{"id":674457,"date":"2025-10-29T00:00:00","date_gmt":"2025-10-29T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/hardhats\/incoming-water-act-to-lure-investors-and-fund-infrastructure\/"},"modified":"2025-10-29T00:00:00","modified_gmt":"2025-10-29T00:00:00","slug":"incoming-water-act-to-lure-investors-and-fund-infrastructure","status":"publish","type":"hardhat","link":"https:\/\/enterpriseam.com\/egypt\/hardhats\/incoming-water-act-to-lure-investors-and-fund-infrastructure\/","title":{"rendered":"Incoming water act to lure investors and fund infrastructure"},"content":{"rendered":"

The water industry is set for a major shake up. <\/strong>As Egypt works to address water shortages and fund new infrastructure without overburdening the state budget, the Drinking Water and Wastewater Act is set to reshape the market and open it up to domestic and foreign investors. The legislation \u2014 issued on 1 September and set to come into force by March 2026 \u2014 accompanies the government\u2019s broader drive to digitalize and shift toward smart management in the water sector. The new law is expected to encourage greater private-sector participation in water and wastewater services and provide a clearer regulatory framework for the industry, according to Shalakany Law<\/a>.<\/p>\n

(Tap or click the headline above to read this story with all of the links <\/strong>to our background as well as external sources.)<\/p>\n

The Water and Wastewater Regulation Law marks a major step<\/strong> toward expanding private participation across all activities and entities involved in water and wastewater services<\/strong> \u2014 construction, operation, maintenance, distribution, treatment, and disposal. It allows private companies to engage in every stage of the value chain \u2014 from building, purification, desalination, transport, and distribution to the collection, treatment, and safe disposal of wastewater \u2014 either independently or through partnerships with public bodies. The aim is to enhance service efficiency while easing the state\u2019s fiscal burden.<\/p>\n

The legislation is part of the government\u2019s State Ownership Policy<\/strong>, with the water sector being one of the areas the government is wagering on to attract long-term investment, sources told EnterpriseAM. The regulatory overhaul mirrors what happened in the power sector several years ago, when independent power producer (IPP) projects paved the way for public-private partnerships (PPPs). The electricity industry has since become a benchmark for successful PPP frameworks, a representative from Hassan Allam Utilities told EnterpriseAM, adding that the model should be replicated in water. Water projects have already drawn foreign investment and financing from international development institutions.<\/p>\n

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REGULATORY FRAMEWORK AND GOVERNANCE IN THE WATER SECTOR-<\/p>\n

The Water and Wastewater Regulatory Authority, to be established under the new law,<\/strong> will have broad powers to oversee the sector. <\/strong>Its oversight will include licensing all water and wastewater projects and service providers, monitoring performance and service quality, protecting consumer rights, handling disputes between operators and users, and proposing and regulating tariffs for water and wastewater activities.<\/p>\n

The law imposes binding operational requirements and service benchmarks to ensure <\/strong>quality and sustainability.<\/strong> These include ensuring equal access among users, supplying water that meets health standards, rapid repairing of breakdowns, responding to complaints within 15 days, banning monopolistic practices, and requiring utilities to use modern technologies in treatment and purification.<\/p>\n

Operating licenses will be granted by the new authority for up to 15 years<\/strong>, with flexible license fees capped at 2% of the cubic meter value produced \u2014 and no more than EGP 50 mn a year. To encourage new entrants, fees are set at 1% for the first five years, rising by 20% annually until they reach the cap.<\/p>\n

Operators must deposit a financial security equal to 20% of the license fee<\/strong> to ensure project seriousness, recoverable at the end of the license term. The framework aims to balance investor incentives with consumer protection and resource sustainability.<\/p>\n

The law sets hefty fines \u2014 up to EGP 1 mn \u2014 for offenses related to water and <\/strong>wastewater services<\/strong>, including misuse of water, unauthorized connections, and tariff breaches. Penalties can escalate to imprisonment for crimes such as damaging public utilities, obstructing projects or operators, or running unlicensed facilities. The regulator will also have the authority to collect dues, fines, and fees as public funds recoverable through administrative seizure.<\/p>\n

The government is <\/strong>pressing ahead with tighter governance and transparency<\/a><\/strong> to make the sector more attractive to private and foreign investors, according to Irrigation Minister Hani Suweilam. Updating the legal framework has already enabled successful PPP models<\/a> in desalination and wastewater treatment and reuse, he added. Suweilam noted that Egypt\u2019s Irrigation 2.0 program includes institutional and legislative reforms to ensure water-resource sustainability, alongside climate-finance mobilization for water projects and improved rural services under the Decent Life initiative \u2014 all aimed at drawing private capital and ensuring long-term service continuity.<\/p>\n

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WHAT DOES THE MARKET LOOK LIKE?<\/p>\n

The state\u2019s <\/strong>USD 50 bn water resources management plan<\/a><\/strong> focuses on quality, efficiency, <\/strong>and treatment<\/strong>, while the desalination program targets an additional 3.35 mn cbm\/day of capacity by 2025. In FY 2025-2026, the government earmarked EGP 77 bn for water and wastewater projects \u2014 EGP 27.8 bn for water services and EGP 49.2 bn for sanitation \u2014 according to the Economic and Social Development Plan<\/a>. The portfolio includes 56 drinking water plants, 135 sanitation projects, 33 treatment stations, and 17 desalination plants.<\/p>\n

Egypt has seen unprecedented progress in water and wastewater services over the past <\/strong>decade. <\/strong>Potable water coverage rose to 99% nationwide in 2024 from 95% in 2014, while sanitation coverage jumped from 79% to 96% in urban areas and from 12% to 60% in rural regions, according to a Housing Ministry statement. The improvements stem from around 5.1k projects worth EGP 726 bn, including new and expanded plants, networks, and rehabilitation works, plus 1.8k projects under the Decent Life initiative to achieve full village coverage.<\/p>\n

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PRIVATE-SECTOR PARTICIPATION IN EXISTING MODELS-<\/p>\n

The new law formalizes the licensing regime for water and wastewater providers \u2014 <\/strong>including private players<\/strong> \u2014 and assigns regulatory authority to the prime minister\u2019s office for stronger governance. It sets defined fee structures for licensed operators and clear pathways for private participation in ownership, operation, and maintenance, according to Hassan Allam Utilities. Still, sources told EnterpriseAM that major investment inflows will hinge on a transparent pricing mechanism and predictable returns, given the service\u2019s social nature and links to subsidies. Hassan Allam Utilities noted that the overall regulatory and investment climate for utilities has improved markedly in recent years, with clear signals that the state is opening the door wider to private participation \u2014 particularly through PPPs and targeted sector reforms.<\/p>\n

Orascom Construction is among Egypt\u2019s leading engineering, procurement, and <\/strong>construction players in the water sector<\/strong>, with a project portfolio exceeding 17 mn cbm\/day, the company told EnterpriseAM. It built and operates the world\u2019s two largest water treatment plants \u2014 New Delta (7.5 mn cbm\/day) and Bahr El Baqar (5.6 mn cbm\/day) \u2014 and delivered Egypt\u2019s first PPP project, the New Cairo wastewater plant. Orascom also built the Abu Rawash facility (1.6 mn cbm\/day) and projects in Galala, East Port Said, andAlamein, underscoring its role in water security and sustainable infrastructure.<\/p>\n

Ridgewood Egypt<\/a><\/strong>\u2014 a <\/strong>joint venture<\/a><\/strong> between Hassan Allam Utilities and Almar Water <\/strong>Solutions \u2014 has also played an important role<\/strong>, having for two decades designed, built, owned, and operated desalination plants using reverse-osmosis technology across Egypt\u2019s coasts. It currently runs more than 50 plants with a combined capacity above 100k cbm\/day and has prequalified for the Sovereign Fund of Egypt\u2019s desalination program, as well as projects in Sixth of October and the Suez Canal Economic Zone.<\/p>\n

Project finance remains the sector\u2019s toughest hurdle<\/strong>, Hassan Allam Utilities told us. Operators need a clear risk-sharing framework and tighter institutional coordination. The solution lies in developing flexible funding models that encourage private participation, alongside streamlined permitting \u2014 especially for coastal or environmentally sensitive sites \u2014 to avoid delays and draw sustainable capital. The company relies on non-recourse financing from development finance institutions and commercial banks, complemented by equity partnerships with strategic investors who bring both capital and technical know-how to ensure strong execution and long-term value.<\/p>\n

Localizing the production of desalination plant components<\/a><\/strong> has become a prerequisite <\/strong>for agreements with foreign developers<\/strong>, Prime Minister Moustafa Madbouly said during talks with Saudi-based Acwa Power, which plans to cooperate with the government on membrane-based reverse-osmosis projects. Acwa Power officials confirmed they will work to localize plant component manufacturing in Egypt amid rising domestic demand for desalinated water.<\/p>\n

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