The northeastern tip of Bahrain is undergoing a radical transformation. Some 40 square kilometres of land are being reclaimed from the sea, to house new residential and industrial developments, as well as extensions to the existing airport and port facilities.

As a result of this activity, the population of the island of Muharraq is forecast to more than triple by 2040, rising to 512,853 from 161,000 in 2007 (see bar chart). By 2040, it is estimated than more than half of all residents on Muharraq will live on land that is not yet in existence.

To cope with this massive increase in inhabitants, a new sewage treatment plant is to be built in the territory, also on reclaimed land. In a significant policy change, it will be Bahrain’s first privately owned treatment works.

The Works Ministry, which is in charge of the kingdom’s wastewater sector, has already prequalified 15 groups, including all of the leading international wastewater firms, to develop the plant. A request for proposals is expected to be issued before the end of April.

Private participation

The facility will have an initial capacity of 90,000-100,000 cubic metres a day (cm/d) and start-up is timetabled for June 2011. The ministry will sign a 27-year agreement with the successful bidder, guaranteeing supply of effluent and offtake of treated sewage. Under the agreement, the ministry will have the right to request the project company to competitively tender an expansion of the plant to 160,000 cm/d, although it says this would be unlikely to occur in the first five years of operation.

The construction of the Muharraq sewage treatment plant is just one element of a new strategy at the Works Ministry, which aims to increase the role the private sector is playing in wastewater service provision in Bahrain. The consultancy team is made up of UK firms and includes HSBC as financial adviser, consulting engineer Fichtner and law firm Norton Rose as legal adviser. It was appointed to advise on the Muharraq project, but was simultaneously asked to draw up further recommendations for a broader restructuring of the kingdom’s sewage treatment services. That study is expected to be completed by the end of this year.

The consultants are expected to establish a framework for the unbundling and privatisation of all state-owned wastewater services. Their recommendations will determine whether the ministry will sell off assets individually or as packages, or whether it will opt for further management outsourcing.

As of late 2008, Bahrain had three major sewage treatment plants in operation, plus a further six smaller plants. The network consisted of 57 kilometres of transmission lines and 186km of distribution pipes.

“The ministry is keen to engage the private sector,” Khalifa Mansoor, assistant under-secretary for sanitary engineering at the Works Ministry, tells MEED. “We have already handed over a number of services through outsourcing to contractors to take care of things until the framework is worked out, and that will tell us how best the private sector can be involved in managing our network, pumping stations and plants.”

Standardising contracts

Most importantly, the consultants will determine a future strategy for the Tubli Water Pollution Control Centre, the largest sewage treatment plant in Bahrain. The facility treats effluent from about 600,000 people and is far exceeding its 200,000-cm/d design capacity, with flows peaking at 322,000 cm/d.

The Works Ministry has brought forward plans for a third-phase development of the site, which had originally been scheduled for 2010-11. The project involves a major upgrade and expansion to 350,000 cm/d. Construction work on the estimated $120m project is scheduled to start in the second quarter of 2009, with completion slated for early 2011.

The upgrade includes an expansion and modernisation of the sludge handling and drying facilities, and the contract to carry out these works has been awarded with a five-year operation and maintenance deal.

“We have not yet worked out a future plan for Tubli, but we are seeing if it can move in the same direction as Muharraq,” says Mansoor.

As the first tender for private investment in the wastewater sector, Muharraq is intended to form a template for subsequent privatisations. Any developer purchasing a treatment plant will have to sign a sewage treatment agreement similar to that used at Muharraq, which will ensure additional capacity requirements are met and quality and environmental standards are adhered to.

In parallel to the privatisation study, a German consortium, made up of architect P2M Berlin, consultant GTZ and project manager Dornier Consulting, is drawing up a new wastewater masterplan to determine the amount and timing of investment required in the sector up to 2030.

A similar plan in 1998 projected the population in Bahrain would reach 1.1 million by 2020, producing on average of 341,296 cm/d of effluent. With peak flows at Tubli Water Pollution Control Centre alone currently exceeding 320,000 cm/d, it is clear that these forecasts need to be revised.

International standards

The wastewater masterplan is due to be submitted to the Works Ministry in 2010. The document, and the restructuring framework, is of crucial importance to the ministry as its conclusions will determine the shape of Bahrain’s wastewater sector in the decades ahead. It will also indicate to developers where future business opportunities in the sector lie.

The decision to open the wastewater services sector up to private investment is in keeping with the government’s policy of reducing its role in all of the country’s public utilities over the long term. The government envisages moving from a position of utility service provider to one of sector regulator.

In addition to shifting the burden of financing projects away from the state, the government believes private sector-led schemes encourage the implementation of internationally proven technology and best practice.

Private developers have already been successfully engaged in the power and water sector, and the build-own-operate model is now applied to all new generation projects.

Although the global financial crisis has made securing financing for independent water and power projects challenging, Mansoor is confident that the Muharraq experience will be different and says the government does not intend to take a stake in the $150-200m project. “I do not think it will be difficult [to find funding], we are not talking about billions of dollars,” he says. “Many of the developers that we have already prequalified have assured us it will be no problem for them.”

As a test case for the sector, the Muharraq tender will come under close scrutiny in the months ahead. But with so many groups applying for prequalification, the project has already served to illustrate the eagerness of developers to enter the Bahraini wastewater market, which suggests the privatisation of this utility will also be a success.