The regulator that owns the plants: Saudi Arabia’s water restructuring

Until recently one body did most of it. The Saline Water Conversion Corporation was the world’s biggest producer of desalinated water, and it also held the transmission and storage assets.^5 1 Regulation sat split between the ministry and the Water and Electricity Regulatory Authority.⁶ Vision 2030 called for that to be pulled apart, with private capital taking production.^6 4 The ministry’s own timeline dates the National Water Strategy 2030 to 2018, the Water Transmission Company to 2019, the first comprehensive Water Law and a water regulator to 2020, and approval of the Saudi Water Authority’s regulatory framework to 2024. The procurement company’s predecessor dates from 2003.⁷

The pulling apart happened on paper. Council of Ministers Resolution 652, of 21 June 2022, ordered the transfer of the corporation’s production, transmission and storage assets to a Public Investment Fund vehicle, the Water Solutions Company.^1 8 In May 2024 the corporation itself was renamed the Saudi Water Authority and given the sector regulator’s mandate.^2 3 Water functions were removed from the electricity regulator, which became the Saudi Electricity Regulatory Authority.⁶

The intended shape separates the functions. The ministry sets policy.¹ The Saudi Water Authority licenses, sets standards and approves tariffs under the 2020 Water Law.^2 6 9 Sharakat procures independent water and sewage plants against long-term offtakes.⁴ A state transmission company is due to take over pipeline procurement, and the National Water Company runs urban services.¹ Production moves to a separate company that sells under purchase agreements.¹

Sharakat publishes a seven-year statement whose procurement table lists 53 projects, most future ones with quarter-level milestones.⁴ That makes it auditable against its own plan. Its stated target is complete private participation in desalinated water production by 2030.⁴

Competitive procurement compressed tariffs hard. Across the Gulf they fell from above US$1.00 a cubic metre under thermal distillation to below US$0.40 under independent water projects, according to Smart Water Magazine, which argues that would not have happened under a state monopoly.¹⁰ The record low bid, US$0.277 at Hassyan in Dubai in 2020, was never financed; the plant was re-let at about US$0.365 and reached financial close in April 2024.^{11 12 13 14} The pressure persists: Vision Invest’s preferred bid for the Riyadh to Qassim pipeline in December 2025 came in almost 20 per cent below the next nearest.¹⁵

Regulation is now one counterparty rather than several, which the law firm Al Tamimi identifies as the practical gain for investors.⁶ The pipeline delivered assets too. Nine Sharakat desalination plants were in operation by the 2025 statement.⁴ Inside the state fleet, the authority says it raised the capacity of more than 400 inland plants by over 1.5 million cubic metres a day in two years.¹⁶

The regulator still owns and operates the assets it regulates. This is documented rather than inferred. Pinsent Masons wrote in October 2025 that the authority’s production arm still runs most of the former SWCC facilities, with around 5,000 staff.¹ It warned investors to understand bodies performing overlapping regulatory and operational functions.¹ Saudipedia’s entry on the authority says the same thing from the other side: the authority operates the production assets until they are transferred.¹⁷

The transfer was ordered more than four years ago.¹ The corporation’s governor said in June 2022 it would take 18 to 20 months, possibly three years.¹⁸ In August 2026 the production arm handed management and supervision of more than 400 groundwater and surface water plants to Water Solutions Company (Al Holol), the company named in the 2022 resolution, as part of what the authority calls a phased transfer of management and supervision responsibilities. Its own staff still carry out operation and maintenance.^19 16 8

Privatisation was abandoned rather than completed. The cabinet approved selling eleven plants in September 2019.^10 5 Seven companies and consortia were invited to bid for a 60 per cent stake in Ras Al Khair.²⁰ The facility cost more than US$7 billion to build, and the sale was expected to raise about US$2 billion.²¹ The sale was suspended in July 2021.^20 21

The published plan is also slipping against itself, which only transparency reveals. Between the 2024 and 2025 statements all seven planned desalination plants had their tender dates pushed back.^22 4 Six saw their operation dates slip, fifteen project-years in all.^22 4 Rabigh 5 now lands in 2033, beyond Vision 2030.⁴ Riyadh North, a sewage plant dated for 2029 in the 2024 edition, now has no dates at all.^22 4 The procurer lengthened its own tendering assumption from 12 to 14 months out to 18 to 24.^22 4 Saudi water infrastructure awards in the first half of 2026 were US$3.14 billion, against US$7.58 billion a year earlier.²³

As Smart Water Magazine puts it, legal ownership and strategic control are not the same thing. At Hidd, Bahrain decides what gets built, to what specification and at what tariff, while a private developer owns the plant.^24 10 Saudi Arabia owns its assets, regulates the market and sets its contractors’ targets, while still procuring new capacity privately.¹⁰

Mhamed Biygautane of the University of Melbourne argues that Gulf governments are quietly reasserting sovereign control over the strategic core of the water system. Water is being reclassified from a tradeable utility service into a national security asset.¹⁰ He gives three determinants: fiscal headroom, because strong balance sheets reduce the appetite for off-balance-sheet structures. Strategic sensitivity, because desalination sits closer to defence than to electricity in the Gulf. And institutional learning, because procurement agencies can now unbundle risk themselves.¹⁰

The boundary condition is money. Re-sovereignisation is a choice available to governments that can afford it. For governments without that headroom, the concession model keeps a plant off the sovereign balance sheet.¹⁰ That is why Bahrain, with gross government debt of over 133 per cent of GDP in 2024 on the IMF’s figure, tendered its first independent water project rather than building the plant itself.^25 26 10