Published on IDRA Global Connections Fall 2020 Issue
By Ms. Menatalla Sadek
Growing up in Egypt, we have always been taught that we were privileged with a country that was gifted with it all: a perfect location right in the middle of three continents, access to the magnificent Mediterranean Sea on our northern coast; and the stunning Red Sea to our eastern; and above all, we were blessed with the Nile River—the longest river in the world. Surrounded by all these bodies of water, we have never come to peace with the notion of water scarcity.
In my office on the small island of Zamalek, surrounded by the Nile, my younger children – who had to accompany me on account of the covid-19 pandemic and listen to my work calls on desalination—would ask: “Look at that big wide river! How come we don’t have enough water? And why should we use salt water to solve our problem?” My children, who are of the generation where water scarcity will be the most pressing dilemma, have always been curious about what I do for a living, and why I founded a company to develop and invest in water solutions for Egypt.
The unfortunate answer is that the United Nations predicts that Egypt may reach the level of “absolute water crisis”—which is less than 500 cubic meters per capita—by 2025. This will be a serious constraint to the agriculture sector that accounts for over 80 percent of water use in our country. With a growing young population that recently surpassed the 100 million-mark, inefficient irrigation techniques, and high waste due an old network of pipelines, water scarcity is increasingly making the top headlines. Moreover, we currently only have c. 80 billion cubic meters, of which c. 55.5 billion cubic meters come from the Nile – the backbone of Egypt’s industrial and agricultural sector and the primary source of drinking water for the population. Add to that the mounting political pressures resulting from the developments around the Grand Ethiopian Renaissance Dam (GERD), and we have gotten ourselves into a really critical situation here.
And so, how do we solve water security? One of the solutions which is becoming more and more obvious at this point is water desalination. The government has announced an ambitious plan to add some 6.4 million cubic meters per day of new capacity over the next 3 decades. The bulk of these capacities is planned for the next decade, which will position Egypt as the desalination destination for all global players in this market in the next 3-5 years. The aim during this time frame alone is to build 47 seawater desalination plants. This program will require an investment of c. EGP 45 billion, or USD 2.8 billion. The numbers are being constantly reviewed but only upwards at this point.
Given the significant investment requirements, it is expected that the private sector would play an important role in supporting the government’s plan. This would give rise to some sort of public private partnerships schemes, or to direct negotiations of Build Own Operate (BOO) and Build Own Operate Transfer (BOOT) schemes (which is very likely given the time constraint). Considering that the private sector has developed capacity in this area, it is critical that the private sector alternative is successfully demonstrated through these models and where the risk of construction and operation is transferred to them and not the state. This will help the government transfer the accountability of managing the plants to a third party as well as the risk sharing framework and contractual responsibilities.
This is not a model without challenges. It will take time, a lot of changes, effort, and commitment from both the public and private sectors to make it happen. However, I strongly believe that having different procurement models is the best way to go at this point. This could be achieved by adding the BOO/BOOT schemes to the traditional EPC model.
All signs point to us heading in that direction. For example, The Sovereign Fund of Egypt, whose role is to attract investments and know-how into Egypt’s key asset classes, has announced its commitment of EGP 30 billion to the new desalination program. I am sure that more announcements will be made in due course and that there will be room for everyone in this industry to participate.
Lastly, while implementing this new model, we have to acknowledge that we still have a long way to go to better understand all these new possibilities. For instance, we need to balance the focus on the price of desalinated water with the reliability and the sustainability it offers. Again, this is not the easiest route to go, but that is why I chose to be part of this industry at this point in time. I like the challenge of introducing this new model in this part of the world at this specific point in time.
Still looking at the beautiful Nile view from my office today, I cannot hide my excitement about the future of desalination in our country and I can only be hopeful at the prospect of executing a successful model that would be comparable to what the Electricity Ministry did with solar and renewables a few years back.
I am also hopeful to see more women get involved, particularly in Africa, as I believe we still have a lot to offer on that front. With the integration of the desalination solution together with serious investment in different water reuse solutions (like waste water treatment), I am certain that in a few years’ time, and with the collaboration of the public and private sectors, we will look back at water scarcity as a distant problem, while enjoying the same beautiful Nile view.