Madaba Billing and Revenue Collection Service Contract

Micro PSP Summary

The Ministry of Water & Irrigation (MWI) has embarked on a comprehensive strategy of improving service delivery in the Water Authority of Jordan (WAJ).

One pillar of this strategy is the introduction of private sector companies in the operation and management of water supply and wastewater disposal systems all over the country.

First experience with private Sector Participation (PSP) has been made in a kind of Macro-PSP, i.e. involving large international water companies through management contracts, funded by international funding agencies like World Bank and KfW.

Figure 1 – Integration of Micro PSP into overall PSP Concept of MWI/WAJ

BOT contracts followed, but the experience gained since 1998 indicates that other PSP options should be explored.

These rather macro level PSP projects involved experts and decision makers across all hierarchy levels, starting from a head of division up to the Cabinet level within Jordan, plus high level officials of the major donor agencies and foreign governments. Logically, considerable time is needed from project identification to implementation.

About 5 years elapse before the originally planned measures have an effect on the service delivery of WAJ (see Fig. 1).

These long implementation periods are not acceptable and need to be shortened.

OMS tried to bridge this long time lapse between project identification and implementation by testing the Micro-PSP option, which addresses particular problems in the regular business processes of WAJ like meter reading, billing & revenue collection, leakage repair services, customer surveys, GIS based information management and sewerage connections management. Pilot projects in the form of outsourcing certain functions to OMS were successfully implemented and yielded immediate improvements in the provision of services (increasing revenue by more than 20 %).

Micro-PSP is defined as a private sector participation approach, which allows qualified local companies to carry out clearly defined tasks in the operation and maintenance of water supply and wastewater disposal systems in the form of performance based contracts. These contracts could be service, management or even lease contracts.

Further characteristics are the maximum use of existing WAJ resources and assets - only complementary equipment and personnel  from the private company is needed to carry out the contract.

The success of those pilot projects indicated that WAJ should develop a fast track strategy and action plan to introduce Micro-PSP all across the country.

As Micro PSP does not need to involve foreign assistance and involvement of donors with their quite often restrictive and bureaucratic loan & grant administration (and even the load on the local budgets is very moderate), this new approach can be applied almost immediately within periods of less than one year.

Other advantages are the quick improvement of service delivery, additional revenue, introduction of modern technology and private sector management techniques as a kind of a preparatory phase for WAJ personnel and the improvement of the WAJ image in the public.

The micro level PSP is not seen as an alternative approach to the traditional PSP projects, but rather as a complementary, preparatory stage for all kind of PSP in operation and management of water and wastewater systems in Jordan

Pay-back periods of less than 1 year in customer services and 4-6 years in water loss reduction indicate the viability of the concept, once intervention areas have been identified.

Identification of suitable and qualified local companies must be pursued.

If competence is not available it has to be built through adequate complementary measures like Public-Private Partnership (PPP) programmes.

Focal areas for further action are:

· Project identification & budgeting

· Development of appropriate tender documents

· Development of performance incentive models

· Development of performance monitoring systems.

Having addressed those issues, first Micro PSP contracts began in 2004.

A roadmap for the Micro-PSP from concept to implementation is shown in Fig. 2. >

Figure 2 – From Concept to Implementation

Tendering period until Contract Award

Ministry of Water and Irrigation signed agreement with local company to manage Madaba governorate water administration

Ministry of Water and Irrigation signed agreement with Enjicon Company to improve the performance and the services in Madaba governorate water administration.

This agreement will last till 3 years. It is part of the MoWI strategy to develop the water services and improve the efficiency of work and facilitate the services for customers.

This project, which costs around 902,000 Jordanian Dinars, aims to improve the quality of water services for the people of Madaba, about 130000 in all, so the participation of the private sector will improve the customer services sector. The MoWI/WAJ is working now on restructuring the work in governorate water administration to improve the water services.

The Madaba governorate is about 2008 Sq.Km and there are around 18000 subscribers in the water services and about 4500 subscribers in wastewater services.