PUBLIC-PRIVATE PARTNERSHIPS PUBLIC-PRIVATE PARTNERSHIPS

In Jordan In Jordan

By Engineer Ibrahim Abu ShamsPlanning and Management UnitMinistry of Water and Irrigation

By Engineer Ibrahim Abu ShamsPlanning and Management UnitMinistry of Water and Irrigation

Water Demand Management ForumAmman: October 15 – 17, 2002

The Hashemite Kingdom of Jordan

Initial Situation in Jordan• Jordan is 91.880 Km2

• Population Estimated to be 5.2 Millions with 2.2 Millions in Amman Governorate by the End of 2002, Growth 2.8%.

• Annual Precipitation Ranges from 50 – 600mm Average 200mm

• Imbalance Between Supply and Demand

• Continue Depletion of Valuable Aquifers

• Un-equal Water Distribution by Region

• Investments for Supply Management, Neglecting Demand Management.

BackgroundBackground::

Water Sector Policy Environment • Since 1997, the Government Issued Strategy, Policies

and Investment Program:

- 2002 – 2011 Sector Plan and Investment Program

- Action Plan 2002 – 2006.

- Water Utility Policy

- Ground Water, Wastewater and Irrigation Policies

- New Water Strategy for Jordan for Water Demand Management (WDM) and Public Private Partnership (PPP)

Ministry of Water and Irrigation (MWI)

- Empowered by the Bye-Law no. 54 of 1992.

- Responsible for the Formulation and Implementation of Water and Wastewater Development Programme

- Formulate Policy and Strategy

- Plan Water Resources Development

- Carry out Research and Development

- Public Awareness Programme

- Establishment Information System

Institutional Responsibilities:

Water Authority of Jordan (WAJ)

-Created in 1988, Law no 18/1988 and its amendments

- Provision of Water and Wastewater Services

- Management of Water Resources

- Regulating Ground Water Use

- Providing Water Supply and Wastewater Services

Jordan Valley Authority (JVA)

-Governed by Law no. 19/1988 amended by new law no. 30/2001

-Develop the Jordan Valley and the Area South of the Dead Sea

-Develop the Water Resources in this Area for Irrigated Agricultural Use

-Operate the Multi Source Supply System for Amman and the King Abdullah Canal in Coordination with WAJ

Problems Requiring Attention Key Problems Prior to PPP:

• Rapid Population Growth

• Shortage of Water Supply

• Intermittent Supply Delivery System

• Tremendous Costs for Production and Distribution

• Absence of Strategic Water Resources Planning

• Un-accounted for Water Around 50%.

• Demand Always Exceeds Supply

• High Subsidy for Water Supply

Totals

1998 1999 2000 2005 2010 2015 2020

Year

Total w aterdemand

Total w atersupply

Total Deficit

Jordan: Total Demand, Available Supplies and Water Deficits to 2020.

Water Demand

0

200

400

600

800

1000

1200

1 2 3 4 5 6 7

Municipal

Industrial

Agricultural

Projected Water Demand by Sectors to 2020

Types of PPP Considered and Selected

Various PPP Models of Interest:• Service Contracts

• Management Contracts

• Lease

• Concession

• Divestiture (Under it BOT,BOO…)

Main Reasons for Choosing Management Contract• Improvement of Services with Reduced Risks to Government

• Results in Significant Improvement, in System Operation

• Improvement of Organizational Reform of Operations

• Good First Step Towards Significant PPP.

Process for Choosing Private Sector Firm For Amman

Operation and Management Support (OMS) Project:

• Compiling and Validating Database

• Comprehensive Subscriber Survey (CSS) Project

• Using Geographic Information System (GIS)

• Training

• Creating Pilot Areas

•Team from MWI, WAJ, Foreign Legal and Accounting Consultant Started Preparing the Contract.

•Request For Qualification (RFQ) Issued for Int’l Firms, Joint Venture with Local Firm was a Must.

•26 Consortium Purchased the Documents, 10 Offered their Proposals, 5 of them were Short Listed

•Pre-bid Conference was Held February 1998, Data Room Prepared and Site Visit Arranged for the Bidders.

•3 Consortium were Interested, 2 Submitted their Proposals.

•Lyonnaise Des Eaux (French), Montgomery Watson (British) and Arabtec Jardaneh (LEMA) was Awarded as Successful Bidder – April 19, 1999,Contract is Signed for 4 Years Started July 31, 1999.

Procedures of Contracting

PPP Service Area

Essential Elements Of PPP Contract in Amman

Financial Issues:• Fixed Fee for 8.8 Million USD for 4 Years

• Financing for Operating Expenditure Account 43 Million USD

• Incentive Fee (Yearly) 5% of Increment Cash Flow

• Operating Investment Fund of 23.47 Million USD

Contract Commitments:• Decrease the UfW 25% from Starting Date up to the End of Contract Period.

• Achieve Constancy of Supply Received by Subscribers

• Repair and Replacement of the Water Meters

• Reduce the Overall Number of Breakdown Repairs

• Reduce Respond Time to Subscribers Complaints.

• Improve the Account Receivable

PPP Contract Regulation And Oversight

Planning and Management Unit (PMU)

•Complete Monitoring of the Operator Compliance with the Requirements of the Management Contract (MC)

•Related Donors Activities as Capital Investment (CI)

•Prepare other Governorates for PPP or / and Private Sector Participation (PSP)

WAJ Role in Management Contract Implementation• Financial Control Responsibilities • Administration and Coordination of the MC• Technical Monitoring and Controlling

Interim Results Of PPP Experience• Human Resources

• Incentives

• Data Update and Customer Information System

• Meter Replacement

• Meter Reading Routes

• Operation and Maintenance, Regular Supply to Customers and Network Improvement

• Revenue and Expenses

•GIS and IT

Lessons Learned From PPP Experience

• Decision Making

• Recruitment

• Cash Management

• Management Fee and Non-payment of Customers

• Demand Management

• Investment Plan

Future Plans For PPP in Jordan• Northern Governorates of Jordan

(Management Contract)

• Wadi Mousa Management Contract

• As-Samra Wastewater Treatment Plant (BOT)

• Aqaba Governmental Company

• PMU Role

• Possible Changes

Governorates of Jordan

Northern Governorates Northern Governorates NGWANGWA

IrbidJerash

Ajloun

Balqa

Madaba

Mafraq

ZarqaAmman

Maan

Aqaba

Karak

Tafieleh

Main Resources from inside and outside

Amman

Other PPP experiences is

• Communication

• Electricity

• Others

Conclusion• The Management Contract is the First Step

• Reducing Fixed Fee and Increasing Incentives

• Using PPP in Irrigation

• By Experiences More Study and Research to Choose the Best PPP for Jordan Situation

• Put Standard Contracts for PPP to be Used in Other Governorates

Thank You