The Ashkelon Desalination Project is the first major step in the
Israeli government's desalination master
plan. It contributes
25% of Israel's initial goal of 400
Mm3/year drinking water. The success of the project justifies the extension of the
plant's production capacity (from 100
Mm3/year to 120 Mm3/year), as
well as its confidence in introducing other Public Private Partnership
(PPP) desalination projects in the country. Hence, the Israeli
government has approved the construction of desalination plants with a
total capacity of 350 Mm3/year by
2010. Likewise, Singapore has entered into PPP, through Tuas Desalination Project which would make
it the first country in South-East Asia, to adopt the PPP model for
social infrastructure development. A variety of new projects are, thus, in
the pipeline. These include: sports HUB, college campus and IT
projects. It is interesting to note that both the desalination projects came
into commercial operation in the year 2005. Both these projects are
PPP projects with a little difference in their ownership structure.
The Ashkelon Desalination Project is of Build-Operate-Transfer
(BOT) type, whereas the Tuas Desalination Project is of
Build-Own-Operate (BOO) type. For both cases, Sea Water Reverse Osmosis (SWRO) is
the selected technology. Nowadays, Reverse Osmosis membrane
process is universally considered to be the most promising technology
for brackish and seawater desalination.
In order to enquire about the financing of PPP
desalination projects, this study seeks to compare and evaluate the main
features of these two projects, in the light of: (1) Sovereign credit-rating
and sub-sovereign risk, (2) Source and method of financing, (3) Role
of government and its support, (4) Energy supply agreement, (5)
Water purchase agreement and (6) Risk allocation and management
for these projects.
Israel had been suffering from chronic water shortage, especially since 1998. Droughts for
consecutive years, inconsistent precipitation, over-pumping, growing population and a sudden drop in
the water levels of the country's primary water resource (Sea of Galilee), made the situation quite
desperate. As part of the Master Plan, the Ashkelon Desalination Project was launched by the Israeli
government in 2000, designed to address the country's chronic water resource problems. The master plan
strategy called for the construction of a series of plants along the Mediterranean coast, to enable an
annual total of 400 million m³ of desalinated water to be produced by 2005, chiefly for urban
consumption. According to the plan, production is intended to rise to 750 Mm³ by
2020. In contrast, Singapore is not short of fresh water as it receives sufficient rainfall, but the problem lies with the limited
amount of land area, to capture and store it. Singapore is working on increasing its domestic
reservoir catchment areas, to two-thirds, from the present half of the island. Water is imported from
Malaysia, as per accords in 1961 and 1962 for guaranteed supply. This water supply meets half of
Singapore's daily water needs. These agreements willbe in force up to 2011 and 2061, respectively. In order
to reduce its dependency on Malaysia for water, an island on the sea, desalination is a natural
solution for Singapore. As a consequence, the desalination program has been initiated. The Tuas
Desalination Project is the first of its kind. It is estimated that, by 2011, the desalination program willmeet 30%
of Singapore's water requirements, of around 88 million
gallon/day. |
