Presented at the

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Power Water Utility Company For Jubail and
Yanbu (MARAFIQ)
Dr. Akili Daifallah Khawaji Director for Marafiq
Company Program Royal Commission for Jubail
Yanbu Kingdom of Saudi Arabia
Presented at the Saudi Arabia Major Investment
Opportunities in the 21st Century 13-15
November, 2000 Madinat Jubail Al-Sinaiyah
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CONTENTS

• Royal Commission for Jubail Yanbu at a Glance

• MARAFIQ Company Program
• Conclusions

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• Royal Commission for Jubail Yanbu at a Glance

• Background
• Existing Utilities
• Utility Demand Growth

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Background
The Strategic Decision was Made by the Government
of Saudi Arabia in the Early 70s

• Stop Burning Associated Gas, Build Gas Collection
  System, and Transport Gas to Jubail and Yanbu
  (Done by Saudi Aramco).
• Establish the Royal Commission to Plan, Construct
  and Operate Two Industrial Cities at Jubail and
  Yanbu.
• Establish Saudi Basic Industry Company (SABIC)
  which will Invest in Building Petrochemical
  Industries in Both Cities.

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(No Transcript)
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Jubail Industrial City (1016 Km2) (Master Plan)
Airport Area 250 Km2
Residential Area 170 Km2
Industrial Area 130 Km2
Park Area 200 Km2
Arabian Gulf
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Jubail Industrial City
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Yanbu Industrial City (185 KM2) (Master Plan)
Support Areas
Resedintial Community
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MADINAT YANBU AL-SINAIYAH (MYAS)
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INDUSTRIES (MYAS)
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Scope of Services and Gas/Utility/Petrochemical
Relations
Scope of Services
GAS SUPPLY
ENERGY INTENSIVE HEAVY INDUSTRIES

• Electrical Power Supply (Yanbu)
• Desalinated Water (Potable, Process)
• Seawater Cooling
• Sanitary Industrial Waste Water Treatment

FUEL
FUEL
UTILITIES
PETRO- CHEMICAL INDUSTRIES
FEED STOCK
UTILITY
UTILITY
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Existing Utilities
Production Facilities at Jubail and Yanbu
Industrial Cities
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Power Demand Forecast
Utilities Demand Growth
Peak Power (MW)
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Desalinated Water Demand Forecast
Potable/Process Water (M3/Day)
YEAR
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Seawater Demand Forecast
Seawater Cooling (M3/Day)
YEAR
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Sanitary Wastewater Demand Forecast
Sanitary Wastewater (M3/Day)
YEAR
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Industrial Wastewater Demand Forecast
Industrial Wastewater (M3/Day)
YEAR
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• MARAFIQ Company Program

• Objectives
• Legal Commercial Structure
• Key Elements in the Program

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Objectives

• Supply two Industrial Cities of Jubail Yanbu
  with Reliable, Reasonably Priced Utility Services
  that Satisfy the Growing Needs in These Two
  Cities.
• Arrange for a Private Commercial Basis without
  Imposing Additional Requirements on the Budget of
  the Royal Commission or Relying on Sovereign
  Guaranties.
• Provide Investment Opportunities for the Saudi
  Business and Financial Institutions.
• Provide Employment and Training Opportunities for
  Qualified Saudi Manpower.

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Legal Commercial Structure
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Transitional Paths in Infrastructure
Privatization
Political Cost of Adjustment/Regulatory Effort
HIGH
LOW
Publicly Owned Regulated Monopoly
C
B
A
-
Unbundling Deregulation
Private Entry Allowed
Unbundling and Privatization
Economic Efficiency of Provision
No Unbundling Divestiture Only
MARAFIQ
Divestiture
Unbundling/ Demonopolization
Divestiture of SOE
Competitive/Contestable Private Infrastructure
Provision
HIGH
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Competition Versus Monopoly

• Partial
• Liberalization

Generation
Distribution
Transmission Control
Customers
Open Access to Transmission System for Producers
Levy for Transmission
Partial Liberalization
Producers Connect to T/D System
Total Liberalization
Levy for Trans. Dist.
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Steps for Privatization
1
2
3
Corporatization
Commercialization
Changing Ownership to Private Sector
Complete Privatization
Partial Privatization
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Legal Structure of the MARAFIQ
Joint Stock Company
Closed Joint Stock Company
Limited Liability Company
Present Status
Present Status
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Commercial Structure of the MARAFIQ
Saudi Aramco SABIC OIU
ECAs
USERS
Saudi Institutions
Regional Intl Banks
Royal Commission
Utility Service Agreements
Loan Agreements
Utility Concession Lease Agmt
Construction Contractor
MARAFIQ
Equity and Management Agreements
Turn-Key EPC Agreement
Subcontractors Suppliers
OM Agreements
Supplier Agreements
Intertie Agreement
OTHERS
SWCC
SEC West IPP
ARAMCO
Direct Hire/ Contractors
SEC West
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Key Elements in the Program

• A Saudi Joint Stock Company Called Power Water
  Utility Company for Jubail and Yanbu (MARAFIQ)
  will be Established with a Capital of SR 2.5
  Billion Invested by the Participant Partners
  (Royal Commission, Public Investment Fund, Saudi
  Aramco, SABIC and Other Saudi Private Investors).
• MARAFIQ will be Responsible for Operation,
  Maintenance, Management, and Expansion of the
  Power, Water, Seawater, and Wastewater Utility
  Infrastructures in Industrial Cities of Jubail
  and Yanbu.

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• MARAFIQ will Lease the Existing Facilities which
  will be Owned by MARAFIQ at the End of the Lease
  Term.
• MARAFIQs Services will be Provided to the
  Non-Industrial User at the Government Approved
  Rates, whereas its Services will be Provided to
  the Industrial Users at the Commercial Rates.
• MARAFIQ Board of Directors will Act as an
  Independent Regulator during the First 3 Years.
• The Board of Directors will Prepare the Details
  of the Independent Regulator and Get Approval
  from the Council of Ministers.
• Since Users are Credit-Worthy, MARAFIQ will Be
  also Credit-Worthy.

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• The Kingdom has Favored the Company with the
  Privileges such as
• Legal Reserve 4 instead of 10
• Maximum Reserve 20 instead of 50
• It is Anticipated that the Company will Invest in
  New Projects and in the Expansion of the Existing
  Infrastructure Projects. The Cost will Range
  from SR 5 to 8 Billion during the First 5 Years
  of its Life.
• The Royal Decree Approving the Basic By-Laws of
  the MARAFIQ Has Been Issued.

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• The MARAFIQ Program Implementation Plan is as
  Follows

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• Conclusions

• Additional Power Water Production Plants are
  Needed to Meet the Utility Growth.
• The MARAFIQ Program is Essential for Continued
  Industrial Growth in the Two Cities.
• Combined Utility Production (Power, Desalination
  and Seawater Cooling System) will Result in a
  Minimum Cost/Unit of Production.
• Phased Privatization Approach will Allow Maximum
  Gain with Minimum Impact on Users.

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• MARAFIQ will Allow Competition in Production of
  Electricity and Desalinated Water.
• Users and Owners will Develop Hand by Hand the
  Well-being of MARAFIQ.
• Cost of Service Approach Required will Establish
  Cost Data which will be Available after 3 Years
  of MARAFIQ Operation.

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THANK YOU
www.royalcommission.com
E-Mail marafiq_at_rc-ynb.com