Desalination wins over imports

Water levels in Israel's reservoirs and aquifers have dropped precipitously. The Sea of Galilee, Israel's main source of fresh water, which in the past supplied some 400 million metres³/year to the national water grid, has receded to its lowest level on record, and the government, after years of negligence, started in mid 2001 to explore emergency plans to alleviate the most serious water crisis in the country's history.

Two measures under consideration are the import of tankers of water from Turkey, and desalination. Whereas the import of water from Turkey, at a quantity of 50 million metres³/year, is currently under negotiation, pending bilateral trade agreements, the government has approved a large scale desalination policy, with the aim to desalinate seawater and saline water at a quantity estimated at 400 million metres³/year. Israeli and international companies responded to tenders issued by the government and by Mekorot, Israel's national water company. The Israel Desalination Society (IDS) forecasts that a total of 400 million metres³ of water will be treated each year at a cost of $1.2BN, and Water Commissioner Shimon Tal, estimates that $3.7BN is needed to develop Israel's water resources in the next 10 years.

In April 2001, Israel's IDE Technologies began operating its plant in Larnaca, Cyprus. IDE Chief Executive David Waxman was quoted in an article in The New York Times saying that 'Israel could use 10 such plants.' Over the past 30 years, IDE has built nearly 300 desalination facilities worldwide, and is a major contender in the current desalination race in Israel, applying new energy-efficient filtration systems.

Instead of heating and distilling the brine, the new filtration system strains salt out of sea water using synthetic membranes in a process consuming half as much power, compared with other desalination methods. Israeli water experts say that world demand for these improved reverse osmosis systems, used also for purifying brackish, saline and polluted water, is now growing at 10 times the pace of thermal desalination.

Planned Israeli desalination facilities and other alternative sources are: The Ashkelon, Ashdod, and Hadera Plants; coastal medium-small-size plants those on the Negev-Arava Plateau.

IDE Technologies, Vivendi and Dankner-Ellern won the government's tender to build the Ashkelon desalination plant. Forming the VID Desalination company (IDE with 50% of the shares, Vivendi - 25%, and Dankner-Ellern - 25%), this consortium, the first to win a bid in Israel, set a precedent in the global desalination business by quoting the lowest price ever of $0.52 for one metre3 of desalinated sea water. The facility, to be built at an investment estimated at between $150M and $250M, is now scheduled to desalinate 100 million metres³/year, double the volume specified in the initial tender.

The decision to add a second facility, came after Finance Minister Sylvan Shalom exercised the State's option it reserved in the original tender, thus making it the country's largest desalination facility, due to begin supplying water by the end of 2003. VID Desalination surprised the water trade by quoting even a lower price for desalinated sea water to be supplied by the second Ashkelon facility - $0.47 per metre³.

Sources at the Water Commission commented that 'VID's move to lower prices indicates the group's plans to dominate the local desalination market in its early stages.'

Ashdod Desalination, comprising the Baran Engineering and Projects; Ionics of the US, and the Via Maris group - a consortium of the Israeli companies Tahal, Oceana, Tambour Ecology, Gaon-Agro and the Spanish company Tadagoa, submitted the bid to Mekorot to desalinate 45 million metres³/year at an investment estimated at $130M. Scheduled to start supplying water at the end of 2003, the Ashdod plant is a turnkey project.

The Hadera Plant is planned as a BOT, to be constructed near the country's major electric power station on the Mediterranean coast, to produce 50 million metres³/year. The Ministry of National Infrastructures is now acting to change the terms of this tender to increase its production to 100 million metres³/year.

Six local and international companies responded to the government's tenders to build small and medium size desalination plants on the sea coast. These plants, all to be financed by private sources, are scheduled to produce some 65 million metres³/year under the BOO method. A seventh player - the Rothschild Foundation, through its development arm the Caesarea Development Company, announced last year its intention to built a desalination plant to produce 250 million metres³/year at a total investment of $500M, with the desalinated water sold to the government for a period of at least 20 years.

The desalination projects in the Negev and Arava, the country's arid areas are planned to desalinate the region's underground saline reservoirs. The tenders specify desalinating 35-50 million metres³/year under the BOT method, for an estimated $100M. The Negev/Arava projects will also cancel the need to transport water, at high cost, from the country's central and northern parts.


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