Iran changes PPP rules to spur water reuse
Private investment has been wielded in the desalination market, but has yet to make an impact on wastewater. With sanctions due to be lifted, international investors are starting to take an interest in Iranian procurement.
Iran’s National Water and Wastewater Engineering Company (NWWEC) has changed its rules on wastewater PPPs in a bid to bring in more private investors and spur the reuse of treated wastewater in the country.
The move comes as the historic agreement between Iran and the P5+1 group of nations looks set to lift sanctions on the country, meaning that money transfers and the import of currently restricted goods will once again be allowed. For years, international investors, contractors and technology suppliers were effectively locked out from doing business in Iran, with no realistic way of concluding financial deals.
Although it has been restricted to dealing with domestic companies, Iran’s main water and wastewater body has found success in privatisation through the BOO programme it uses to procure new desalination facilities. Although in theory there was a BOO process available for the procurement of wastewater treatment assets, the large capital requirements and reduced value for developers meant that it was less successful, and the sector needed heavy support from independent funders, most notably the Islamic Development Bank.
The NWWEC is now looking to spur more private development in wastewater treatment and collection by rolling out a ‘buy-back’ model, whereby a wastewater collection or treatment BOT will be bundled with a concession to sell treated wastewater. The authorities hope that this will spur investment in wastewater infrastructure, particularly in inland industrial cities such as Kerman and Yazd, where the water shortage is particularly intense, and where desalination is not a feasible option.
At least 13 provinces in Iran are now categorised as facing water stress, with rainfall decreasing, and natural water sources drying up. The government has a long-term plan to use desalination to supply inland areas of the country, but the amount of money and planning that would be required to implement such a project is ambitious, and is exacerbated by a chronic lack of tariff income.
Global Water Intelligence - Vol 16, Issue 7 (July 2015)