Interpreting Middle East Economic News and Analyzing Market Trends

Saudi Arabia’s water problems stink

Saudi Arabia needs to act quickly to come up with new water supplies.  The country has been known to turn dessert into farmland, which made the country a net exporter of wheat for many years.  This policy consumed valuable water supplies and is now being wound down as the country faces increasing pressure on its water resources.  This, however, is not the country’s only water problem.  Years of poor sewage planning have lead to contamination of underground water supplies, making the need to for desalination plants even more urgent and putting additional pressure on the country’s energy sector.

  

Saudi Arabia needs to step up efforts to prevent a possible water supply shortage caused by a rapid growth in its population, steady expansion in the industrial sector and low water tariffs, the Gulf Kingdom’s largest bank said on Tuesday.

The population in the world’s largest oil exporter has grown at an average three per cent annually over the past two decades and is expected to maintain that pace over the next five years, National Commercial Bank (NCB) said.

While water consumption over the same period has fallen by approximately 1.5 per cent annually, the demand for desalinated water has increased by more than double that of the population growth, at 6.27 per cent, it said in a study.

“The Kingdom’s rapidly rising population, expansionary fiscal policies and large investments in social and physical infrastructure, have exerted pressure on the existing water networks…..the accelerated pace of water consumption relative to that of population is attributed to the low utility rates faced by the public, as the water sector is heavily subsidized by the government.”

The study said average water tariffs in Saudi Arabia are the lowest within the Gulf Cooperation Council countries and among the lowest in the world.

“As the Saudi population is estimated to reach 31.69 million in 2015, additional pressure will be placed on energy intensive desalination plants for potable water,” NCB said.

“Furthermore, the abundance of oil and gas reserves provides the Kingdom with both a comparative advantage in energy costs and funding sources….this acts as a driver in the project market, increasing the share of industrial water consumption.”

Read the full article from Emirates 24/7.

  The first step in fixing the water shortage problem is to reduce the water subsidies.  This is a very sensitive issue in a country where all basic necessities are subsidizes by the government, including basic food staples, gas, water, electricity, housing and education.  With high population growth rates and high unemployment, reducing or removing any subsidy can lead to social unrest.

The country’s generous subsidies are leading to another major issue beyond water.  The country is consuming a larger and larger portion of its oil production, making oil available for export decline year over year, unless more oil is pumped out.  Citigroup published a recent study showing that Saudi Arabia could end up being an importer of oil by 2030 if it does not change its policies (read the story from Bloomberg).

As if this weren’t enough for the Saudi government to worry about, poor sewage planning in Jeddah over the years have tainted valuable underground water supplies.  A city with over 3 million inhabitants only recently received proper sewage plumbing.  Years of mismanagement and kickbacks lead to delays and mistakes in installing a proper sewage system in the city.  The solution in the interim was to truck this toxic waste out into the mountains near Jeddah and dump it.  It later formed a lake known as Buhairat Al Misk (a.k.a. Shit Lake), which could be seen on Google Maps.  This massive environmental problem is in the process of being ‘fixed’.   The lake is no longer visible on the map as the cleanup has already started (see here for more on the cleanup).

 

There are not many lakes in the desert of Saudi Arabia, but in the mountains east of Jeddah flamingos hover around the greenery sprouting at the edge of a large, blue body of water, shimmering in the sun. Yet this lake is not what it seems. The putrid odour belies the truth about this toxic sewage dump next door to Jeddah, Saudi Arabia’s second largest city, which has no citywide wastewater system despite the wealth of the world’s biggest oil exporter.

Musk Lake has been the dumping site of Jeddah’s sewage wastewater for the past 10 years. The lake was created as a stopgap measure to deal with the increasing amounts of wastewater in the growing city. Jeddah’s more than three million residents use an estimated 200 litres of water per capita per day, said Tarek Fadaak, the chairman of the Jeddah City Council. The lake was to be used for depositing this water until a functioning sewage system was created, he said. But plans were delayed because the city was not given adequate funding to complete the projects, which take a minimum of 10 years, said Mohammad Shahin, a project manager at the National Water Co, which is responsible for the sewage system project in Jeddah.

Since 70 per cent of Jeddah households are not connected to sewerage pipelines, waste water accumulates in underground cesspools and later is transported by lorries to Musk Lake. About 50,000 cubic metres of water are transported to the 2.5 million square-metre lake each day. Only a small percentage of the waste water from the remaining 30 per cent of Jeddah households goes to treatment plants for purification before being dumped in the Red Sea. Most of the waste water that is accumulated through pipes is dumped directly into the sea without purification, said Abdullah al Suhaibany, a co-ordinator and scientific officer at the Reef Chief Foundation, which monitors pollution in the Red Sea to preserve the sea environment.

Speculation that Saudi residents are consuming toxic waste water is rising. According to observers, some farmers use the lake’s water to irrigate their vegetables, which they later sell to Jeddah residents. “This is probably done under the radar. I have seen sewage-filled lorries going into farms,” said Mr al Suhaibany, who suspects that water from those lorries was used to irrigate the vegetation in some farmlands. In addition, the lagoon environment at Musk Lake has become a fertile rest stop for migrating birds that come from Africa on their way to Asia. “In their excrement they have seeds that started an aquatic life and plant life at the lake,” said Richard Bodeker, a landscape architect who has been working in Saudi Arabia for more than 30 years.

Mr Bodeker said the birds themselves could be carrying disease beyond the diseases that may be breeding and growing in the water. The accumulation of sewage water in the lake area, as well as in cesspools all over Jeddah, affected the natural underground aquifers, which the country needs to tap into to relieve the water shortage situation in the area. “Some of the sewage leaks into the underground water. This problem has increased with the years and with the rise in Jeddah’s population,” said Tarik Alireza, a Saudi architect who has been concerned with the sewage crisis for many years. “As a result the underground water situation in Jeddah is horrendous.”

Read the full story from The National.

   

Multiple problems lie ahead of the world’s ‘current’ largest oil exporter.  Failure to address these problems early on are making them more painful to deal with in the coming years.  At the heart of the problem are the governments subsidies, especially in energy consuming areas; water electricity and gas.  Sooner than later these subsidies will have to be adjusted.  There are no other viable solutions.