Water Desalination Technologies for Industries and Consumers
Water Desalination Technologies for Industries and Consumers
Business Model Description
Establish and operate desalination plants, as localised treatment systems, that draw sea water and treat it to produce desalinated water for bulk sale to industrial users, such as mining companies or resellers as drinking water.
Expected Impact
Provide affordable water to industries, especially mining, and improve sanitation services for end users through localizing treatment systems.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Namibia: Ohangwena Region
- Namibia: Omusati Region
- Namibia: Erongo Region
Sector Classification
Infrastructure
Development need
The Africa SDG Index and Dashboards Report 2019, on SDG 9 regarding Industry, Innovation and Infrastructure, indicates that Namibia has “major challenges” in achieving this SDG (VIII). The country's infrastructure performance is ranked 94 out of 114 countries in the WEF Global Competitiveness Report 2019 (XII).
Policy priority
The Government prioritises infrastructure development towards SDG achievement (I). Namibia's 5th National Development Plan (NDP5) highlights how the lack of infrastructure development results in bottlenecks for economic development (II). It committed to spending 42% (NAD 74 billion, USD 5.3 billion) of the country's GDP on infrastructure projects over five years (VII).
Gender inequalities and marginalization issues
Given that infrastructure projects are typically linked to large-scale construction, gender representation in the construction industry was used as a proxy to gauge gender equality within the infrastructure sector. Namibia’s construction industry is male-dominated; 92% of its workforce is male (XII).
Investment opportunities introduction
Namibia put in place the Public Private Partnership Act in 2018, which aims to address the country's critical infrastructure needs through participation from the private sector through leveraging public private partnerships (PPPs) (IX). It also established a dedicated infrastructure fund to support the sector's growth (X).
Utilities
Development need
Namibia's utility infrastructure, which includes access to electricity, quality of electricity supply, exposure to unsafe drinking water and reliability of water supply, is a challenge in the country, as it scores a low 68.7 out of 100 in the WEF Global Competitiveness Report 2019 (XII).
Policy priority
The Government's infrastructure focus includes energy and water infrastructure developments. Priorities for energy in Namibia feature generating capacity and renewable energy, such as solar, wind and biomass, as stipulated in the 5th National Development Plan (NDP5) (II).
Gender inequalities and marginalization issues
Namibia’s electricity, gas, steam and air condition industries are male-dominated; 76% of its workforce are male (XIII).
Investment opportunities introduction
The Namibian Infrastructure Fund (NIF) addresses infrastructure backlogs in Namibia's key subsectors, including energy and water utilities (besides sanitation, ICT, transport and logistics, health and municipal services) (XI). The World Bank estimates that investments in infrastructure can generate economic returns of up to 11% for electricity projects (V).
Water Utilities and Services
Pipeline Opportunity
Water Desalination Technologies for Industries and Consumers
Establish and operate desalination plants, as localised treatment systems, that draw sea water and treat it to produce desalinated water for bulk sale to industrial users, such as mining companies or resellers as drinking water.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
Mines in the Erongo Region are projected to have a water demand of 23 million cubic meters by 2030.
Large scale water infrastructure projects require an investment of USD 235.7 million (NAD 3.5 billion) in 2019 - 2023. This includes bulk water projects to the value of USD 221.5 million, reclamation projects to the value of USD 32.1 million and rural water projects amounting to USD 7 million, respectively (6).
Public sector investment in water infrastructure refurbishment and development programmes for the 2020 / 2021 financial year alone amounted to USD 66 million (NAD 979 million) (5).
The Erongo Region’s water demand for the communities and mines stands at about 20 million cubic meters per year (5). It is estimated that the mines in the Erongo Region alone could have a projected water demand of over 23 million cubic meters by 2030 (without taking into account any new mine commissions) (7).
Indicative Return
15% - 20%
The Aveng Water Treatment Namibia desalination plant, which supplies NamWater with 12 million cubic meters of water a year, records an IRR of 17% (9). A new plant to secure water supply to Central Coast, Windhoek and en-route users identifies an IRR of 12.6-18% (11).
Investment Timeframe
Long Term (10+ years)
A feasibility study for Namibia shows a long-term investment timeframe, and confirms debt capacity and ability to meet equity and debt obligations. During operation term, available cash flows are sufficient to meet debt service as well as operational and maintenance services (11).
Market Risks & Scale Obstacles
Market - Highly Regulated
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Namibia is a water scarce country and growing demand is putting increasing pressure on existing water sources (6, 12).
Only 78.8% of Namibia's population has access to basic drinking water services, and only 33.8% of the population has access to basic sanitation services (1).
Only 6.3% of anthropogenic wastewater in Namibia receives treatment (1).
Gender & Marginalisation
Namibia's rural and remote communities suffer most under the strained water resource given their lack of alternatives to source water for consumption and productive use.
Expected Development Outcome
Enhanced access to clean water in regions that have inadequate access to portable water through localizing treatment systems within facilities providing key public services, thereby reducing dependency on centralized water grids suffering from underinvestment.
Reduced water shortage, which has hampered social and economic development in several regions of Namibia.
Gender & Marginalisation
Increased livelihood opportunities especially for rural communities, either directly benefitting from access to safe drinking water or obtaining income generation opportunities in water reliant industries, especially mining companies.
Primary SDGs addressed
3.9.2 Mortality rate attributed to unsafe water, unsafe sanitation and lack of hygiene (exposure to unsafe Water, Sanitation and Hygiene for All (WASH) services)
6.1.1 Proportion of population using safely managed drinking water services
6.4.2 Level of water stress: freshwater withdrawal as a proportion of available freshwater resources
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Outcome Risks
If the water source is located far from the desalination plant and / or the end user, the transport of the water may require extensive energy.
If not managed carefully, desalination can impact marine resources due to the increase in salt content in the ocean.
The construction of desalination plants may lead to visual intrusions of desert landscapes, and the water pipelines may prevent animal migrations, if not set up carefully.
Impact Risks
If the water is not of suitable quality for industrial purposes, and consequently not being used by industries, the scale of the impact may be limited.
If the water is not considered as safe, potential end users may be hesitant to access the water and rely on old sources.
Impact Classification
What
The outcome is likely to be positive, important and intended because water desalination technologies and localised treatment systems provide enhanced water access to businesses and consumers.
Who
Large businesses, especially in the mining industry, and populations who are underserved and lack access to affordable and clean water for productive purposes and as drinking water.
Risk
While water desalination technologies are proven and readily available, the cost of utilities in Namibia can negatively affect the profitability of the business model and hamper its uptake.
Impact Thesis
Provide affordable water to industries, especially mining, and improve sanitation services for end users through localizing treatment systems.
Enabling Environment
Policy Environment
Namibia's water sector is governed by the National Water Policy (2000), and the Water Supply and Sanitation Policy (2008). The National Policy on Coastal Management for Namibia (2013) is also relevant for the construction of desalination plants (10).
Namibia Water Corporation Ltd (NamWater), as a parastatal company, purchases water from the Areva Desalination Plant in Henties Bay, which comprises 16% of NamWater’s total costs (6).
Namibia Water Corporation Ltd (NamWater) has an off-take agreement to purchase 10.2 million cubic meters of desalinated water per annum to supply the three Erongo based mines, which together make up more than 34% of NamWaters revenue base (8).
Financial Environment
Fiscal incentives: There are currently no incentives that specifically target water supply in Namibia. Public-private partnerships can catalyse water desalination investments, and marginal commercial cases can be support by the Government through budget appropriation or concessional loan funding.
Regulatory Environment
Namibia's water sector is governed by the Water Resources Management Act 11 (2013), the Integrated Water Resource Management Plan (2010) and the Namibia National Sanitation Strategy (2010-2015) (10).
Additional regulations that impact desalination plants are Environmental Management Act (2007), National Heritage Act (2004), Soil Conservation Act (1969), Marine Resources Act (2000), Aquaculture Act (2002 and Integrated Coastal Management Bill (2014) (10).
Marketplace Participants
Private Sector
Existing projects such as the Aveng Water Treatment Namibia and the Areva Desalination Plant. Financiers such as the Namibia Infrastructure Development the and Investment Fund (NIDIF) set up by EOS Capital.
Government
Namibia Water Corporation Ltd (NamWater), Ministry of Agriculture, Water and Forestry.
Multilaterals
KfW Development Bank.
Public-Private Partnership
Infrastructure projects with a public-private partnership approach coordinated by the PPP Unit of the Ministry of Finance.
Target Locations
Namibia: Ohangwena Region
Namibia: Omusati Region
Namibia: Erongo Region
References
- (I) Republic of Namibia, National Planning Commission, 2018, Implementation of Sustainable Development Goals, Voluntary National Review, https://sustainabledevelopment.un.org/content/documents/19880New_Version_Full_Voluntary_National_Review_2018_single_1_Report.pdf. II) Republic of Namibia, National Planning Commission, 2017, Namibia's 5th National Development Plan (NDP5), https://www.npc.gov.na/?wpfb_dl=294. III) Republic of Namibia, Office of the President, 2016, Harambee Prosperity Plan 2016/17 - 2019/20 Progress Report, Goals and Outcomes, https://op.gov.na/documents/84084/572904/HPP+Report+2019/66c2eef8-3b23-45be-bc2c-5e728699057e. IV) African Development Bank Group, 2020, Namibia: African Development Bank approves $121.7 million loan, Euro 3 million grant to support water and sanitation sector, https://www.afdb.org/en/news-and-events/press-releases/namibia-african-development-bank-approves-1217-million-loan-euro-3-million-grant-support-water-and-sanitation-sector-34727. V) Canning, David & Bennathan, Esra. 2000, The Social Rate of Return on Infrastructure Investment, The World Bank, Policy Research Working Paper Series, https://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-2390. VI) Republic of Namibia, Public Private Partnership Act 4, 2017, Section 40(1), https://laws.parliament.na/cms_documents/public-private-partnership-act-4-of-2017---regulations-2018-353-c96b676b6f.pdf. VII) African Development Bank Group, 2018, 2018 African Economic Outlook, https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/country_notes/Namibia_country_note.pdf. VIII) SDG Center for Africa and Sustainable Development Solutions Network, 2019, Africa SDG Index and Dashboards Report 2019, Kigali and New York: SDG Center for Africa and Sustainable Development Solutions Network, https://sdgcafrica.org/wp-content/uploads/2019/06/SDGS_INDEX_REPORT_2019WEB.pdf. IX) Republic of Namibia, Public Private Partnership Act 4, 2017, Section 40(1), https://laws.parliament.na/cms_documents/public-private-partnership-act-4-of-2017---regulations-2018-353-c96b676b6f.pdf. X) World Bank, 2020, Leveraging Pension Fund Investment for Domestic Development: Namibia’s Regulation 29 Approach, http://documents1.worldbank.org/curated/en/125241594367606090/pdf/Leveraging-Pension-Fund-Investment-for-Domestic-Development-Namibia-s-Regulation-29-Approach.pdf. XI) Ino Harith Capital, Our Partners, https://www.harith.co.za/our-partners-2. XII) Schwab, K, World Economic Forum, 2019, The Global Competitiveness Report 2019, http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf. XIII) Republic of Namibia. Namibian Statistics Agency, 2018, Labour Force Survey 2018 Report, https://d3rp5jatom3eyn.cloudfront.net/cms/assets/documents/NLFS_2018_Report_Final_.pdf. XIV) United Nations, 2018, Accelerating SDG 7 Achievement Policy Brief 12 Global Progress of SDG 7 - Energy and Gender, https://sustainabledevelopment.un.org/content/documents/17489PB12.pdf. XV) Republic of Namibia. Namibian Statistics Agency, 2016, Namibia Household Income and Expenditure Survey (NHIES) 2015/2016 Report, https://d3rp5jatom3eyn.cloudfront.net/cms/assets/documents/NHIES_2015-16.pdf. XVI) DNA Economics, 2021, SAM Multiplier Analysis for the SDG study in Namibia, Six Capitals.
- (1) SDG Center for Africa and Sustainable Development Solutions Network, 2019,. Africa SDG Index and Dashboards Report 2019, Kigali and New York: SDG Center for Africa and Sustainable Development Solutions Network, https://sdgcafrica.org/wp-content/uploads/2019/06/SDGS_INDEX_REPORT_2019WEB.pdf.
- (2) UNDP, Subnational Human Development Index Database, Namibia, https://globaldatalab.org/shdi/shdi/NAM/?levels=1%2B4&interpolation=0&extrapolation=0&nearest_real=0.
- (3) Embassy of Namibia, Investment Catalogue: Regional Profiles and Contact Details, https://www.embassyofnamibia.se/index.php/trade-and-investment/why-invest-in-namibia/fields-o,-investments/84-investment-catalogue-regional-profiles.
- (4) Republic of Namibia, Namibia Industrial Development Agency, 2020, Long list of candidate PPP Projects.
- (5) NamWater, Hydrological Services - Sea Desalination, https://www.namwater.com.na/index.php/services/56-hydrological-services?start=5.
- (6) Savela, N., Levanen, J., Lindeman, S., Kgabi, N., Koivisto, H., Olenius, M., John, S., Mashauri, D., Keinanen-Toivolo, N., 2020, Rapid Urbanization and Infrastructure Pressure: Comparing the Sustainability Transition Potential of Water and Energy Regimes in Namibia, https://www.mdpi.com/2673-4060/1/2/6/htm.
- (7) Iiyambo, I, 2010, The Implications of Mining Prospects on Water Demand and Supply in the Erongo Region, Namibia, http://wiredspace.wits.ac.za/bitstream/handle/10539/9267/Research%20Report-I.Iiyambo_final.pdf?sequence=1.
- (8) NamWater, 2020, Integrated Annual Report 2019/20, https://www.namwater.com.na/images/docs/NamWater_2020_Annual_Report.pdf.
- (9) Office of the President of the Republic of Namibia, 2021. Harambee Prosperity Plan II 2021-2025, Available upon request from the Office of the President of the Republic of Namibia.
- (10) See Annotated Laws & Regulations, Republic of Namibia, https://laws.parliament.na.
- (11) NamWater, 2021, Feasibility Study for Desalination Plant and Water Carriage System to Secure Water Supply to Central Coast, Windhoek and En-Route Users, Prepared by ILF Consulting Engineers, Germany. Available upon request from NamWater.
- (12) Climate Technology Centre & Network (CTCN), Policy Review: Water Scarcity in Namibia, https://www.ctc-n.org/system/files/dossier/3b/namibia_technical_assistance_policy_review_1.pdf.