Senegal Cancels $800 Million Desalination Plant Deal with Saudi Arabia’s ACWA Power

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Senegal will cancel an $800 Million Desalination Plant Deal that was expected to take a duration of 32 years that was signed by former president Macky Sall with Saudi Arabia’s ACWA Power company due to its high cost, the minister of water and sanitation said.

Valued at $800 million, the contract for the construction and operation of a desalination plant in the capital Dakar was signed on March in the final days of Sall’s presidency. Touted as the largest project of its kind in Sub-Saharan Africa, the plant’s production capacity of 400,000 cubic meters per day was intended to alleviate shortages in a country where water withdrawals are forecast to rise by up to 60% by 2035, according to the World Bank.

But Minister Cheikh Tidiane Dieye mentioned on Thursday the cost in the long term made it “a short-termist and expensive solution”.

Reasons for the Cancellation of the $800 Million Desalination Plant Deal

“The price of water will become more expensive in the long run because of the technology used to produce it,” he said, speaking on a private TV network. “I said that it (the project) is not going to happen.”

He criticised Sall for signing the deal so close to his departure from office. “A president who is due to finish his term of office in a few days’ time and who pledges his signature for a period of 30 years is unacceptable to any mind.” ACWA did not immediately respond to a request for comment outside business hours.

One could argue that clean energy funds have done a very good job of cleaning out investors’ pockets.

The company signed an agreement with Senegal’s ministry of water and sanitation and state-backed National Water Company, to build a 400,000 cubic metres per day desalination plant in Dakar.

Expected Capacity of the Project

The capacity was divided into two phases, each with a production capacity of 200,000 cubic metres per day. Moreover, the Saudi company was to develop, finance, build and operate the Grand Cote seawater desalination plant using reverse osmosis technology. The contract duration was 32 years, the company said in a statement to the Saudi stock exchange on Thursday.

Acwa Power expected the project to have a positive financial impact after the first phase becomes operational by the beginning of 2028. Acwa Power, backed by the kingdom’s Public Investment Fund, has 75 assets in various stages of development and in operation in the Middle East, Africa, Central Asia and Southeast Asia. In December 2023, Raad Al-Saady, vice chairman and managing director of Acwa Power, said the company was targeting future investments in Africa as part of the clean energy company’s plan to triple in size by 2030.

“Africa needs that energy transition. But there aren’t enough developers going there and asking questions,” he said during a panel discussion at Cop28.

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