GCC residents often take for granted their lives in the impressive cities they call home. Built off the back of vast oil-generated revenues, these cities have – in the space of a generation – expanded from small hubs of local trade to bustling metropolises that interact with millions from around the world on a daily basis.

This growth shows no sign of stopping either, with population levels rising every year and construction continuing apace, even with the recent slump in oil prices, which has hit regional government budgets quite severely.

However, if this level of development is to continue, regional governments need to start paying attention to another vitally important liquid – water. As a fundamental part of human life and survival, water is an essential need for the region, but it remains a considerable challenge to produce and supply in the arid Middle East region.

According to World Bank data, more than half the people in the MENA region live under conditions of water stress, which is when water demand outstrips supply. Of even greater concern is the expectation that water availability per capita will halve by 2050, due to rising populations, a trend likely to be exacerbated by climate change, the World Bank report adds.

This will have a direct economic impact on countries in this region, with the report predicting that water scarcity could cost some regions up to 6% of GDP over the next 30 years.

Therefore, investing and building critical water-related infrastructure is likely to be of crucial importance to the region. With desalination being the most heavily-used water-generation technology in the GCC, it is expected that many governments will invest billions in expanding capacity. At present, some 70% of the world’s desalination capacity is thought to be in the Middle East.

While this is certainly an important step towards resolving the water scarcity problem, it also creates a host of larger issues, given that desalination is hugely energy intensive, oil-reliant and causes considerable environmental damage.

Therefore, it is essential to find a cleaner, more sustainable approach to water production, which is part of the reason Almar Water Solutions exists. Owned by Abdul Latif Jameel Energy, the company has been established to “tackle the challenges of water scarcity and contamination”. Focusing on the provision of global solutions that will contribute to sustainable development in the water sector, Almar will help construct and operate water desalination and purification treatment plants in areas that need them most.

“The last 10 years have shown that water scarcity is one of the biggest problems that the world will have to face in the coming years,” Carlos Cosin, CEO of Almar Water Solutions, tells Big Project ME during a meeting with selected members of the press at Abdul Latiff Jameel’s offices in Jumeriah Lakes Towers, Dubai.

“Over the last century, we’ve increased the usage of water while also increasing the size of the population, which is creating a great number of problems in some of the regions that are not prepared to face this crisis. My view is that there is enough water in the world, but the problem we have is that it is not very well handled. It is polluted and it is not very well balanced and distributed. That’s some of the problems we have to face over the next few years. At the end, we see that the consequences will be felt by the 1.2 billion people living in what we call scarcity areas, while 1.6 billion people will be really affected at an economic level.”

While this paints a fairly gloomy picture, Cosin is adamant that Almar will be able to help regional governments and utility providers over the coming years, backed as they are by Abdul Latif Jameel Energy’s resources and capabilities.

“We want to be a recognised leading player in the water sector, able to provide commercial solutions to the challenges of achieving sustainable development. Abdul Latif Jameel Energy’s expertise and extensive global reach will strengthen our efforts to do so. By combining water treatment services with a renewable energy offering, we can also help reduce costs and the environmental impact,” he explains.

Roberto de Diego Arozamena, CEO of Abdul Latif Jameel Energy, adds that the parent company’s strategy is to focus on renewable energies such as solar, wind, waste-to-energy and hydro power.

“Through the establishment of Almar Water Solutions, Abdul Latif Jameel Energy is uniquely positioned with both our renewable energy and water treatment solutions. Almar will invest in water projects globally, with a core focus on Latin America, the Middle East and Africa.

“The group has always been concerned with water, actually. Our chairman has a participation in a desalination company in Jeddah, and in parallel we’ve created the Abdul Latif Jameel World Water and Food Security Lab at MIT, which is focused on promoting water and food research and developmental technologies, programmes and policies with measurable effects on a global scale,” Arozamena elaborates.

The idea with Almar Water Solutions is that the new company is a step further in ALJ Energy’s renewable energy and environmental services strategy, which builds on the company’s successful acquisition of Fotowatio Renewable Ventures (FRV) in 2015. That company has rapidly expanded in recent years, and is now the largest GCC-based solar photovoltaic provider.

“FRV is now in 15-plus countries, and most of them overlap with the water business,” says Arozamena. “There are significant synergies between the two businesses, as they’re both project-based and use project finance. The cycles are different, but the overall business concept is the same.”

“The strategy with Almar is to develop, finance, build and operate the plants, and after a reasonable period of time, when the production is stable, sell the assets – but keep the operation and maintenance of those assets.”

Cosin adds that although government budgets have tightened, the private sector has started to show greater interest in the water generation industry. He points out that the new liquidity in the financial sector means investors are now on the lookout for new opportunities.

“There is now, in the private sector, extensive know-how about how we can improve the way to produce water with more innovation, efficiency in the plants and how to accommodate the proper risk between the private and public sector.

“At the end, this is moving in a different way – how we finance infrastructure. We’ve gone from the typical design and build, or EPC, to the PPP model for private practices. This will be giving us a very good solution to develop a new way for infrastructure development,” he says.

Furthermore, he points out that Almar is getting into the water production sector like a developer, which sets it apart from many other rival firms.

“If you try to evaluate how many developers there are in the water sector, it’s very difficult. It’s very specific work. In the US, you can find one – Poseidon – but in the global water sector, it’s mainly the EPC contractors. No one is starting from scratch, creating solutions with governments and utility providers, and finding out what is the best way,” Cosin elaborates.

“One important point for us with Abdul Latif Jameel Energy is the long-term vision that they have. These projects take two to three years to develop. They also have strong financial credentials in the sector, and also a very good reputation in the areas that are probably 60% or 70% of the market for desalination.

“We decided to create this new platform about 10 months ago, with the possibility to use this extension of FRV in the water sector, in the very parallel areas that the water business needs to be in, which is the Middle East, Latin America and Africa.”

Keeping this vision in mind, Cosin and Arozamena outline how they built and developed a team with the necessary experience in developing projects in the municipal and industrial sectors, while also recruiting personnel with the knowledge and experience to extend the PPP model, so often used in the municipal sector, into the industrial sector.

“In the last 20 years, working in 25 countries, we have developed and participated in $2.3 billion worth of project finance worldwide, while assisting more than five million people in different cities in China, Algeria, India and the US,” says Cosin.

“We’ve created the business, developed it right from scratch, and our idea is that we can tender for the utilities that launch internationally, but also to help many of the utilities that do not have the framework to launch this internationally.

“It’s in our DNA to assume this risk, because we have the experience. This is what we feel comfortable with, and we have the experience to handle assets that we’ve created from scratch. Our idea is to give comfort to the customers and investors, to operate the plants and keep them in operation. But when it is stable and we’ve reduced the risks from construction and development, our idea is to rotate the assets.”

“When we sell the assets, what we do is rotate those funds into developing new projects,” Arozamena chimes in. “We are not a quoted company, and we don’t intend to be a quoted company, so we will only do those projects that make sense to us.

“We’re not in this business to create a huge volume that will eventually IPO, or to sell to someone. This is a very long-term vision. It takes us some time to get into a new business, but when we do, it’s on a very long-term basis,” he concludes.