BrazilHow EY helped Saudi’s National Water Company with full integration
In preparation for privatization, Saudi Arabia’s government has brought together all its water distribution and sewage activities under the centralized management of its National Water Company. The major integration project – which saw more than 4,000 employees and 2 million assets transfer – was overseen by EY.
Privatization of infrastructure and national companies is one of the essential engines to achieve (and finance) Saudi’s Arabia’s Vision 2030. In May, the country’s Finance Minister Mohammed Al-Jadaan said the Kingdom was seeking to raise about $55 billion over the next four years through its privatization program.
Across the privatization portfolio, the government has identified 160 projects in 16 sectors, including asset sales and public-private partnerships.
For the Ministry of Environment, Water and Agriculture (MEWA), the largest privatization task is to consolidate and integrate its different water distribution and sewage collection and treatment operations under a single organization, the National Water Company (NWC).
According to the program’s business case, this integration drive will – eventually with the support of private sector investment – be able to “increase the efficiency of operational processes, redress technical gaps, and localize technology and technical expertise.”
Welcoming EY
In April 2020, the leadership team working on the integration of thirteen regions into six regional clusters under the single umbrella company appointed EY as its lead management consultant. Helming the project from EY’s side was Nadim Batri, a partner in the consulting business and leader of the firm’s power & utilities consulting offering.
EY worked with the program team to design, structure, and execute the transition. “This was a complex project, and the onset of the Covid-19 pandemic posed challenges at the beginning of the project, but we are proud that our EY teams were able to finish the project on time,” said Batri, a former long-time Booz & Company consultant.
The transition was a project with multiple dimensions, with aspects including organisation design, employees, contracts and assets, financial data and systems.
Starting with the employee aspect: “Approximately 4,000 employees were transferred from MEWA to NWC. A change management program covering engagement and communication, change impact analysis, training and hyper care was put in place to manage this transition,” explained Batri.
From an assets and contracts perspective, more than two million assets and around 5,000 contracts were analyzed and transferred from MEWA to NWC.
From a systems perspective, an ERP migration took place, with many peripheral systems either taken out of operation or transferred to the applications landscape of NWC. This workstream coincided with a data governance project, which ensured data was cleansed and enriched to support a more data driven way of working.
“Data cleansing was the most time-consuming aspect of the technology process. A three-way check had to be conducted, to make sure that the values were correct and uploaded correctly on the NWC system. This problem will now go away since everything is under one umbrella,” explained Batri.
In several phases, regions were slotted into new National Water Company blueprint. In November 2020, the regions in the north were integrated into the Northwestern Cluster, in the summer of 2021 the Western Cluster (around the Makkah region) and the Southern Cluster (the Asir, Jazan, Najran, and Al-Baha regions) went operational, and so on.
As per the original plan, at the start of this year all six regional clusters were successfully migrated, with “no interruption in day-to-day operations or services provided” to NWC customers. Meanwhile, the overall grievance rate across all 13 directorates was measured at only 2%, thanks to the strong focus given to the soft side of change. Batri: “We’re extremely proud of these achievements.”
“We were able to deliver by deploying the right resources to speed up the execution of the project in addition to the full support of MEWA and NWC who addressed the challenges in a timely and effective manner.”
What’s next for NWC
In its new form, the National Water Company manages all water distribution and wastewater collection and treatment, operating independently. “It is now able to introduce its own improvement projects and to measure its performance through accurate technology systems.”
“Operation and maintenance contracts have been signed with private sector water companies that will introduce international best practices to NWC’s operations,” added Batri.
“The water sector should now be much more effective and efficient. This will increase the quality of service to citizens at the end of the day and should prepare for all citizens to be connected to the water network. In terms of the Saudi economy, the idea is to prepare for privatization and to attract local and foreign investments in the sector.”
Concrete plans for privatization of the National Water Company are yet to be announced.
