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Viewing report
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Bahrain Water Report Q4 2011
Business Monitor International, Oct 2011, Pages: 39
BMI View: After a tough year, Bahrain’s infrastructure sector has, at last, some good news, with the reaching of financial close on the Muharraq wastewater treatment plant in Q311 – in the context of Bahrain’s political climate, which has disrupted commercial life in the island, hitting a key deadline on a major privately financed project represents clear progress. Moreover, with work virtually complete on key desalination projects like Al Dur, there is optimism that the authorities will hit their targets for increased water supply. Looking further ahead, signs of continued commitment to public-private partnership (PPP) models of delivering key projects must be seen as a positive. BMI expects the water sector to remain at the top of the government’s set of priorities going forward – though it will have to overcome the challenge of investor concerns over the risk climate.
Key themes to highlight for Bahrain’s water sector:
- Under intense political pressure, associated with domestic protests that hit Bahrain in Q111, the government is working tirelessly to ensure that the investment climate is as accommodating as possible for foreign investors in critical infrastructure sectors. The authorities will continue to seek to create a level playing field for foreign investors and developers alike. The water sector remains open to foreign investors; but for those there, the small size of the market means that competition will remain strong. .
- The government’s efforts to boost public private partnership (PPP) schemes have lost traction this year, as the government focused its efforts on quelling the security situation, but there are signs that a greater emphasis is returning to PPP. Most promising, in this respect, is the strong progress on the Muharraq wastewater treatment project - the first wastewater scheme to be undertaken as a PPP project. Financial close was reached on the 100,000 m3/d project in September 2011.
- In September 2011, financial close on the funding package was reached, indicating that the project had progressed. Under the structured financing, export credit agencies will cover US$227mn of loans.
- Gauging Bahrain’s potential to boost its water production over the forecast period depends on a series of variables, including an uncertain political climate. However, with the financial close of a major wastewater treatment plant in Q311, plus signs that the government is advancing PPP projects, BMI are confident that Bahrain will increase groundwater output over the next five years.
Desalination is the sector to watch. Reverse osmosis (RO) capacity will rise from 24,562mn gallons to 27,132mn gallons by the end of 2015. Meanwhile, multi-stage flash (MSF) desalinated water capacity should expand from 31,423mn to 33,957mn gallons. Underpinning this forecast is the coming on-stream of first production from the Al Dur plant, expected before end-2011. Furthermore, the addition of Tubli and Muharraq wastewater projects will also help to reduce the depletion of groundwater resources. Overall, then, a positive outlook – though political events may yet intervene.
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