Closed Compact Report: Jordan Compact | September 2018

Wastewater Network Reinforcement and Expansion Project

  • $102,570,000Original Compact Project Amount
  • $88,604,174Total Disbursed

Estimated Benefits

Estimated benefits correspond to $82 million of project funds, where cost-benefit analysis was conducted

Estimated Benefits for the Wastewater Network Reinforcement and Expansion Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At the time of signing 19 percent 1,633,400 $207,000,000

2005 PPP

At compact closure 13 percent

National population exceeding 9 million. The higher beneficiary number reflects the revised view of project benefits as primarily comprising resource savings to the economy at large. To date, observations do not validate expected changes in consumer usage of water and expenditure on water that were anticipated at the time of compact development.

$103,000,000

2012 constant (or approximately 2005 PPP $164 million). The original presentation was in 2005 PPP dollars for international comparisons. The end of compact analysis was carried out in 2012 constant values.

The original economic rate of return (ERR) was based on three main benefit streams. First, there is an estimated addition to household income that would come about as people shift demand away from expensive water sources (e.g. tanker water), to the less costly network water supply. Second, this shift was expected to also generate health benefits as a result of increased access to clean water. And third, the investment was expected to lead to lower water production costs as a result of reducing physical losses in the rehabilitated water network.

The closeout ERR is estimated at 13 percent, lower than the original rate, but still above MCC’s 10 percent threshold. This number was driven by benefits realized from lower water production costs. However, the other two benefit streams did not take shape as projected at the beginning of the compact, resulting in a close-out ERR that declined below the original estimate. In the case of the first benefit stream, households in Zarqa were actually spending more on water that does not come from the network, like tanker and bottled water, at the end of the compact than they were before the compact began. While it is too soon to know whether this reflects the impact of the project (the new system had only been operational for a few months when the last round of surveys were conducted), it means that households had not yet started to save money on water at the end of the compact. Additional data on how the project impacted the amount households spend on water will be available in 2020. ;For the second benefit stream, while it was originally thought that the project would generate economic benefits through improved hygiene and water consumption, research that emerged during the compact period indicated that water borne diseases are not driving health costs in Jordan.

Project Description

At the time of compact development, an estimated 50 percent of potable water supply in the Zarqa Governorate was lost through a combination of physical leaks, water thefts and administrative mismanagement. The water transmission and distribution network suffered from substantial disrepair, with parts comprised of cheap, flexible pipes that ran above ground through residential streets, where they were subject to puncture, wear and tear. Nearly 10,000 leaks were reported each year.The Water Network Project represented the largest investment in the water sector in the Governorate at the time. The objectives of the project were to (i) improve the efficiency of network water delivery and the condition of home water systems, and (ii) decrease certain costs that households in Zarqa Governorate incur to satisfy their basic water needs.

Through the Infrastructure Investment Activity, the project reduced high water losses by repairing and upgrading transmission and distribution pipes throughout Zarqa. The activity rehabilitated864.7 kilometers of water pipes, built a new pump station, and installed 41,650 household water meters. It established clearer and more efficient district metering areas (DMAs), laying the foundation for better operation and management of the entire water utility. The activity also contributed to a decline incommercial and physical water losses from 61.6 percent to 50.7 percent across the Zarqa Governorate during the life of the compact, helping the Government manage increased pressure on water resources due to endemic water scarcity, population growth and the influx of Syrian refugees.The reduction of physical losses improved the cost recovery of the Zarqa water utility. The utility expects to achieve full cost recovery of operations and maintenance by 2019. In addition to reducing physical leaks, the project established the transition from periodic distribution under high pressure to more frequent gravity-fed distribution that improved customer service, reduced wear and tear on critical infrastructure, and extended the lifespan of the network.

The Water Smart Homes Activity improved the quality of plumbing and water storage in the homes of 3,958 poor families in Zarqa as well as in 22 public schools. The overall objective of the activity was to improve the condition of home water systems and decrease the water costs of households, particularly poor households. The activity used a two-prong approach: an outreach campaign on in-house water management of water quality and water conservation; and an infrastructure component that replaced or improved the plumbing and water storage systems of poor households. As a result, 3,958 households were supplied with improved water and wastewater. In addition, thirty women received training and tools to become self-employed as plumbers in response to a need within the community to sustain water improvements and proper management of resources.Some of these women worked as plumbers for construction companies responsible for implementing household water repairs under the compact, including replacing water tanks.

In addition to the original activities included in the compact, unused budget identified during implementation allowed MCA-Jordan and MCC to reallocate $1,617,145 to fund construction of a new water utility administration building, intended to enhance the utility’s operation and maintenance activities by placing staff in the same location and creating more space for customer service.

Evaluation Findings

An impact evaluation will examine the benefits of the compact projects to Jordanian households and farmers. This rigorous impact evaluation, the first of its kind in Jordan, will assess the impacts of the water and wastewater network projects on household income, and will also include a water balance analysis to estimate the magnitude and economic impacts of changes in the availability of freshwater and recycled treated wastewater. Given the influx of refugees into the Zarqa Governorate and the capital city of Amman, the evaluation will include a detailed refugee survey to understand the extent to which they benefit from compact investments. MCC is also collecting detailed monitoring data on the network and at the utility to better understand how water delivery and wastewater collection evolved in Zarqa after the compact. Data collection for the evaluation is anticipated to be completed in 2019 after a three-year exposure period, with a final report to be submitted in 2021.

Water Network Restructuring and Rehabilitation Project

The Water Network Restructuring and Rehabilitation Project is expected to increase the amount of piped water available to households and businesses in Zarqa and Russeifa by replacing old, leaky network pipes. New water meters are expected to reduce commercial losses and increase revenue to the now more commercially-oriented water utility, which was entered into a management contract 1 as part of the compact. The impact evaluation of the Water Network Project will determine whether (1) the amount of piped water used by households increased, and (2) households substituted expensive, non-network water with cheaper piped water. The impact evaluation will be informed by analysis of key utility performance indicators to look at the impact of the project (including new meters) on the financial well-being and operational performance of the utility. The evaluation will assess both how the operations of the utility impact the efficacy and longevity of compact investments and how compact investments affect the bottom-line of the utility.

The Water Smart Homes Activity will be evaluated in a qualitative component of the overarching evaluation that is currently under design. Preliminary analysis of midline data found that households have better water pressure and more days of water per month as a result of network improvements funded by the compact, though they are spending more on non-network water than at baseline.

Status of the evaluation
Component Status
Baseline Report Completed in 2017
Midline Report Analysis complete 2017, report writing ongoing
Final Report Surveys to be completed in 2018; Final Report in 2021

Key performance indicators and outputs at compact end date

Key performance indicators and outputs at compact end date
Activity/Outcomes Key Performance Indicators Baseline End of Compact Target Quarter 1 through Quarter 20 Actuals Percent Compact Target Satisfied

Wastewater Network Project
Outcome: Increase access to the wastewater network, increase the volume of wastewater collected and reduce the incidents of sewage overflow

Number of Complaints Received About Sewer Blockage 8,500 2,000 3,307 80%
Volume of wastewater collected (cubic meters/year – millions) 24 31 37.5 193%
Percentage of the population connected to the wastewater network 72 85 67.4 -35%
Percentage of the population connected to the wastewater network – forecasted population 72 85 83.7 90%
Total number of wastewater network subscribers 94,778 119,793 131,499 147%
Total number of wastewater connection points constructed by MCC 0 5,653 8,768 155%
Kilometers of pipelines that are expanded, reinforced or rehabilitated 0 287.0 295.4 103%

Explanation of Results

The Water Network Project replaced more pipes and customer meters than planned at the beginning of the compact. According to preliminary evaluation findings, customers who live in areas where the compact improved the network report higher water pressure and more hours of water, reflecting significant if preliminary improvements to their water service. Despite these positive signs, non-revenue water and continuity of water supply remain higher than their end of compact targets. The higher than expected level of these outcome measures reflects the complex nature of the water network in Zarqa and the challenge of accurately measuring the benefits of the project to how the network functions.

Non-Revenue Water (NRW) measures the water that is pumped and then lost or unaccounted for, and is challenging to capture in Zarqa due the sprawling water network that must serve a rapidly growing population. Measuring NRW accurately requires reading nearly 170,000 customer meters on a consistent basis. While Miyhauna-Zarqa (the water utility) continues to make operational improvements, reading every customer’s meter regularly is a long term goal, rather than a short-term reality. In recognition of this fact, MCA-Jordan and MCC worked with Miyahuna-Zarqa to measure NRW in areas where the compact improved the network and a selection of areas that were not improved. Areas with the improved network have a NRW of only 35.5 percent as compared to 70.4 percent in areas where the old network remains, reflecting the significant reduction in the amount of water leaked from the pipes in compact areas.

While this represents a significant improvement, NRW in compact areas is still not as low as the end of compact target. NRW is a combination of the amount of water lost from the pipes and commercial losses at the utility. At the beginning of the compact, MCC and MCA-Jordan assumed that the majority of the measured NRW was water leaked from the pipes, which was measured at zero in pressure tests performed on compact constructed pipes. Seven years later it is apparent that commercial losses are a bigger challenge in Zarqa than previously understood. USAID is building on the compact and working with the utility to reduce its commercial losses in order to reduce NRW even further.

MCC and the Government of Jordan originally expected that the investments would increase the hours of available water to customers. This expectation changed with improved understanding during the compact of how hours of supply were allocated and measured on the network. The utility in Zarqa reports the scheduled number of hours that engineers plan to allow water to flow to the network, not the continuity of supply. This means they capture the expectations of the network managers for how much water will be needed to service the demand in different areas, not how many hours of water different parts of the network actually receive. In recognition of this measurement challenge, MCC and MCA-Jordan worked with Miyahuna-Zarqa to record the actual numbers for water serving compact areas and non-compact areas at the end of the compact.

Given this, the lower number of hours of water supplied to the network in compact areas reflects the reduction in physical losses in those areas of the network. When determining how many hours of supply to offer, the engineer watches the speed of the flow of water out of the reservoir. Miyahuna engineers report that when serving the areas improved by the compact, fulfilling customer demands requires fewer hours of supply and, thus, less water due to the reduction of leaks in compact areas.

Footnotes
  • 1. MCC’s investment supported the procurement of a private sector contractor to manage the operations of an independent, publicly-owned water company that assumed the Water Authority of Jordan’s responsibilities for water delivery and wastewater collection in the Zarqa Governorate. This arrangement provided improved administrative efficiency and cost recovery.