

• Training Centre

• Call Center• CSC• Exhibition

Centre

• Opening of West Branch in Riyadh

• Centre serves 100,000 households

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NWC EARNED SOME OF THE MOST COVETED AWARDS AND RECOGNITION IN THE INDUSTRY

2nd Best Distinguished Global water company, by GWI

Highest level of nationalization in the GCC

Prince Turki Bin Nasser Award for Environment protection

Achieving highest Global standards in the GIS in Water/ Wastewater Sector

Water Innovation Award

NWC COVERAGE DATE AND PROJECTS

PORTFOLIO INFORMATION

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2013 – WATER & WASTE WATER NETWORK DATA:

14,716RCBU

Network Length (km)

393,961

House Connections

Water Network

6,500

Network Length (km)

281,400

House Connections

Waste Water Network

5,631JCBU 174,720 2,279 97,873

3,676MCBU 80,678 2,170 59,704

990TCBU 45,000 750 31,000

25,013TOTAL 694,359 12,019 469,977

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2013 –NWC PROJECTS PORTFOLIO INFORMATION :

199RCBU

No. Of Ongoing Projects

89JCBU

22MCBU

20TCBU

330TOTAL

2,848

Projects Total Values Billion USD

2,075

514,9

427,73

5,866

BLUEPRINT FOR THE FUTURE

& CAPITAL INVESTMENT

PLAN

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BLUEPRINT FOR THE FUTURE

NWC depend highly on having a Master Plan for each CBUs with the support of highly qualified international consultant which draw the near-med-long term future of Water and Wastewater services in each city and this process is updated every 5 years and according to any new Regulations or major needs.

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TREATED SEWAGE EFFLUENT (TSE)

As part of its strategic planning, NWC have conducted a study with an international consultant and the demand forecasted on the short and long term:

The short term demand will exceed 1.6 m3 per day.

The long term demand will exceed 2.2 m3 per day.

Additional to that NWC acted proactively in signing several agreement and MOUs with potential and large companies in the Government and Private sectors to sell more than 400,000 m3 per day of TSE generating more than USD 1.6 billion.

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ESTIMATED CAPITAL PROGRAM (2013 – 2017) – USD 13.7BILLION

4.8RCBU

CAPEX needed for 7 Cities (in USD)

13.7TOTAL

4.5JCBU

2.9MCBU & TCBU

0.75Madinah (Near Future)

0.75Dammam & Khobar (Near Future)

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NWC TOTAL CAPEX REQUIREMENTS FOR 7 MAJOR CITY/GROUPS

TOTAL = 13.7 BILLION USD (2013-2017)

Water Plants , Wells & Reservoirs

Water Mains Water Networks Water House Connections

WWTP Wastewater Mains Waste Water Networks

Waste Water House Connections

-

500

1,000

1,500

2,000

2,500

3,000

3,500

615 567 729

260

726

1,263

421 253

449 349

305

1

906

854

1,133

174

368 315

343

199

544

630

200

258

89

67 67

60

142

171

97

52

105.392

82.80875.28

45.168

135.504

143.032

120.448

45.168

RCBU JCBU MTCBU MCBU DKBU

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WATER SECURITY STRATEGY (STRATEGIC RESERVOIR)

Planned Strategic Reservoir Capacities (m3)

Riyadh 10,000,000

Targeted Strategic Reservoir Capacities (m3)

6,500,000

Jeddah 10,000,000 7,500,000

Mecca 6,000,000 2,340,000

Taif 2,000,000 1,700,000

TOTAL 36,000,000 22,790,000

As Part of MOWE Water Security strategy, and in order to secure water supply for the cities (Riyadh, Jeddah, Mecca,Taif, Medina, Aseer) for 10 days in case of any shortage or loss of water supply, MOWE jointly with NWC initiated an urgent plans for Strategic Reservoir with an overall capacities of 36,000,000 m3 and estimated cost exceeding 2.1 Billion USD as followings

Aseer 2,000,000 1,250,000

Madinah 6,000,000 3,500,000

OPPORTUNITIES AND FACILITIES OFFERED TO NWC CONTRACTORS, SUPPLIERS,

CONSULTANT,….

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OPPORTUNITIES FOR US COMPANIES

Our Projects focus mainly on the design and Construction of following Water & Wastewater infrastructures:

Water Network & Main lines

Wastewater Network & Trunk lines

Water & Wastewater House Connections

Wastewater Treatment plants

Brackish Water Treatment Plants

Lift stations

Large Water Reservoirs

Ground water deep wells

Rehabilitation of Plants & Networks

Related Consultancy & Supervision service

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FACILITIES OFFERED TO CONTRACTORS

ADVANCE PAYMENT UP TO (20%) TO THE CONTRACTORS TO THEM AT THE BEGINNING OF THE EXECUTION.

PROVIDE SUPPORT TO CONTRACTORS IN OBTAINING CERTAIN LOCAL RAW MATERIALS LIKE ASPHALT, PIPES ETC.

ASSISTANCE IN GETTING APPROVALS FROM MUNICIPALITIES AND GOVERNMENT AGENCIES.

SPEEDY SETTLEMENT OF PAYMENTS.

LOW RISK FIDIC FORM OF CONTRACT.

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ENVIRONMENT OFFERED TO CONTRACTORS

PROVIDING PROFESSIONAL QUALITY AND PROJECT MANAGEMENT PRACTICES BY IMPLEMENTATION OF NWC-PMM (PROJECT MANAGEMENT MANUALS) WHICH WERE DEVELOPED BY FAITHFUL & GOULD BASED ON ONE OF THE BEST PROJECT MANAGEMENT PRACTICES (PMI), PLUS ISO 9001 (QUALITY MANAGEMENT), 14001(HSE) AND 18001 (OHSAS).

PHASE-2- APPOINTMENT OF AECOM FOR NWC-PMM PROFESSIONAL IMPLEMENTATION WITHIN NWC, TO PROVIDE PROFESSIONAL PROJECTS SERVICES AND SUPPORT FOR THE COMPANY MEGA PROJECTS TO INSURE PROFESSIONAL PROJECT MANAGEMENT IMPLEMENTATION ACROSS NWC.

ACQUIRING PROFESSIONAL SUPPORT IN MEGA STRATEGIC PROJECTS FROM EXPERIENCED AND PROFESSIONAL COMPANIES SUCH AS BUT NOT LIMITED TO AECOM, CH2MHILL, CDM AND OTHERS..

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VENDOR LIFE-CYCLE MANAGEMENT

Due Diligence

Qualification Audit

• Basic information submitted on-line

• Verification of data

• Highlight risk

Registration

• Detailed analysis of vendor

• Scored/ weighted by categorization

Qualification

Continuous Monitoring Revision

ReviewPerformance Management

Re-Classification/ De-selection

• Regular monitoring

• Feedback from internal customers

• Annual vendor appraisal

• Escalations

Upgrade / Downgrade /

Blacklist

Vendor PerformanceSourcing

Asset / Projects

Internal customers

Vendor Categorization

• Vendor Portfolio / Vendor Panel

• Procurement Strategies

Certification

Procurement

Purchase Request

Bidder List

Bidding Process

Award Committee

F. Evaluations

Negotiation

Award

Blacklist

Upgrade

Standardization

Control Categories

Create items & services

Link items to categories

THANK YOU

شكرا