PUBLIC-PRIVATE PARTNERSHIPS PUBLIC-PRIVATE PARTNERSHIPS In Jordan By Engineer Ibrahim Abu Shams Planning and Management Unit Ministry of Water and Irrigation By Engineer Ibrahim Abu Shams Planning and Management Unit Ministry of Water and Irrigation Water Demand Management Forum Amman: October 15 – 17, 2002

The Hashemite Kingdom of Jordan

Initial Situation in Jordan Jordan is Km 2 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. Background:

Water Sector Policy Environment Since 1997, the Government Issued Strategy, Policies and Investment Program: – 2011 Sector Plan and Investment Program - Action Plan 2002 – 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 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

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

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, 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 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 NGWA Irbid Jerash Ajloun Balqa Madaba Mafraq Zarqa Amman 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