As-Samra

As-Samra Wastewater Treatment Plant Project on BOT Basis Development and Lessons Learned

Introduction

By the end of December 2003, the As-Samra Wastewater Treatment Plant commencement date was announced by signing all relevant project agreements between all parties. This was the first successful project on BOT basis in Jordan and the first mix financed project that includes a grant component from USAID with the participation of local Jordanian banks and financial institutions.

The Project goals are:

• To provide for improved wastewater collection, conveyance, treatment, and reuse for customers which is reliable, efficient, cost-effective, environmentally sound, and financially sustainable. Customers include residents, businesses and industries of the Amman-Zarqa River Basin, and farmers who reuse treated wastewater from the Greater Amman area.

• To produce all analysis, planning, and preliminary engineering design documentation needed to meet the Project Goal in the Amman-Zarqa River Basin through the year 2025.

• To conduct the Project tasks in a manner which maximizes the probability of financing from donors, multilateral lending institutions, and other financiers for the construction of infra-structural elements of the Master Plan.

Background

Construction of the first sanitary sewers in Amman began in 1964 when the population was about half a million residents. The first wastewater treatment plant in Amman, and in Jordan, was an activated sludge facility at Ain Ghazal in the northeast of Amman which was constructed in 1968.
As-Samra Wastewater Stabilization Ponds (WSP) were constructed in 1985 upon the recommendation of the first 1982 wastewater master plan; it was originally conceived as a temporary facility that would be used while other three plants are constructed in different locations in Amman Zarqa Basin to serve the cities of Amman, Zarqa and Russeifa. The sewage flowing to the WSP receives pre-treatment at the head-works at Ain Ghazal Pre-treatment plant, the West Zarqa Pumping Station and the Hashimiyya Pumping Station.

As-Samra Wastewater Stabilization Ponds

The AS-Samra WSP was designed to treat an average daily flow of 68,000 m3/day and a design five-day Biological Oxygen Demand (BOD5) of 526 mg/l or about 35,750 kg/day of BOD.

West Zarqa Pumping Station

Ain Ghazal Pre-treatment Plant

Because of many factors and shortly after putting the plant in operation it became both hydraulically and organically overloaded and, as a result, the quality of effluent from the WSP system has become degraded. Effluent from the As-Samra WSP system failed to meet Jordanian Standards for discharge of treated domestic wastewater effluents to streams, wadis and reservoirs. The average concentrations of BOD5 and total suspended solids (TSS) became almost three times and twice, respectively, their allowable levels as stipulated by the Standard. Average concentrations of ammonia (NH4), total nitrogen and coliform bacteria also exceeded the Standard.

The effluent from As-Samra WSP as a major source of irrigation water, both locally along Wadi Dhuleil and the Zarqa River and in the Jordan Valley makes the quality of the effluent a major economic (agricultural production) and public health (potential contamination of produce that will be consumed raw) concern at the local and the national levels.

The effluent from As-Samra WSP to King Talal Reservoir

Other major concerns relative to the existing system include odour in the vicinity of the As-Samra WSP, hyper-eutrophication of King Talal Reservoir (KTR), which is a major storage facility for irrigation water, possible groundwater contamination in the vicinity of As-Samra and along Wadi Dhuleil and the Zarqa River, and water quality in the Zarqa River above and below KTR (particularly with respect to Nitrogen, salinity and bacterial concentrations).

King Talal Reservoir

Wastewater collection areas in the Amman-Zarqa River basin are based on topography to allow gravity collection. Conveyance of most Amman wastewater to the treatment plant site is also by gravity through a 39-km siphon. Wastewater collected from lower elevations in Amman, Russeifa, Zarqa and Hashimiyya requires pumping for conveyance to the treatment plant site at As-Samra
A Second Wastewater Master Plan financed by USAID for the period 2000 to 2025 has been prepared for Amman-Zarqa basin. It has identified and evaluated sites for new and expanded treatment plants and the needs fro supporting conveyance lines. The Zarqa river (Seil Zarqa) basin includes most of the Greater Amman Municipality, all the sewered areas, and most of the towns in Zarqa Governorate. The second master plan recommended the construction of a treatment plant at As-Samra site of a capacity of 267000 m3/day as the first stage that would be capable of treating the wastewater from the area until the year 2010; by then another plant is recommended to be constructed below Zarqa to take the loads from Zarqa, Russeifa and parts of Amman until the year 2020-2025 while As-Samra plant is to be expanded in the year 2015 to treat the wastewater from Amman area until the year 2027.

Population

The population of Amman municipality is growing rapidly, about 4.4% per year. At 1.3 million in 1994, it was 32% of Jordan’s total population. The Zarqa Governorate municipalities are growing nearly as fast. The population of this area, including much of Amman and the Zarqa Governorate municipalities, was 1.56 million at the 1994 Census. It is expected to double by 2010 and to reach 5.4 million in 2025 when the overall growth rate of the Area population would have declined to 3.7% per year. This Area contained 38% of the population of Jordan in 1994 and would contain 44% in 2025 as the national growth rate declined from 4.0% to 3.3%.

Project Development:
In 1997 a USAID funded second Master Plan Study recommended the construction of two plants in two stages: As-Samra plant at the same site and Wadi Zarqa plant some 20 km downstream of the confluence of Wadi Dhleil and Zarqa River. Because of the high capital cost required, the Master plan recommended the construction of As-Samra plant first phase to treat an average daily flow of 267000 m3.

MWI’s main objective is to produce a wastewater effluent suitable for reuse to irrigate crops in Wadi Dhleil area and in the Jordan Valley downstream of KTR. And because of health requirements, MWI decided to achieve more stringent effluent quality; i.e achieving effluent concentrations of BOD5, total suspended solids (TSS) and total Nitrogen of less than 30 mg/l were set to be achieved.

Odour removal also received great attention. Zero odour concentrations (hydrogen sulphide, mercaptans and methane) outside the plants’ site boundary were set as a major goal to be achieved.
Salinity is perceived as the main quality concern for reuse in irrigation. Crop yield reductions can result from present effluent salinity levels. Salinity levels in future WWTP effluents will not vary greatly from present levels, so improved irrigation water management is the major requirement to improve yields. The ongoing and planned water supply projects will reduce (improve) salinity of drinking water supply and eventually the effluent quality. Future changes in water sources for the Amman-Zarqa water supply, growth of per capita water use, and adoption of wastewater treatment processes that have smaller evaporation losses than the WSP will probably each improve salinity to a an acceptable degree.

In 1998 and based on the needs and requirements, MWI entered into an agreement with SWECO international – a Swedish consultancy firm financed by a grant from the Swedish International Development Agency (Sida)- to study different financing options to implement the Plant at As-Samra based on the following requirements:

* Treat 267000 m3/day of wastewater from the area to meet certain standards which were more stringent than any Discharge Effluent Standards. These were: average effluent concentrations of BOD5, total suspended solids (TSS) and total Nitrogen of less than 30 mg/l. Meeting such requirements will improve water quality in streams and KTR and will allow for the use of the effluents for unrestricted irrigation in the Jordan valley or upstream of KTR.

* Elimination of odour around the wastewater treatment facilities. Control of odour will require that a sludge management system to digest, dry and store sludge be incorporated in the treatment facilities.

* 21 different financing scenarios were studied and as a result a BOT approach was recommended for the construction/financing of the project, the selection of process train should be made by the Contractor. Such scenario was based on grant component whereby MWI would grant 50% of the capital cost.

In September 2000 the Government of Jordan represented by MWI issued a Request for Proposals (RFP) for the development of a wastewater treatment plant at As-Samra, near Amman. The RFP specified that the plant should have a capacity to serve a population of approximately 2.3 million people with a total average flow of approximately 267,000 cubic meters per day. Proposals were submitted by two Bidders in July 2001. In January 2002 the consortium which included the Morganti Group, Inc., Ondeo S.A., and Ondeo Degremont, Inc. (the Sponsors) was announced as the preferred bidder.

BOT model

As countries begin to privatize, several new financing schemes have evolved. These financing mechanisms are especially important for capital intensive infrastructure projects such as water supply and wastewater treatment projects. Some of the more familiar buzzwords that have been developed to describe the financial arrangements include BOT, BOO, BTO, ROT, as well as other combinations of these acronyms. The most common of these schemes is the Build-Operate-Transfer (BOT) financing mechanism which has been utilized for infrastructure projects that in the past would have almost certainly been financed publicly. Under a BOT arrangement, a private developer finances, builds, and operates the project under a series of contractual agreements between the various relevant parties that delineate the terms, provisions and clauses pertaining to the project. The BOT arrangement, as the name suggests, consists of three distinct components.

Scope of Responsibilities

MWI Responsibilities

Project Company Responsibilities

       Make available, and grant the right to use the site to the Project Company

        Develop, Plan, Design, Engineer, Procure and Complete the Plant and the work accordance with technical requirements

       Make available, and grant the right to use the MWI Property, to the Project company

     Take delivery of wastewater at the influent points, Pre-treat wastewater in Ain Ghazal pre-treatment Plant, Transport wastewater in the Siphon and pipelines to the plant, treat wastewater in the plant and deliver treated waste water at the influent point

     Construct and Complete the new Siphon

     Store, Market and sell and/or otherwise dispose of the sludge

       Provide installation for the supply power, water telephone and other similar services required for the execution and completion of the works

   Obtain and keep into force all Government authorization required for the project and perform all activity in relation thereto.

          Convey and deliver wastewater to the Project Company at the influent points for pre-treatment in Ain Ghazal Pre-treatment plant and treatment in the plant

      Operate, maintain, repair, renovate and renew the plant and MWI property

        Provide MWI contribution to the Project Company

   Procure financing for the project

           Pay Treatment Charge to the project Company

     Procure Proprietary right, licenses, agreement and permissions for the materials, methods, processes and systems used in relation to or incorporate into the plant

     Establish and Maintain the Payment Assurance scheme

    Transfer and surrender possession of the plant

The As-Samra WWTP BOT Project Construction view:
The project includes the design, construction, procurement, commissioning, operation, maintenance and financing of the new wastewater treatment plant (WWTP), Phase 1, at As Samra. The WWTP is to be built on the site of the existing stabilization ponds, to be taken over by the Project Company and potentially used in the project. The plant shall have a capacity of 267 000 m3/day.
The project also includes expansion and upgrading the pre-treatment plant at Ain Ghazal, the minor refurbishment of the pumping station at West Zarqa, as well as operation and maintenance of the main conveyor lines from the pre-treatment facilities at Ain Ghazal to the WWTP and of the pumping stations at Hashimiyya and West Zarqa.
The construction of As Samra WWTP is divided into two stages. In the current project-stage 1, the capacity for the design year 2015 is to be achieved. In stage 2, an expansion for a capacity the year 2025 is planned. While it is a requirement in stage 1 to design the layout of the plant to facilitate for an expansion in stage 2, such expansion is not part of this project.

Financing:
The project total construction price is JD120,2 million, (financed through a syndication of Jordan financing institutions lead by the Arab Bank) and the Project Sponsors. Where USAID contributed $ 78Million as grant to the project through MWI, MWI contribution is $14 Million, with the reminder being invested by the project company in the form of equities and debt financing from the lenders.

MWI Contribution/USAID grant

Although the RFP specified that the successful Bidder should secure all financing for the Project, MWI undertook to provide a fixed contribution of 50% of the costs of the Project up to US$ 75 million. This undertaking was based on an agreement between USAID and the MWI whereby USAID agreed to fund this contribution, subject to the following conditions:

Availability of the agreed fund from USAID; (commitment letter was obtained before the effectiveness of the project)
USAID would not enter into any agreement with the Project Company;
MWI shall raise the wastewater tariff by 12% as recommended by previous studies in order to support the financial requirements of the Project during the operational phase and as part of the securities that would make the project financiable and attractive to the private sector;
Funding from USAID would be based on the Fixed Amount Reimbursement (FAR) method. Under such method of payment the total amount that USAID will pay for a particular Section is fixed in advance (according to special appendix to the Project Agreement);
A majority of the shares of the Project Company must be held by firms with U.S. nationality with the balance of shares held by firms with a Code 935 Country,
The EPC Contractor must have U.S. nationality, and any subcontractor providing services for the EPC Contractor must have a Code 935 Country as its nationality;

The O&M Contractor must have a Code 935 Country as its nationality
All commodities for the Works must have their source and origin in a Code 935 Country
The Project Company shall use commodities whose source and origin are either United States of America or Jordan in the execution of the Works (“US/Jordan Commodities”) with a value corresponding to at least fifty (50) per cent of the total actual cost of commodities for the Works.

The involvement of USAID in the As-Samra Project created a number of significant benefits:

The funding from USAID, as a grant paid throughout the construction period, reduced the amount of private financing required for the Project including the level of equity to be provided by the Sponsors;
The funding from USAID resulted in reducing the Treatment Charges payable by MWI. TC were substantially reduced by (65%), and as a result the Project became attractive, financiable and affordable;

USAID Payment Conditions:

Payments from USAID to the Project Company will be made during the construction period subject to the following conditions (the Payment Conditions):

• That Completion Certificates are issued by MWI with respect to an operational section of the plant (a Section), with confirmation that:

• The Nationality Requirements are satisfied;

• That the Commodities Requirements are satisfied in accordance with the Compliance Plan;

• That the Project Company is not in breach under the Project Agreement or under the Facility Agreement and that none of the Sponsors is in breach of its equity and continuing shareholding obligations; and
• That USAID has made a positive USAID Determination with respect to the relevant portion of the MWI Contribution if required.

FAR Method and Completion of Sections

Under the FAR method of payment the total amount that USAID will pay for a particular Section is fixed in advance in an amount specified in an appendix to the Project Agreement.

According to the RFP, each Bidder shall fill the appendix (MWI contribution) by designing and structuring the work to be completed in Sections that are brought into service in successive stages. Filling the MWI contribution appendix requires bidders to identify the relevant anticipated cost of each Section to be covered by MWI. This allowed the contractor to receive the MWI contribution for the first completed sections which allows deferring the draw of money under the facility agreement (debt financing) as well as structuring the equity injection and consequently reduction in interest rates during the construction period.

Environmental Concerns prior to the new plant

ENVIRONMENTAL CONDITIONS

The effluent from As-Samra WSP plant does not meet Jordanian effluent standards and is not suited for reuse in agriculture due to poor biological quality and high nitrogen content. Its oxygen demand on the receiving stream is excessive, and its high nutrient content stimulates undesirable aquatic plant growth.

Complaints of odor emissions from AinGhazal Treatment Plant (AGTP), and As-Samra WSP, are frequent. At AGTP improved odor control facilities are planned to control and treat odors from the septage discharge facilities and from the septic wastewater entering the siphon. At As-Samra WSP, the inlet facilities have been covered and odor scrubbers have been installed. The continued use of anaerobic ponds will continue to cause odor problems.

As-Samra WSP effectively removes nematode eggs, but it requires disinfection by chlorination to control fecal coliforms. Operation of the chlorination process is intermittent. Therefore, bacterial quality is unreliable. Effluent used for irrigation along the banks of Wadi Dhuliel and the Zarqa River does not consistently meet bacterial quality standards. Therefore, consumption of the food crops produced there carries some risk of disease transmission, and direct contact with the receiving stream water should also be avoided. However, the removal of nematode eggs does eliminate an important threat to public health.

The discharge from King Tala Reservoir (KTR) has declined in quality to the point where it is not suitable for unrestricted irrigation based on Total Dissolved Solids (TDS), nitrogen, and fecal coliforms.

Groundwater in the As-Samra area has declined in quality since the As-Samra WSP began operation. However, there is insufficient data to indicate that seepage from the ponds is the reason. In fact, it is suspected that local irrigation with treatment plant effluent from the wadi, livestock operations, and over fertilization have been major contributors to the groundwater quality decline. The rise in groundwater levels attributed to seepage from the ponds may be more the result of the cessation of well operations in favor of surface water.

Public Health

An epidemic of waterborne cholera occurred in the Zarqa basin about 1985 which was attributed to discharges from AGTP. Whether the cause of the epidemic was attributed to treated effluent or to combined raw sewage/storm water bypass is not clear. The utilization of the WSP at a site more remote from the urbanized area was influenced by this event. Concern remains that such an episode could recur.

Water Quality for Agriculture

Reclaimed water suitable for irrigation of most crops can be achieved by providing secondary treatment such as Waste Stabilization Ponds. Secondary treatment can reduce Biological Oxygen Demand (BOD5) and Total Suspended Solid(TSS) loadings to acceptable levels, but will have little, if any, affects upon TDS, nitrogen, phosphorous, boron or chloride. Expensive tertiary treatment and/or source control would be required to reduce these elements.

The effluent from the existing WSP meets requirements for irrigation of crops when chlorination is practiced to control coliforms and for crops less sensitive to salinity. There may be additional yield reductions in some crops due to high levels of chloride and nitrogen.

Short-term improvement of 1995

In 1995 A short improvements program was commissioned under the assistance of USAID for investment cost $ 11 million. The As-Samra Wastewater Stabilization Ponds Emergency Short-Term Improvement Program is one of an Improvement Program for the rehabilitation and expansion of the Amman wastewater system. This contract included:
- The removal of sludge from four anaerobic ponds
- Construction of two anaerobic ponds, to replace the deconstructed
- Construction of new inlet structure to accommodate with water flow in peak time
- Construction of inter-pond pipelines and attendant structures
- Construction of odor control facilities, chlorination facilities and installation of surface aerators in two ponds at the inlet.

Improvement considered only one third of the plant at that time, awaiting the long term solution.