Amman Water Treatment and Distribution

concluded

In February 1999, the Water Authority of Jordan (WAJ) granted a 51-month management contract to the LEMA consortium for the operation and management of the water and wastewater utility of Amman, the capital city of Jordan. LEMA was formed by Suez Lyonnaise des Eaux (known as SUEZ after 2001) (75%) and the local Montgomery Watson Hertze Arabtech Jardaneh (MWHAJ) (25%). At the time the contract was signed, Jordan was facing a dangerous water situation as limited water resources, inefficient service provision, and low quality and cost recovery were a serious constraint to Jordan's economic growth. Suez and MWHAJ beat sole competitor Vivendi (later known as Veolia). The contract was extended for a year until the end of 2004 and then again for a further 2-year extension until the end of 2006. The service area consisted of a drinking water network of about 5,100 km. and about 330,000 subscribers, of which about 15% were commercial. The contract included an innovative performance bonus which permitted the operator to retain a percentage of the incremental cash flow resulting from improved performance and efficiency and allowed it full control over operations, maintenance, billings and collections as well as control of an operational investment fund of US$25 million. The main targets of the project were significantly improving water distribution by reducing leakages, securing the constancy of quality water supply, improving customer service and investing in the overall network. The total cost of the project, including the management contract, operating and capital investments and technical assistance was estimated at US$136 million. The World Bank lent US$55 million to the Jordan government in 1999 for these purposes while the EIB lent US$44 million, the Italian government US$20 million and the government of Jordan US$17 million. By the end of 2004, LEMA was boasting of various accomplishments, including improvements in the billing system, effective network repairs, water quality controls and continuing capital investment projects. LEMA had also managed to replace some 170,000 old water gauges and install 80,000 for new or extra subscriptions, with 88% of subscribers receiving their bills issued on their doorstep to "encourage transparency." The company reported that their subscriber list was growing at an average rate of 1,400 new meters per month. However, dealing with illegal use and water theft remained a major challenge for the company, as it was costing WAJ around JD4 million per year and up to 7 million m3 of water annually. After the conclusion of LEMA’s contract in December of 2006, state owned Jordan Water Company (Our Water) took over the management of Amman’s water and sewerage systems. None None