Asian desalination market to reach USD1.3 billion by 2010

The market for desalination equipment in Asia is predicted to grow at a compound rate of 11% per year between 2001 and 2005 from its current value of US$508.7 million. The market will then reach US$1.3 billion by 2010, spurred on by increasingly scarce fresh water in the region.

According to a new report by the international market research company, Frost and Sullivan, over-extraction, mismanagement, pollution, droughts and high population growth are making the need for a safe and sustainable water supply ever more apparent. Although the market is faced with a buoyant future, there will be fluctuations in the total market value throughout the next eight years, due to the impact of occasional monolithic projects, says the report.

According to Matthew Barker, Industry Analyst at Frost and Sullivan, the high price of equipment is the most significant challenge confronting companies involved in the Asian desalination plant market. However, the market is gathering momentum as prices fall, the technology becomes more user-friendly, and customer confidence and understanding in desalination increases.

“Although the potential for developing desalination may be high in some regions, the extent and extreme level of poverty in some countries is expected to delay market take-off,” said Barker. “Most of the Indian subcontinent falls under this classification. This region boasts enormous potential demand for fresh water delivered through desalination plants. However, lack of project funding remains a key stumbling block.”

In the most poverty-stricken areas foreign bodies have provided some degree of funding, said Barker. “However, desalination is perceived as an expensive extravagance in comparison with alternative options to solve water shortage,” he says. Nevertheless, he points out that “brackish water desalination equipment generally costs up to 50% less than its seawater counterpart”.

Governments around Asia have been turning to the private sector to fund and implement desalination projects, due to the sector’s ability to produce large volumes of potable water through desalination at a competitive price, and its operational and management expertise, says the report. Private participation includes Build Own or Build Operate Transfer (BOOT), where companies are contracted to construct a facility, and then run it for a period of time. This means that companies that have a solid grounding in the BOOT process will be able to gain a stronger foothold in Asia than other firms.

The industry will be keeping its eye on one BOOT contract in particular – the Singapore contract, scheduled to begin in 2005, which is set to become the benchmark for future projects. There are currently 10 bidders competing for the project that will cost about US$400 million, and will comprise three plants that should be able to produce 400 million litres of water a day.

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