By John — Desalination News
Across the Gulf, a quiet but consistent shift is underway in how governments approach ownership of desalination infrastructure: rather than continuing to hand new plants to private concessionaires under long-term build-own-operate (BOO) or public-private partnership (PPP) structures, several states are choosing to retain direct ownership themselves, even while still contracting private firms to build and sometimes operate the assets.
The clearest reversal has taken place in Saudi Arabia. The Saline Water Conversion Corporation (SWCC), which operates more than 30 plants producing a combined 7.5 million cubic metres of water daily, was originally earmarked for privatisation as far back as 2008, with the plan accelerated under the kingdom’s Vision 2030 economic reform program. But the government suspended the high-profile Ras Al Khair privatisation tender in July 2021, and by 2022 had cancelled the broader SWCC privatisation push entirely. Rather than reviving it, Riyadh restructured SWCC into the Saudi Water Authority by May 2024 — repositioning the body as a sector regulator rather than a commercial entity slated for sale, while its desalination assets remain under state control.
Iraq offers perhaps the starkest example of the model. The Grand Basra Seawater Desalination Project, designed to produce 1 million cubic metres of water daily for Iraq’s southern Basra Governorate, was signed as an engineering-procurement-construction (EPC) contract with China’s PowerChina in January 2026, valued at $2.4 billion. Under that structure, the Basra Governorate retains full ownership of the plant from day one — PowerChina is purely a contractor delivering a fixed-price build, with no equity stake and no long-term concession to operate and collect revenue from the asset.
Kuwait has applied the same logic more selectively. The North Kabd wastewater facility, a KD998 million (roughly $3.2 billion) scheme, was restructured away from an originally planned PPP model into a direct contract with China State Construction Engineering Corporation, with Kuwait retaining full ownership and the contractor taking on a ten-year operation period rather than a multi-decade concession.
Not every Gulf state is moving in the same direction, however. Bahrain launched its first independent water producer (IWP) tender in late 2024, for a 272,000 cubic-metre-per-day plant structured as a conventional build-own-operate concession — the traditional private-ownership model. Yet even there, both qualifying bidders, ACWA Power and GS Inima, are themselves sovereign-aligned entities (ACWA Power counts Saudi Arabia’s Public Investment Fund as a major shareholder), suggesting the line between “private” and “state” ownership is blurring even where the contracting structure looks conventional on paper.
Three factors appear to be driving the broader shift, according to analysis of the trend. First, sustained high oil revenues in recent years have left Gulf treasuries with stronger fiscal positions, reducing the original rationale for off-balance-sheet PPP financing that made private concessions attractive in leaner budget years. Second, desalination is increasingly treated as strategic national security infrastructure — a framing reinforced by recent incidents of desalination plants being targeted or disrupted elsewhere in the region — rather than a tradeable utility asset like a toll road or airport terminal. Third, two decades of PPP experience have given Gulf water authorities and state utilities the in-house technical and commercial expertise to manage complex, multi-decade contracts directly, without needing a private concessionaire as an intermediary.
The practical effect for the desalination industry is a shift in how contractors and technology providers make money in the region: less reliance on long-term concession revenue and equity returns, more on competing for large, fixed-price EPC and O&M contracts where the government carries the asset risk. For a sector historically built around the BOO/PPP model pioneered in the Gulf in the 1990s and 2000s, that is a meaningful change in the underlying business.
(Source: Smart Water Magazine)