Regulatory Framework.

The legal basis for the current private sector intervention in the management and operation of water utilities is attributed to Article 28 of WAJ Law. This Article makes some provisions for WAJ to seek private sector participation through either lease contracts, or through commercial vehicles, i.e limited liability and/or public shareholding companies.

In all cases, approval and endorsement of the Cabinet is a mandatory requirement.

This Article was deemed to be by many commentators a breakthrough that made possible the incorporation of the commercialization principle into Jordan's Water Sector. It can be said that all major initiatives that took place recently, such as As Samra BOT, Amman Management Contract, Amman and Aqaba Water Companies, the managing consultant contract in the Northern Governorate, were possible only because of the amendment of WAJ Law by introducing the said Article.

However, the more the commercialization principle is embedded in Jordan's Water Sector the more crucial is the need to review the current regulatory framework to create an efficient, cost-conscious and results-driven water sector.

Under the Al Meyyah Project, the PMU is mandated to look at possible enhancement of the current regulatory framework. The PMU will largely benefit from the lessons learned and gained out of its current experience in involving the private sector. Also careful attention will be paid to what other stakeholders, such as other donors, have made in this direction. 

The PMU's activities in this direction will centre around the main three pillars:

• Enhancement of PSP. The PMU will examine more options for private sector involvement in Jordan's Water Sector. It will seek also to identify regulatory obstacles hindering further involvement of the private sector.  Proposals for change in the current framework will be presented to decision makers for their perusal.
• Illegal Use of Water. In Jordan a chronic problem of water loss has been persisting for decades. This problem affects directly the efficiency and profitability of water utilities. In this regard, the PMU will continue advising MWI/WAJ on best practices to be used to confront administrative losses resulted from illegal use of water. the PMU's activities in this regard will include suggesting and presiding over a training and qualification programme for Judicial Police Officers within MWH/WAJ in charge of dealing with illegal use of water.
• Researching into the institutional changes needed for the introduction of Water Sector Audit Unit.  As it is envisaged to create a Water Sector Audit Unit, the PMU will work closely with MWH/WAJ on the legal mandate needed for such a body, and institutional set-up needed for its creation

Water Sector Audit Unit.

Why:
Given the fact that Jordan's Water Sector will witness a rapid increase in the role of the private sector in the management and operation of water utilities, there exists an immense need for an independent body to monitor and audit these private sector activities, and to report in an objective manner to decision-making authorities on what remedial action, if any, should be undertaken.

The PMU will create and build all infrastructure needed for this unit to operate effectively. Monitoring Protocols on the basis of relevant legal documents will be prepared by the PMU, which shall include mechanisms for collecting information, and reporting.

A point worth considering here is that this legal mandate should facilitate and support the natural evolution of the prospective Audit Unit into a fully fledged water regulatory body as soon as the internal capacity has been put in place and the regulatory know-how has been built, and once the political decision has been made to establish a water regulatory body for the water section of the kingdom.

How:
The Water Sector Audit Unit needs to enjoy the fullest possible degree of autonomy and independence. It has also to be empowered with a sufficient legal mandate to help it seek whatever information is needed, and to report on results and analysis made.

In this regard, the PMU will analyze and evaluate different options for such a legal mandate.

The Water Sector Audit Unit needs to be in a prime position in the hierocracy of MWI/WAJ, to enable it deal closely with decision- making authorities.  

When:
The ground work for establishing the Water Audit Sector Unit has to be ready by the year 2008. It is anticipated that this Unit will become a reality in the year 2009.