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2.9 Financing (Topic i)

The cost of construction and operation of sewerage schemes and treatment plants in the West Asia region appears to be very high. However, there is a wide variation in the cost among countries according to the quality of sewer lines and degree of treatment level. It varies from about 1.0USD/m³ for countries which use ordinary concrete pipelines and Wastewater Stabilisation Ponds (WSP) to about 4-6USD/m³ in countries that use good quality sewer lines and advanced treatment processes including tertiary treatments. The cost of treatment varies according to capacity and method, for example in Jordan, the cost of treating a unit volume of water using WSP is about 0.02USD/m³ compared to 0.23 USD/m³ where aerated lagoons are used.

In most of the West Asia countries, the provision of wastewater collection and treatment is the responsibilities of the governments or municipalities, which are funded also by the governments. Except in oil rich countries, priority for investment has been given to providing people with drinking water supply and little attention has been given to building collection and treatment facilities or to improving the existing schemes until recently. Therefore, existing systems are overloaded. The oil producing countries have invested above that required (planning for the future) while for other countries like Jordan, Iraq, Egypt, and Lebanon the investment level is under what is required (50%). The investments of Yemen and Iran in this sector are around 30%.

The government of Oman is encouraging the participation of the private sector in construction and operation of sewerage schemes. In their 1995 strategy, all new housing complexes, hotels, universities, and hospitals are required to add to their infrastructure the provision of construction of collection and treatment system. The operation, maintenance, disposal and reuse are also the responsibilities of the private sector subject to government approval and monitoring

External sources of finance played a major part in investment in wastewater projects for Egypt, Jordan, Lebanon, and Syria. The main sources of finance come as grants from donor countries or loans from lending agencies like the World Bank, European Investment Bank, Islamic Development Bank and the Arab Funds. Oil producing countries rely on their internal funding. Furthermore, their governments provide operation and maintenance costs for wastewater collection and treatment schemes. Very little information on finance is available for Iraq and Iran. As for the new Palestinian Authority, the whole infrastructure of wastewater has to be built with financial support from donors' countries and international agencies mainly as grants or soft loans.

In Jordan, Yemen, Syria, Lebanon, the West Bank and Egypt, upgrading existing facilities and construction of new facilities will require major investments in the next ten years and beyond. Furthermore, the operation and maintenance of the conveyance system and treatment plants will necessitate the allocation of adequate annual budget to guarantee a safe and reliable level of collection and treatment. Financing needs for wastewater projects are competing with other infrastructure projects.

In all countries, tariffs were less than actual cost. For example, in Jordan the collected fees for collection and treatment are about 0.5USD/m3 plus subscription and taxes compared to the actual cost of 2.0USD/m³.

In most countries, projects have been operated by public authorities (water sanitation authority) as in Jordan, Egypt, and Syria, or have been contracted for operation by private companies as in some oil producing countries. In recent years, many countries have launched substantial privatization programs and projects in various sectors of their economy. This trend, which is encouraged by the World Bank and other lending agencies, is expected to increase in the future, leading to more private participation of water supply and wastewater projects. There are many international water utility operators and investors seeking such opportunities. In this respect the Water Authority of Jordan has contracted Lyonnaise des Eaux (a French operator) to operate and manage the water supply system to Greater Amman.

There are four main models for private sector participating, namely; (1) Management or Service Contract model, (2) Affermage or Lease model, (3) Concession model, (4) Build, Operate and Transfer model.
Although there are many benefits which would be gained through privatization such as improved efficiency and better services, the social implications of such a trend have yet to be evaluated. The use of public agencies create a lot of job opportunities. What would happen if these agencies turned into private companies? Whether they would employ less people is a community related question being asked in the region.

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