Israel publishes tender for world's biggest desalination plant

Sorek desalination plant  photo: Eyal Izhar

After an eight-year delay and severe criticism by the State Comptroller, the Sorek B facility is starting to make progress.

The State Comptroller's severe criticism of the government's failure to meet its desalination targets is having an effect on decision-makers. Following an eight-year delay, construction of Sorek B, Israel's sixth desalination plant, planned to be the world's largest, has begun to make rapid progress.

Four months after the government approved a strategic plan for coping with Israel's prolonged drought, the ministerial tenders committee, representing the Ministry of Finance, the Ministry of National Infrastructure, Energy, and Water Resources, and the Israel Water Authority, today published the tender documents for the Sorek B desalination plant. The committee is headed by Itsik Marmelstein, head of the energy and water unit and private public partnership (PPP) projects in the Ministry of Finance Accountant General department.

The franchise holder for the PPP project will be responsible for planning, financing, constructing, operating, and maintaining the desalination facility for 25 years. The plant will produce 200 million cubic meters of water a year, bringing Israel's aggregate desalinated water production capacity to 785 million cubic meters a year, equal to 85% of Israel's annual home and municipal consumption.

Earlier this month, seven local and international consortia submitted their candidacy to the pre-selection stage of the tender. The committee will announce in November which consortia have met the threshold conditions and will be invited to submit bids in the tender.

The consortia submitting their candidacy were Hutchison, Israeli companies IDE Technologies and GES, Chinese company PMEC, French company SUEZ, a partnership of Spanish company Acciona with Israeli company Allied Investments, and a partnership between Spanish company Aqualia and Israeli company WPI.

IDE, controlled by Yitzhak Tshuva and Alpha Partners, had to sell its holdings in the Sorek A desalination plant in order to participate in the new tender. There is no guarantee, however, that IDE will win out over the six other consortia in the pre-selection stage.

In tenders of this type, one winner is usually selected and then asks a bank to provide financing for carrying out the project. For the first time in a desalination tender in Israel, the state can select two bidders for the final stage, in which they will have to choose a lending bank and complete with it the procedure for providing financing for the project. Together with the lending bank, the bidders will then be allowed to submit improved offers, from which the state will select the winning bid (a best and final offer (BAFO) proceeding). This proceeding will increase certainty about execution of the project and provide the state with a better bid.

The tender documents also give the developer the option of building a private power station with a 140-megawatt capacity for operating the facility. A letter of intent from the European Investment Bank (EIB) for providing up to €200 million in financing for the project is also attached to the documents.

If the drought persists next year, disruptions in home water supplies are liable to occur.

Israel's water desalination plants currently supply 585 million cubic meters of desalinated water a year, amounting to 70% of all of the water supplied to homes and communities. Under a June 2008 cabinet resolution, there should already be six desalination plants. The State Comptroller's report states that the Water Authority did not take the necessary steps to meet the desalination target set by the government in 2008; instead, it in effect changed the government's desalination target volume without obtaining approval for this measure. As a result, a sixth desalination plant was not built, water quotas for agriculture were cut, and continued drought is liable to disrupt home water supplies.

Sorek B is scheduled to begin operating only eight years from now, meaning that if the drought continues next year for the sixth consecutive year, disruptions to the water supply are likely.

Published by Globes, Israel business news - en.globes.co.il - on October 29, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Sorek desalination plant  photo: Eyal Izhar
Sorek desalination plant photo: Eyal Izhar
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