Wastewater treatment in the Middle East is of great importance due to the region's limited freshwater resources and increasing population. Several countries in the Middle East have implemented wastewater treatment programs to ensure the sustainable use of water resources, protect the environment and promote circular economy.

Due to the scarcity of freshwater sources, many countries in the Middle East heavily rely on desalination, which is the process of converting seawater into freshwater. However, to mitigate the strain on freshwater resources, wastewater reuse has gained significant importance. Treated wastewater is increasingly being used for irrigation, landscaping, and industrial purposes.

Several Middle Eastern countries have invested in large-scale wastewater treatment projects to expand their treatment capacity and improve infrastructure, but despite progress, there are still challenges in wastewater treatment in the Middle East. Some of these challenges include the high energy requirements and costs associated with tertiary and polishing treatment, proper maintenance and operation of treatment plants, solid legal framework, ensuring adequate funding and investment, and addressing the perception and stigma associated with using treated wastewater for various purposes. And it is here where the green financing takes a main role.

As countries identify measures to fight against climate change, investors all over the world are increasingly incorporating particular investment objectives into green infrastructure projects, with an ever clearer focus on water projects. This trend, observed in recent years, is giving rise to the exponential growth of “green financing”, where investors and lending institutions consider Environmental, Social and Governance (ESG) aspects an even more important part of their criteria when selecting assets.

Clearly, there is increased recognition of the fundamental role of water in the economy in general and in any effort to progress towards a more sustainable economy. The scarcity of water is a systemic risk for almost all segments of the global economy, especially in the Middle East region.  The growth in the world’s population will mean an even greater scarcity of water resources in the next few years. And it is necessary to address the problem to develop a sustainable development.

The key role that water will have in any commitment to achieve the desired sustainable development, and make the circular economy grow in general, is something that is already very evident.

 

FROM THEORY TO PRACTICE

Madinah 3, Buraydah 2 and Tabuk ISTP projects in the Kingdom of Saudi Arabia

One of the latest contract awards in which ACCIONA participates as a developer relates to the Madinah 3, Buraydah 2 and Tabuk 2 wastewater treatment plants in Saudi Arabia.

Madinah 3, Buraydah 2 and Tabuk 2 are three independent sewage treatment plants (ISTPs) to be constructed in the Kingdom of Saudi Arabia. The Saudi Water Partnership Company (SWPC) has signed an agreement with each project company to procure the treated water from the ISTPs for 25 years. These three companies will design, build, own, operate and transfer the ISTPs, which are being built to expand and improve wastewater and sewage treatment services in the Kingdom.

Key environmental features and benefits of these projects

1. Recycling of wastewater for agricultural activities

The use of treated sewage effluent will substitute the use of available fresh water for farming purposes, thereby producing direct water savings.

The plants have been designed to comply with stringent technical requirements regarding the quality and quantity of discharged water to satisfy the needs of local farmers who will ultimately use the water.

2. Treatment and reuse of sewage sludge (‘zero-sludge-dispatch’ method)

All sewage sludge produced in the plants will be suitable for agricultural application and cement manufacturing. The plants will handle, transport, and deliver it to the designated Sludge Disposal Area (specific for each ISTP), so that the amount of non-beneficial sludge that is removed or leaves the ISTPs’ site is equivalent to zero.

3. Renewable electricity consumption

Up to 57% of the daily electricity consumption for the different sites will be supplied from renewable energy sources onsite (solar photovoltaic electricity), resulting in a significant reduction in greenhouse gas emissions generated by the ISTPs. This is the maximum renewable energy available from the extension of land available for the installed capacity of PV panels and the production of biogas derived from water treatment processes.

With the incorporation of these solutions into the sewage treatment plants, ACCIONA and its partners set out to make a contribution to the European Union objectives on the sustainable use of water and offsetting climate change, while working within the framework of the United Nations Sustainable Development Goals on water and clean energy.

Implementing Green Financing

Aware of the importance of these projects to optimise the use of water resources in Saudi Arabia and their clear alignment with Saudi Arabia’s Vision for 2030 programme and the plan to reach Net Zero by 2060, the projects have been considered clear objectives for the application of green finance from the outset. They have represented a perfect opportunity for lending institutions to take a position in a financial trend that is rapidly growing globally.

In this sense, the project companies have developed a Green Loan Framework that has been appraised by a Second Party Opinion (SPO) Provider, concluding that the Green Loan Framework for the ISTPs is aligned with the Green Loan Principles. This enables the project companies to close a green loan for each of the projects totaling 480 MUSD of Green Loan

Islamic Project Finance

In addition to the priority objective of applying a green loan to these projects, we have given priority to a structuring of finance that will incorporate an additional Islamic tranche to the more common conventional approach. In these three projects, Islamic finance has accounted for just over 60% and is structured under the “Ijara Facilities” modality.

Islamic banking, which has its roots in Sharia law, is characterized by its strong ethical commitment. Nowadays, the fundamental role of ethical principles in the development of a sustainable international financial system is unquestionable.

By Julio de la Rosa, ACCIONA ME Business Development Director, Water solutions