Egypt’s Water Sector opens avenues for Public–Private Partnerships

Introduction: opening new avenues for investment

In May 2025, Egypt’s House of Representatives approved a draft law designed to regulate drinking-water and wastewater services, strengthen the regulatory authority and create a licensing framework under which public and private entities can provide services. The law (Law No. 172 of 2025) was formally gazetted in September, and amongst others has created opportunities for private investors to participate in the development of water and wastewater treatment plants. The legislation broadens and formalises opportunities to attract private capital and establish public–private partnerships to reduce pressure on the state budget. Operating licences may run for up to 15 years, while annual regulatory fees range from EGP 25,000 to a maximum of EGP 50 million (approximately USD 1 million), depending on the scale and volume of the licensed activity..

Egypt has made very substantial progress in expanding both sewerage networks and wastewater treatment over the past decade, although there remains a marked urban-rural divide: the current urban sanitation coverage in Egypt is around 96% while rural coverage was expected to reach around 60%, up from only 12% in 2014. These service-coverage figures should be distinguished from the proportion of wastewater that is safely collected and treated: under the SDG 6 monitoring framework, approximately 62.6% of Egypt’s domestic wastewater flows were safely treated in 2024. Many unconnected households, particularly in rural Upper Egypt and parts of the Nile Delta, continue to depend on septic tanks, cesspits and other on-site systems.

Reconciling Supply and Demand

In the context of constrained national water supply, the treatment and reuse of wastewater emerges as an option worth pursuing. To reduce pollution and address the country’s structural water deficit, Egypt established a long-term framework to balance an 80 billion cubic metre net annual demand against some 59 billion available conventional water resources. To close this gap, Egypt’s water system consequently operates in a substantially recirculating manner, with approximately 21–22 BCM reused annually, principally through the recapture of agricultural drainage water, supplemented by treated municipal wastewater.  

The current regulatory measures address a substantial national water deficit, with late 2024 government data indicating that annual water availability stands at 59-60 billion cubic metres against a total demand exceeding 114 billion cubic metres, which is the total environmental and food water footprint Egypt theoretically requires. Of this amount, around 81–82 BCM of water is used within Egypt, while some 34 BCM is effectively ‘virtual water’: water that is imported through food and commodities which have a water footprint elsewhere.

Water quality is also an issue of concern: salinity in the lower Nile Delta is driven by a number of factors which include reduced river discharge into the Mediterranean, sea level rise, groundwater abstraction, land subsidence. Within the NWRP, improving water quality is a key objective – to be achieved in part by reducing pollution, enhancing water-use efficiency (especially in irrigation) and developing additional water resources.  The use of water inland has historically reduced freshwater flushing to the coast, contributing to saltwater intrusion along the Rosetta branch of the Nile. To establish climate resilience up to 2050 and mitigate the decentralised pollution risks identified by Loutfy (2011), the current national framework outlines four core pillars: expanding desalination, improving irrigation efficiency, reducing water pollution, and decentralising governance.

This macro-strategy framework is operationalised through the National Water Resources Plan (NWRP) 2017–2037, which was introduced by the Ministry of Water Resources and Irrigation (MWRI) to replace the 2005 framework. Supported by an estimated total investment of EGP 900 billion (approximately USD 57.5 billion at the time of launch), the plan aims to cap the widening water demand gap, restricting the projected annual consumption increase to 7 billion cubic metres (BCM) by 2037 through efficiency improvements, pollution control, and – importantly – reuse and development of additional resources.

A Pipeline of Projects

To achieve this target, the NWRP involves the implementation of over 20 large scale development projects. These focus on expanding desalination plants in coastal governorates, including Matrouh, North and South Sinai, and Suez, alongside scaling up agricultural drainage reuse through centralised treatment and recycling corridors. Furthermore, canal rehabilitation and lining are deployed to reduce water loss through seepage.

Through this strategy, Egypt aims to transition toward Integrated Water Resources Management (IWRM) by increasing coordination between the MWRI, municipal water authorities, and local water user associations. AGBI reports that under the new framework, the Water and Wastewater Regulatory Authority and Consumer Protection will oversee the issuance of operational licences for up to 15 years, requiring operators to pay a 2 per cent fee with annual payments ranging from EGP 25,000 to EGP 50 million.

The seawater desalination plant infrastructure is located in the Sokhna Industrial Zone and part of the Suez Canal Economic Zone -SCZONE. The Sokhna Industrial Zone relies on dedicated coastal seawater desalination facilities—including a large operational plant with a capacity of over 100,000 cubic metres per day and upcoming expansions—to supply the high-purity water required for heavy manufacturing, chemical complexes, and the regional green hydrogen hub.

The Suez Canal Economic Zone (SCZONE) serves as a prime example of how low- and middle-income countries utilise Special Economic Zones with modified taxation, labour, and environmental frameworks to drive industrialisation. By leveraging these adjusted regulations and its strategic maritime location, the SCZONE actively attracts private capital and foreign investment to develop heavy manufacturing hubs and vital utilities, such as the large-scale seawater desalination plants in the Sokhna Industrial Zone.

The operational viability of attracting private capital to Egypt’s water infrastructure was historically demonstrated by the New Cairo Wastewater Treatment Plant, which launched in 2013 as the country’s first successful utility-scale public–private partnership. This model of non-conventional water management has become critical to mitigating the national deficit, particularly as agricultural drainage reuse expands across major reclamation corridors. An analytical study by Yehia Abd El-Rahman Yehia and M. M. Soliman Doaa Mamdouh confirms that while recycling drainage water provides essential volumes and valuable macro-nutrients like nitrogen and phosphorus, it demands highly centralised treatment and precise blending to prevent secondary soil salinisation. Consequently, to minimise public health and ecological risks, contemporary strategies restrict this recycled water to specific industrial crops and non-food cultivars under rigorous institutional monitoring.

The influx of foreign capital into Egypt’s water infrastructure, exemplified by Germany’s BAMAG, forms part of a broader multi-billion-dollar framework designed to integrate international private investment with state development goals. Early utility-scale public–private partnerships, such as the landmark New Cairo plant developed by the Orascom and Aqualia consortium, successfully established the long-term commercial bankability of the nation’s water sector. To sustain this momentum, the Egyptian government has prequalified 17 major domestic and global consortia, including regional market leaders Metito, ACWA Power, and Hassan Allam Utilities, for its upcoming desalination pipeline. This substantial expansion of private equity is heavily supported by international financial institutions like the European Bank for Reconstruction and Development, which co-finance and de-risk these capital-intensive environmental assets.