Azaliya will provide outsourced water management services to municipal and industrial customers in the MENA region

In October 2008, Veolia Water and Mubadala Development Company had announced their intention to create a joint-venture company to focus on water purification and distribution, wastewater treatment and reuse in the Middle East and North Africa (MENA) region.  That intention has now taken concrete shape in the form of Azaliya which unites the expertise of the world's leading environmental services operator with the experience of region’s leading development and investment company. Azaliya, owned 51% by Veolia Water and 49% by Mubadala, was formally unveiled at a select press briefing held during the MEED Wastewater Conference in Abu Dhabi in early December 2009.

Patrice Fonlladosa, Board member & CEO, Azaliya said, “The new name represents the development of a strategic and long term partnership between two large companies – Mubadala and Veolia. We have a clear perspective of where we want to go. The resources of both companies will be deployed in the direction of sustainable contracts and development in MENA region.”

Population growth and economic development are the two major features of countries in the MENA region. These have been accompanied by continuous increase in demand for water and electricity along with increasing risk of pollution of the environments by wastewater. Azaliya will provide outsourced water and wastewater services that can help local authorities meet these challenges through concessions, performance contracts, Design-Build-Operation (DBO) and Operation & Maintenance (O&M) contracts.  At present, Azaliya provides water services to more than 8.5 million people and wastewater services to 5.5 million people.

All the water and sanitation activities of Veolia Water portfolio in the MENA region will be transferred to Azaliya. These include contracts in the GCC region – mainly UAE, Oman, Saudi Arabia and Qatar and Morocco in North Africa.  In Morocco, Azaliya has 25 year concession contracts for water, wastewater and electricity services in the three cities of Rabat, Tangiers and Tetouan. In North Africa, Azaliya is also exploring opportunities in Egypt, Libya and Tunisia in both water production and wastewater markets.

Gerard Velter, General Manager, Azaliya said that joint venture will also target industrial customers for its outsourced services. “There are industries like petrochemicals and aluminium smelters in the GCC region and other parts of the Middle East that water and need water and wastewater services that are different from municipal market,” he explained. In January 2009, Veolia won its first industrial O&M contract in the region in Saudi Arabia. Velter continued, “We have signed a 5-year O&M contract to operate the wastewater plant at Saudi International Petrochemical Company’s (SIPCHEM) acetyl complex in Jubail.” The treatment is capable of treating 21 different types of different polluted flows. Global Water Intelligence (GWI) has placed the value of the contract at $8.36 million.

On opportunities with regard to desalination versus wastewater markets, Fonlladosa pointed out that it varied from country to country. He felt that desalination, which is a relatively more developed market, will continue to see some capacity development; but waste water treatment and re-use is definitely getting more attention from governments prioritise access to potable water.

Velter opined that while desalination is an important water solution, in regions with rivers, aquifers, ice & snow, the scope for desalination will be much less; whereas waste water treatment is a universal need because “when you consume water, you produce wastewater.”

Interestingly, wastewater dominates Azaliya’s GCC portfolio with major contracts in Ajman, Saudi Arabia, Abu Dhabi and Qatar. The largest contract is the one for financing, design, construction and operation of two new waste water treatment plants in Abu Dhabi (300,000m3/day) and Al Ain (130,000 m3/day). Azaliya will operate the plants for 22 years.

On the desalination side, Azaliya’s portfolio is made up of 22-year BOOT contract for a RO Desalination Plant in Sur, Oman which was commissioned in November 2009 and 12 year O&M contract for a RO desalination plant in Fujairah, where the commissioning is underway and full operation is expected to begin in the next six months.

Commenting on the financial crisis, Fonlladosa said that while the crisis has led to a diminished projects pipeline and re-phasing of some projects, the prospects of the MENA water and waste water markets continue to be bright. He said, “For Azaliya, this is one of the promising regions in the world with strong prospects of double digit growth.”
Azaliya’s strong commitment to the region has started yielding dividends. In Riyadh, for example, happy with the results of its performance contract covering wastewater collection and production and distribution of drinking water for the city, the local authorities have entered into a 5-year MoU with Azaliya to operate three waste water treatment plants in Riyadh. In Libya, where Veolia has been present for a while, Azaliya is eyeing RO desalination projects as well as some municipal contracts.