Private Sector Participation (PSP)
Water is an indispensable input for any
social or economical activity. Its scarcity can impede
development and evolution and make negative impact on
standards of living of the people.
Jordan lies in the
Mediterranean Sea region, where the climate is arid and
semi-arid with short rainy winter and long dry summer.
Annual precipitation varies between 50mm in the desert
area and 600mm in the north-west highlands.
The water resources
scarcity leads to a large imbalance between supply and
demand, leads Water Authority of Jordan (WAJ) to over
pump the water from valuable aquifers, water supply is
intermittent in summer, sometimes one day per week.
Due to the increasing of
the water demand, Ministry of Water and Irrigation (MWI)
adopted a Water Strategy in 1997 supplemented it with
different water policies in water sector aiming to make
a balance between water demand and supply and
emphasizing to give major role for private sector. The
Government of Jordan also embarked upon a privatization
program, the goal was to increase the efficiency of
management and attracting private investment into the
economy.
WAJ, one of the
authorities of the MWI entered into a management
contract with a consortium led by a French Company on
April 1999, for four years, for all water and wastewater
related services in Amman Governorate.
MWI has been considering
other options for the largest wastewater treatment plant
in Jordan (Al-Samra) as a Build-Operate-Transfer (BOT)
system with a consortium led by an international
company, and in the way to award a management contract
to a consortium led by international company for the
four Northern Governorates of Jordan (Irbid, Ajloun,
Jerash and Mafraq), expected to start the implementation
in the first half of the year 2004. MWI is studying the
establishment of public companies for other water and
wastewater services in other areas throughout the
Kingdom.
Privatization of the Water Sector in Jordan:
In 1997, the Government of Jordan embarked upon a
privatization program, the goal being to orient Jordan's
economy more towards private sector participation and
best present Jordan towards the international financial
community. The specific objective of the program
included improving the efficiency of the public sector
and consolidating it, attracting private investment into
the economy and shifting into market economy.
The Government started to
put strategies which suit the water situation in the
Kingdom, so it started to implement Management Contracts
and other privatization options and MWI issued policies
to guarantee benefit from groundwater, irrigation water
and wastewater.
Privatization is defined
as the adoption of an economic policy that enhances the
role of the private sector in the national economy
especially public enterprises which should be managed on
commercial basis.
Privatization aims at:
-
Contributing to the
attraction and flow of local and foreign investments
by providing favorable investment and inductive
environment.
-
Direct private savings
towards long-term investment to strengthen and
consolidate the internal capital market and the
national economy.
-
Alleviate the debt
burden of the Treasury through ceasing its financial
commitments in terms of loans and grants for those
projects deemed unsuccessful and unproductive.
-
Manage economic
projects through modern techniques including the usage
of developed technology to open up stable markets and
to penetrate new markets by emphasizing its
international competitiveness.
Privatization of the
Water Sector Services in Amman Governorate (Capital)
MWI started to study the different
options for private sector participation by making a
comparison between three options as shown in
table (1). It concluded
that Management Contracts (MC) is the preferred option
for Jordan's water sector since it gives comprehensive
solutions with immediate short-term effects as well as
sustainable long term benefits.
