Preparatory steps for regulatory change
Background
The Ministry of Water and Irrigation committed itself to a water sector reform that aims at the establishment of corporatized water utilities, separation of retail and bulk water supply, and significant involvement of the private sector in the operations of the utilities according to Jordan’s Water Strategies and Policies.
Within this context a clear need exists for a professional body that monitors and audits the performance of corporatized water utilities, and which could monitor other activities such as bulk supply as well as BOT-arrangements. The development of a Water Sector Audit Unit will take place within the context of the reform of the water sector.
To summarize the main reasons for establishing a Water Sector Audit Unit:
• Consumers will want to see safeguards that private sector involvement does not result in misuse of the (natural) monopolies of water service providers;
• Jordan authorities will want to see demonstrated that corporatization and increased private sector involvement indeed results in better performance and raised efficiency in the sector,
• The private sector would be attracted more easily when it knows its performance will be professionally monitored and audited.
The establishment of a Water Sector Audit Unit is in support of the institutional reform, and a Water Sector Audit Unit will be a critical element in the new institutional settings. The establishment of the WSAU, however, is not an end in its own.
Staged development
Three stages are expected in the development of the WSAU, marked by two
legislative decisions. From the start of the Al Meyyah programme until the formal establishment of the WSAU, monitoring and reporting functions will be undertaken by the PMU / Al Meyyah as such, continuing its present activities and under WAJ delegation.
At the same time the PMU / Al Meyyah will further build its monitoring and reporting capacities, and continue to undertake other preparatory activities as the further development of the PI-system.
The formal establishment of the WSAU will need a legal basis. Initially this basis could be a regulation or decree at ministry (?) level. Such legal mandate will have to define its legal status (level of independency), the scope of its work, competencies, the relationship with WAJ and other institutions, its organization and (future) financing.
After its formal establishment the WSAU will operate in line with its formal mandate, with support from the Al Meyyah programme through the PMU / Al Meyyah. The further development of monitoring, reporting and regulatory capacities will continue, as well as the support to the further institutional development of the sector. MWI’s Action Plan (Extension) 2002 -2010 indicates 2007 - 2009 as the transition period for transformation of an audit unit for the water sector (WSAU).
The institutional reform the water sector is going through will in due time require a legislative overhaul to provide an adequate legal framework. At present various management models are being developed, tested and evaluated as the company set-up for Aqaba, the Managing Consultant for the Northern Governorates, the Management Contract and its succession arrangement for Amman, and the BOT for the As Samra WWTP. Insights gained from the performance of these models will help to determine a (final) overall institutional model for the Jordanian government to adopt, and hence
will provide the basis for a revised legal framework, wherein the WSAU (or a regulator) has its definite place. The envisaged mid-term review of the last quarter of 2007 will report on the developments and might propose adjustments to below activities.
Al-Meyyah support to the WSAU unit will end in December 2009.
Results from preparatory activities
A number of activities have been undertaken to prepare the implementation of the Al Meyyah programme, including the development of an initial monitoring and reporting protocol, and a monitoring and reporting exercise for the Aqaba Water Company.
An important observation from this activity has been the urgent need to agree upon reporting standards, including the need to define the contents of business plans, which are to play a critical role in monitoring performance.
Furthermore, a legislative programme to be supported by the PMU / Al Meyyah is being developed, as well as an Institutional Development Plan for the WSAU.