Kuwait is one of the driest countries in the GCC and MENA regions. Receiving no more than an average of 110 mm of rainfall per annum, the country is devoid of fresh water streams. Over-depleting of aquifers has led to reliance on desalination for almost all the needs of the country (90% of all water used in the country is derived from desalination). The country has a very high consumption of water at 500 liters per person per day. While the government is implementing awareness programs, it is unlikely that the consumption will lower, with the population increasing at almost 1.62% annually. As of 2015, the desalination market in Kuwait was worth USD X.X billion. The market size is expected to grow at a CAGR of XX.XX%.
The depleting natural precipitation and ground-water levels and increasing population are the major drivers of the sector in the region. A continued effort at increasing diversification of government income from hydrocarbons is another factor that has led to an increase in construction projects, industries, manufacturing plants, etc., leading to more demand for fresh water. Moreover, the government is supporting and encouraging the establishment of desalination plants to meet the nation’s demands.
Restraints and Challenges
The biggest challenge of desalination is the cost. As per a study, the cost of desalinated water per meter cube was USD 1.04, 0.95 and 0.82 for MSF, MED, and RO, assuming a fuel cost of USD 1.5/ GJ. Moreover, energy accounts for approximately three-fourths of the supply cost of desalination. Transportation cost is also added to the overall cost, making desalination a very costly process. Another negative impact of desalination is on the environment with the treatment of brackish water leading to pollution of fresh water resources and soil. Discharge of salt on coastal or marine ecosystems also has a negative impact.
The country’s adverse business climate due to rifts between the National Assembly and the executive branch has led to a slow pace of economic diversification. However, efforts pushed forth by way of a planned USD 104-billion-investment have borne fruit only partly because of the uncertain political climate. The relative increase in economic diversification has led to a more open economy, engendering an increase in the number of businesses, services, and industries, all implying an increase in the need for water. It is estimated that consumption will increase from 405 million imperial gallons per day in 2011 to an estimated 780 million imperial gallons per day by 2020. Currently, all desalination plants in Kuwait are owned and managed by the government. However, going forward, the emphasis will be on setting up new desalination plants in the public-private-partnership in the Integrated Water and Power Plants format. Towards this end, the MEW (Ministry of Electricity and Water) is currently interested in issuing tenders. Hence, there are many opportunities in the sector in Kuwait.
About the Market