The €7.7bn Jordan Red Sea Project accepts first bids

hdhdMADRID | As reported on Wednesday in the newspaper Negocio, the Spanish company Abengoa will make a bid in Jordan to carry out the construction works that will join the Red Sea to the Dead Sea, valued at €7.7 billion. Acciona, which had also considered participating in the project, decided to step back at the last minute due to the lack of specificity. BBVA may be one of the candidate entities to finance the construction of this major infrastructure.

“The Jordan Red Sea Project (JRSP) designed by the government of Jordan, specifically by the Ministry of Water and Irrigation, and known in the industry as ‘two seas’, consists of broadly speaking the transportation, distribution and maintenance of water services from the Red Sea to the Dead Sea, as well as supplying water to many towns including the capital, Amman.

“Works have been valued at a whopping €10 billion (€7.682 billion) and will require two desalination plants, three hydroelectric plants, thirteen pumping stations and two pipelines, each over 300 km long. The budget for the first phase of the project alone ranges between €3.5bn €3.85bn.

Until recently, six groups had expressed interest in participating: Acciona Agua/Mitsubishi; ACWA Power/ACWAHolding/ Samsung Engineering; Consolidated Contractors Group/SAudi Oger/Suez Environnement; Orascom Construction/Orascom Hotel/Veolia; Samsung C&T/Korea Water/Kolon Engineering & Construction/Befesa/AECOM and Sinohydro.

According to what the Spanish newspaper was told, Acciona withdrew from the project due to the doubts that such a ‘science fiction’ project generated. Industry sources, familiar with the work bidding process justified Acciona’s loss of interest in the Jordanian mega-project because it is

“very attractive a priori, but undoable in practice. This is a project whose demand is not assured because it is also subject to a hotel development of which no one knows the real impact nor its needs,” said consulted sources that were not surprised by the step back that the company, chaired by José María Entrecanales , took.

On their part, sources connected with JRSP assured to this newspaper that this is not a project that would interest Acciona.

“This is a very open project and it would not make much sense for them to participate.”

The newspaper pointed out Abengoa as a possible finalist, specifically its subsidiary Befesa. This decision will be announced next Monday. Subsequently the client, in this case the Ministry of Water and Irrigation, would evaluate the projects, taking into account the most creative and innovative. Two companies would then pass to the next phase which would involve a negotiation period that would last approximately two months.

The water diversion project designed by the government of Jordan aims to extract from the Red Sea 2,150 cubic meter of salt water per year of which 930 would be desalinated and used for consumption while the remaining 1,220 would be channeled to the Dead Sea. The objective of this project is to prevent the gradual disappearance of the Dead Sea taking into account the current rate of exploitation, as well as providing a reliable supply of water to the region and promote economic growth.

To achieve these objectives, the government of Jordan intends to promote the project and obtain support from the governments in the region, investors and partners. There are 20 international organisations who are potential candidates to fund the project, including BBVA, the only Spanish bank. The list includes institutions such as HSBC, BNP Paribas, UBS and Deutsche Bank, Credit Suisse, Barclays Capital and Societe Generale, among others.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

Be the first to comment on "The €7.7bn Jordan Red Sea Project accepts first bids"

Leave a comment