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Jordan Compact

The Millennium Challenge Corporation’s partnership with the Government of Jordan transformed the nation’s water infrastructure, creating new opportunities for growth and stability in one of the most water poor countries in the world. The $275.1 million investment helped improve water delivery to the Zarqa Governoratea region of over 1 million people east of the capital city of Amman.Delivery was improved through increases in the supply of water available to households and businesses and through improvements in the efficiency of water delivery, the extension of a wastewater collection network, and the expansion of a wastewater treatment facility. As a result, 1,160 km of new water and wastewater pipelines were constructed, bringing water to more citizens and businesses in Zarqa and also reducing water loss from leaky pipes. The wastewater network expansion extended the wastewater system to nearly 55,000 additional people, collecting more wastewater for treatment. A highly acclaimed public-private partnership financing structure expanded a world-class wastewater treatment plant, increasing its capacity by one third and allowing it to treat 70 percent of the nation’s wastewater. The compact also helped train thousands of citizens on best practices in water conservation and provided instruction and job opportunities to women interested in becoming plumbers. Effective procurement strategies and careful management of expenses enabled savings that were reallocated to fund the installation of additional wastewater pipes, the construction of a new water utility building in Zarqa, and the purchase of sewer cleaning vehicles to clean and maintain the water networks in Zarqa and Amman. The compact’s investments were coordinated with USAID assistance and responded to Jordan’s appeal for more long-term support to the country’s water and wastewater infrastructure.

Already one of the world’s driest countries, Jordan has faced a water shortage exacerbated by the needs of those displaced by the war in neighboring Syria. At the end of the MCC compact, more than one million Syrians were taking refuge in Jordan, further straining the water infrastructure. Demand for water increased during the compact period by 40 percent and government officials and development experts agree that Jordan will continue to require further investments in the water sector to address the stresses caused by the Syrian refugee crisis. The MCC compact was particularly important given the additional pressure on Jordan’s water resources and infrastructure. Launched in 2010, months before the crisis in Syria began, the compact carefully targeted improvements to water and wastewater infrastructure in Zarqa, one of Jordan’s largest cities. Around half the water that entered Zarqa’s water system was being lost through leaks in the network, an unsustainably high loss given Jordan’s already scarce water resources. Valued at the marginal cost of water production, these losses at the time amounted to more than $10 million a year.

This report provides a summary of the tangible outputs of the compact program, documents changes in compact activities and the reasons behind them, details information on performance against targets in the monitoring plan, and summarizes the results of independent evaluations that have been completed.  Some evaluations for compact activities are not yet complete and this report will be updated to include that information when available.


Jordan is a highly urbanized, resource poor country of over nine million people.[[Population estimates vary between 9.4 million (World Bank, World Development Indicators, 2016) and 8.2 million (CIA, World Fact Book, 2016), depending in part on the count of recent migrants.]] The country has no oil or natural gas and relies heavily on imports to meet its energy needs. Barely three percent of the land is arable, and only one percent is under permanent cultivation. With limited access to surface water or naturally recharged aquifers, Jordan ranks among the world’s five most water scarce countries, with renewable freshwater resources that total only 150 cubic meters per person per year—a situation further exacerbated by rapid population growth, urbanization and other factors.[[Water scarcity, stress and security are related concepts, of which the last, from a development perspective, arguably is the most relevant.  Jordan is among the most water scarce, stressed and insecure countries in the world (see, accessed February 2018).  For information on the water sector in Jordan see]] On a per capita basis, available fresh water supplies are expected to decline significantly over the next 15 years, driving up costs and impacting household expenditures and industrial productivity.  The influx of Syrian refugees into Jordan since 2011 has further stressed the resource infrastructure, which was already suffering from structural issues prior to the refugee crisis.[[Regarding the impact of refugees on Jordan’s resources see]]

MCC’s Board of Directors first selected Jordan as eligible for MCC compact assistance in November 2006. As part of its compact development process, MCC conducted analyses to determine the binding constraints to economic growth in the country, and the Prime Minister of Jordan established the Millennium Challenge Unit to manage the development of a detailed Constraints Analysis and Sector Analysis in the first half of 2008. The Unit then conducted a broad consultative process that garnered feedback from donors, private sector representatives, civil society organizations, and ordinary citizens in each of Jordan’s twelve governorates. Throughout this process, the challenge of addressing Jordan’s severe water shortages emerged as a key priority.

During further consultations, key stakeholders in the water, sewer, and sanitation sector emphasized the need to (i) improve water delivery systems to reduce water losses and (ii) expand capacities for collecting and treating wastewater and reusing it in agriculture, wherever appropriate. This led the Government to propose a compact comprised of four major projects related to the rehabilitation of the water distribution system and expansion of the capacity for collecting and treating wastewater in Zarqa Governorate, among the poorest and most urban areas in the country. A history of neglect coupled with rapid population growth had strained critical water and wastewater infrastructure throughout Zarqa.  Residents continuously complained of sewer main overflows and water pipes made of cheap, flexible tubing that ran above ground through city streets, where they were subject to considerable wear and tear.

MCC agreed to jointly develop three of the four projects, which included rehabilitating and extending water distribution and wastewater collection networks and expanding the capacity of an existing wastewater treatment plant that treats the majority of wastewater from the Zarqa Governorate and the capital city of Amman. Through separate investments outside of the compact, the Government of Jordan agreed to fund the fourth project, a conveyor pipeline to carry high-quality treated wastewater to agricultural areas in the Jordan Valley; andcontributed $20 million to expand wastewater pumping stations to complement MCC’s investments in the sector.

MCC and the Government of Jordan signed a five-year, $275.1million compact in October 2010, to address the constraints outlined above. At that time, the Government of Jordan and MCC estimated that the compact would benefit more than 3 million people over 20 years, laying the groundwork for sustained economic growth by expanding access to clean water and improving wastewater treatment.[[The beneficiary estimate was later changed to reflect the expectation that the primary benefit stream will be from lower production costs of water over time. This reduces fiscal demands on the public purse and implies macroeconomic benefits to Jordan (lower national debt, a lower tax burden on the public, or changing government expenditures). Such macro benefits imply beneficiaries beyond Zarqa households. This change in method for counting beneficiaries takes account of income impacts that are derived rather than intermediated.]] This modern, more efficient water and sanitation system would create new opportunities for households, communities and businesses, as well as support stability in the region. MCA-Jordan was created soon after signing the compact to implement its programs.[[Under MCC’s country ownership model, governments receiving MCC assistance are responsible for implementing the MCC-funded programs. Partner governments establish units known as accountable entities referred to as MCAs to manage implementation for compact projects.]]

At the end of the compact in December 2016, the Government of Jordan and MCC had spent 99 percent of the allocated compact funds to increase the supply of water available to households and businesses and help improve the efficiency of water delivery, wastewater collections and wastewater treatment. Given the nature of the investments, the entire kingdom’s population is expected to benefit from them. Further details of the compact results and impacts will be shared in forthcoming impact and performance evaluations, expected by 2019, with a final report to be submitted in 2021.

  • Original Amount at Compact Signing:
  • Amount spent:
  • Signed:
    October 25, 2010
  • Entry Into Force:
    December 13, 2011
  • Closed:
    December 13, 2016

Project Results

As-Samra Wastewater Treatment Plant Expansion Project

  • $93,030,000
    Original Compact Project Amount
  • $97,882,950
    Total Disbursed

Estimated Benefits

Project Description

The As-Samra Wastewater Treatment Plant was constructed in 2008 with support from the U.S. Agency for International Development (USAID) to replace the highly polluting waste stabilization pond system outside Amman, and is the primary facility for treating wastewater from Jordan’s Amman and Zarqa Governorates. However, the demands of a growing population had pushed the capacity of the plant to its limits. Without an expansion to properly handle the region’s growing volume of wastewater, the plant would be overloaded, its ability to treat wastewater would deteriorate, and downstream agricultural areas that rely on treated water for irrigation would face serious food safety risks and the loss of markets for agricultural products. The objectives of the As-Samra Expansion Project were to (i) increase the capacity to treat wastewater from Amman and Zarqa Governorates, (ii) increase the volume of treated wastewater that is available as a substitute for freshwater for non-domestic use, and (iii) protect existing agriculture from the potential consequences of pollution from untreated wastewater.

Under a project finance public-private partnership, with help and a funding commitment from MCC, the plant underwent an expansion and technological upgrades, which allowed the Government to treat 70 percent of the country’s wastewater and meet the region’s wastewater treatment needs through 2025.The plant has improved the long-term sludge management and disposal practices and helped preserve Jordan’s scarce water resources. The expanded plant provides 133 million cubic meters of high-quality treated water per year – equivalent to over 10 percent of Jordan’s entire annual water resources – for irrigation in the Jordan Valley.

At the end of the compact, approximately 375,000 households (2,023,000 individuals) in the Zarqa Governorate and neighboring Amman benefitted from the project through additional supplies of freshwater transferred to these areas as larger volumes of treated wastewater were made available for substitution in agricultural applications in the Jordan Valley. This included approximately 8,500 households in the Jordan Valley (46,000 individuals) that receive consistent supplies of high-quality treated wastewater that can be used for irrigation. The As-Samra plant also provides bio-solids for potential reuse in fertilizer and fuel, and produces nearly 13 megawatts of energy, or 80 percent of its own energy needs, from biogas and hydropower, making it one of the most modern and energy efficient treatment plants in the Middle East.

Additionally, unused budget identified during implementation of other parts of the compactwas reallocated to the project to purchase four high pressure jetting sewage cleaners enhance system maintenance and capacity, thereby leading to a longer life-span of the sewage lines. More information can be found in the Compact Changes section below.

The project was financed as a public private partnership using a build-operate-transfer arrangement. In these arrangements, a government assigns responsibility to a private sector entity to finance, design, build, operate, and maintain the facility for a certain period. The As-Samra expansion was financed in partnership with the Samra Wastewater Treatment Plant Company Limited (SPC), a private company that built the original plant and operates it under a concession from the Government of Jordan.  Under this arrangement, the compact covered half the cost of construction, while SPC mobilized debt and equity funding to cover the remaining construction costs, along with project development and design, project management, and interest costs. Due to the grant nature of MCC’s investment, the project was more affordable for the Government of Jordan and financially attractive for SPC and Jordanian banks. MCC’s grant did not subsidize the private sector, as the private investors earn a return only on their investment.MCC’s involvement also reduced the cost of capital, allowing lower water and wastewater tariffs to consumers than might otherwise had been necessary. Through this financing method, the private sector not only provided over 50 percent of the cost of construction, but it assured the Government that the facility will be operated and maintained at world class standards for 25 years.  At the end of the concession period, in 2037, the agreement requires that the facility be transferred back to the Government of Jordan in good working order and at no additional cost. The project won international awards, including the “Water and Energy Exchange International Award for Innovative Financing,” and the “Best Water Project Award” by World Finance Magazine.

The project represented MCC’s first major participation in a build-operate-transfer agreement, and its role in providing what is referred to as “viability gap funding” was critical to expanding As-Samra. MCC also provided grant funding for the Jordanian government to hire transaction advisors to assist the Ministry of Water and Irrigation in the project’s commercial negotiations.

Wastewater Network Reinforcement and Expansion Project

  • $102,570,000
    Original Compact Project Amount
  • $88,604,173.94
    Total Disbursed

Estimated Benefits

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 1,633,400 $207,000,000

2005 PPP

At compact closure 0 $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.

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.

Water Network Restructuring and Rehabilitation Project

  • $58,220,000
    Original Compact Project Amount
  • $75,789,801.2
    Total Disbursed

Estimated Benefits

Estimated Benefits for the Water Network Restructuring and Rehabilitation 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 2,000,000 $602,000,000

2005 PPP

At compact closure 9,000,000 $493,000,000

2012 constant (approximately 2005 PPP $700 million). The original presentation was in 2005 PPP dollars for international comparisons. The end of compact analysis was carried out in 2012 constant values.

Project Description

In 2007, the wastewater collection system in Zarqa Governorate was limited in reach and endangered public health. The system frequently overflowed into city streets and the surrounding environment, relied on pump stations that had insufficient capacity, and did not serve nearly 30 percent of the population. The Wastewater Network Projectrepresented the largest investment in wastewater infrastructure improvements for Zarqa Governorate system. The objectives of the project were to (i) increase access to the wastewater network, (ii) increase the volume of wastewater collected within Zarqa Governorate for treatment and reuse, and (iii) reduce the incidents of sewage overflow.

The Wastewater Network Project was originally comprised of two activities: (i) the reinforcement of existing networks and rehabilitation of existing sewer main lines in West Zarqa, and (ii) the reinforcement of existing networks and rehabilitation of existing sewer main lines in East Zarqa.

The project extended service to households that were not connected to the sewer network by constructing over 300 kilometers of new sewers in the neighborhoods of East Zarqa and West Zarqa, both of which lacked access to the sewer network.The extension of lateral sewer lines raised wastewater service coverage rates from 72 percent to about 84 percent of the local Jordanian population, though coverage rates of the full population dropped due to the influx of Syrian and Iraqi refugees. These new customer connections also generated additional wastewater. The project provided more than 8,700 connection points to the wastewater pipes, which allowed over 54,800 people to be connected to the new wastewater system. These new customer connections generated additional wastewater which is treated at the As-Samra Wastewater Treatment Plant and reused in agriculture downstream in the Jordan Valley.The project also utilized unused budget identified during implementation of the compactto add 65 kilometers of pipes to the Princess Haya neighborhood of the Zarqa Governorate and to purchase high pressure jet cleaning vehicles for the water utility to enhance system maintenance. More information can be found in the Compact Changes section below.