Saudi Water Sector Overhaul: Greater Regulatory Clarity and New Investment Opportunities
Saudi Arabia Focus
Rafiq JafferPartner, Head – Debt Capital MarketsBanking & Finance (Bahrain, KSA & UAE)
Aurangzeb MaqsoodSenior Associate,Banking & Finance
Transformation of SWCC into the Saudi Water Authority centralises regulation, advances mega desalination projects, introduces stricter compliance, and opens the sector to private investment
The Kingdom of Saudi Arabia aims to achieve approximately 8.5 million m³/day desalination capacity by 2025 and up to 20 million m³/day desalination capacity by 2030; as it stands, it already is the world’s largest desalination producer comprising of approximately 22% of the global share.
The Kingdom has also announced the development several mega water treatment and desalination projects; which include:
the 600,000 m³/day Shuaibah 3 Desalination Plant converting Multi-Stage Flash (MSF) technology to the more efficient and environmentally friendly Reverse Osmosis (RO) technology involving a total investment of SAR 3.079 billion (USD 821 million);
the Rabigh 5 independent water project with water treatment capacity of 400,000 m³/day; (iii) the SAR 2.6 billion ($693 million) Ras Mohaisen Independent Water Plant (IWP) project with a contract capacity of 300,000 m³/day; (iv) the Hadda & Arana Independent Sewage Treatment Plants (ISTPs) with a project capacity of 100,000 m³/day (Hadda, expandable to 250,000) and 250,000 m³/day (Arana, expandable to 500,000); (v) the Jubail 4&6 project with a capacity 600,000 m3/day, and more being under the PPP structuring or tendering phases.
In early 2024, Saudi Arabia’s Council of Ministers approved the resolution converting the Saline Water Conversion Corporation (SWCC) into the Saudi Water Authority (SWA), effectively making SWA the regulator for water services in the Kingdom. This transformation bolsters oversight of water resources and advances the National Water Strategy’s objectives in line with Vision 2030. For businesses in the water sector, the change heralds a new regulatory landscape – one with clearer governance, updated compliance requirements, and greater scope for private sector participation.
The Kingdom of Saudi Arabia aims for approximately 8.5 million m³/day desalination capacity by 2025 and up to 20 million m³/day desalination capacity by 2030; as it stands, it already is the world’s largest desalination producer comprising of approximately 22% of the global share.
The establishment of the Saudi Water Authority centralizes regulatory oversight of the water sector under one dedicated body. Previously, water regulation was fragmented among multiple agencies, including the Ministry of Environment, Water & Agriculture (MEWA) and the Water & Electricity Regulatory Authority (WERA), while SWCC operated most desalination facilities. Now, SWA serves as the sole regulator for water services. In parallel, WERA was renamed the Saudi Electricity Regulatory Authority, with water functions removed from its mandate. By unifying regulation in one entity, the government aims to streamline rules and improve service management. Stakeholders should benefit from more consistent guidance, simplified processes, and a single point of contact for regulatory matters.
Under SWA’s expanded mandate, companies in the water sector face new compliance obligations – especially regarding licensing and sustainability. The SWA is tasked with developing policies and setting unified regulations for licensing water activities. Now, any company involved in desalination, water supply, or wastewater services must obtain a license from SWA. The authority is also standardizing technical and engineering norms to ensure operators comply with local content requirements and sustainability benchmarks. In practice, this means businesses will be held to stricter standards on water quality, conservation, and environmental impact. The Water Law (2020) emphasizes sustainable water management and encourages investment in water conservation projects. SWA will build on this foundation by enforcing compliance and steering the industry toward more sustainable practices. Companies should prepare for more rigorous inspections and reporting requirements.
A core goal of the reform is to encourage greater private sector participation in Saudi Arabia’s water industry. Saudi Vision 2030 and the National Water Strategy both prioritize privatization in the water sector, and SWA’s mandate explicitly includes “increasing private sector participation”. The government’s privatization program features major water infrastructure projects slated for public-private partnerships (PPPs). With an independent regulator in place, investors can be more confident that licensing, tariffs, and service standards will be applied fairly. Importantly, economic regulation of water tariffs now falls under SWA’s purview. The Water Law empowers the regulator to approve and periodically review water tariffs, so gradual moves toward cost-reflective pricing may occur to support long-term project viability. Overall, this clearer regulatory framework reduces uncertainty and should help attract more investment into water infrastructure.
The transformation of SWCC into the Saudi Water Authority marks a major shift in how the Kingdom’s water sector is governed. Unified regulatory oversight, new licensing regimes, and stricter enforcement are creating a more transparent and investor-friendly environment. While new opportunities are emerging, companies also face greater compliance responsibilities. Businesses should proactively monitor new licensing, tariff, and sustainability requirements to stay compliant.
For further information,please contact Rafiq R. Jaffer and Aurangzeb Maqsood.
Published in September 2025
