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PUBLIC-PRIVATE PARTNERSHIPS

PUBLIC-PRIVATE PARTNERSHIPS . In Jordan . 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. Background:.

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PUBLIC-PRIVATE PARTNERSHIPS

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

  2. The Hashemite Kingdom of Jordan

  3. Initial Situation in Jordan Background: • 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.

  4. 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)

  5. Institutional Responsibilities: • 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

  6. 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

  7. 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

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

  9. Projected Water Demand by Sectors to 2020

  10. 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.

  11. 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

  12. Procedures of Contracting • 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.

  13. PPP Service Area

  14. 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

  15. 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

  16. 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

  17. Lessons Learned From PPP Experience • Decision Making • Recruitment • Cash Management • Management Fee and Non-payment of Customers • Demand Management • Investment Plan

  18. 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

  19. Governorates of Jordan Jerash Ajloun Irbid Mafraq Balqa Zarqa Amman Madaba Northern Governorates NGWA Karak Maan Tafieleh Aqaba

  20. Main Resources from inside and outside Amman

  21. Other PPP experiences is • Communication • Electricity • Others

  22. 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

  23. Thank You

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