Aqaba Desalination Plant Phase 1
Project description
This summary covers an application by Meridiam Eurasia 3 of France and Suez International of France (collectively, the Guarantee Holders) for their equity/quasi-equity and/or shareholder loan investments into the National Carrier Project Company (the Project Enterprise) for the preliminary development activities (Early Works or Limited Notice To Proceed (LNTP) Works or Phase 1), in preparation of the financing, construction, operation and maintenance of the Aqaba-Amman Water Desalination & Conveyance project, a seawater desalination plant and associated infrastructure in Aqaba, Jordan, with a net potable water capacity of 300 million cubic meter per year (Phase 2).
Phase 1 scope of works will be limited to engineering and preparatory works necessary for the development of the desalination facility. Specifically, these activities will consist of design and engineering studies, on-site surveys, early staff mobilization and preparation, and environmental and social (E&S) assessments to be completed before financial close.
The Guarantee Holders seek cover for up to US$71.25 million for their investments of up to US$75 million in the LTNP Works, against the risk of Breach of Contract (BoC) for a guarantee period of up to 2 years (the Project).
Following the completion of Phase 1, Phase 2 will start and will entail the following components: (i) Marine Works: an intake system composed of a pumping station to convey seawater to the desalination plant site and an energy dissipation chamber before discharge of the brine back to the sea; (ii) Desalination Plant: a facility producing 300 million m3 of desalinated water per year through four independent parallel production lines, located in the Aqaba area; (iii) Conveyance System: composed of a 438 km long underground water pipeline, three tanks and four pumping stations to convey water to the Aqaba turnout and to existing reservoirs near Amman; and (iv) Renewable Energy: a solar power plant with a production capacity equal to 280-300 MWp.
The scope of Phase 1 and Phase 2 are completely distinct. Phase 1 does not involve any construction or operational activities and will end before the beginning of Phase 2.
Environmental Categorization
The Project is category C under MIGA’s Policy on Environmental and Social Sustainability (2013) because the activities to be undertaken are primarily desktop exercises involving minor fieldwork and are therefore expected to have minimal or no adverse E&S risks or impacts.
Minimal E&S risks associated with Phase 1 relate to labor and contractor management and occupational health and safety. The Project Enterprise has demonstrated the capacity to implement Phase 1 in line with Performance Standard requirements.
The MIGA guarantee will not cover any construction or refurbishment activities, which will be undertaken as part of Phase 2. It is anticipated that the Project Enterprise will seek a MIGA guarantee for Phase 2, and therefore, a separate E&S due diligence and disclosure will be undertaken for Phase 2.
Development Impact
The Project (Phase 1) contributes to advancing the Government of Jordan’s National Water Strategy for 2023-2040 which outlines steps towards addressing water challenges housed in four pillars (reform the legal and institutional framework, improve resource management to balance supply-demand, achieve financial sustainability, ensure transparent regulation of services and costs) in tandem with the sector’s Financial Sustainability Roadmap which outlines a set of policy and investment measures that seek to close the operational deficit and reduce debt accumulation. The Project also supports innovation through its offering of advanced technology and modern standard practices for a non-conventional source of water supply for the sector.