OMS started in 1994 following a typical technical assistance approach, i.e. trying to modify and increase efficiency of WAJ within the existing institutional framework.
After about 18 months of project activities, OMS and the top management of WAJ ralised that changing procedures and work flows for an operating entity within the rigid legal framework of a public institution is an almost uphill task.
Therefore and with the assistance of major donors like KfW, World Bank, USAID the Ministry of Water & Irrigation embarked on an ambitious strategy to involve the private sector in operations and maintenance of water supply and waste disposal systems all over Jordan (see Figure below)>
A first management contract for Greater Amman was conducted in August 1999, funded by World Bank.
A management consultant is presently under preparation and parly funded by KfW.
In both transactions, OMS had and still has an important role, i.e. preparation of reliable base data, re-structuring of organisational set-ups and re-engineering business processes to prepare the existing WAJ organisation for such contracts.
In parallel, OMS initiated the idea of establishing a public company for WAJ Aqaba, which was further elaborated by the MWI and is now proposed to be the first step in corporatisation and establishment of public companies in the Water Sector.
The Minister for Water & Irrigation developed a "Concept of Commercial Companies in the Water Sector" and presented a first draft on the international donor conference, held at KfW in Frankfurt in April 2003.
OMS is supporting this corporatisation drive, as it can break the rigid institutional framework, under which WAJ has to presently operate.
The PSP experience since 1996 and the pressing need to accelerate the reform process in the Jordanian Water Sector prompted OMS to propose another option for involving private sector companies in opertion and maintenance of WAJ units - the Micro-PSP.
“Private Sector Participation in operation, maintenance and management of selected business activities and smaller business units of WAJ [JVA] enabling local private companies to support commercialization and efficiency of service delivery”.
This option had to be introduced in the PSP discussion, as the management contracts as a rather macro level PSP projects involve experts and decision makers across all hierarchy levels, starting from a head of division up to the Cabinet level within Jordan, plus high level officials of the major donor agencies and foreign governments. Logically, considerable time is needed from project identification to implementation.
About 5 years elapse, before the originally planned measures have an effect on the service delivery of WAJ.
This long implementation periods are not acceptable and need to be shortened.
OMS tried to bridge this long time lapse between project identification and implementation by testing a new channel on micro-level PSP, addressing particular problems in the regular business processes of WAJ like meter reading, billing & revenue collection, leakage repair services, customer surveys, GIS based information management and sewerage connections management.
The Advantages of Micro PSP are the use of local expertise and the reduced dependency on external funding and donor involvement, higher flexibility, fast track of projects, short-term improvements (almost immediate effect on the cash flow) and complementarities. Risks are in the Project identification (e.g. lack of reliable business data) and the expertise in the private sector in the needed types of services (new field in Jordan).
Another possible risk is the delegation of power (e.g. collection of taxes under the Ameri Law) as well as the performance of WAJ personnel working under commercial conditions.
Practical Experience has been made in the OMS project with billing and revenue collection in WAJ Aqaba, Outsourcing of billing and revenue collection in Al Koura and the Comprehensive Subscriber Surveys (CSS) and GIS introduction.
The Integration of Micro PSP into the overall PSP concept of MWI/WAJ is a great advantage of the approach. While Management Contracts, Lease Contracts or Concessions take up to 4 years before they are implemented Micro PSP options can be introduced at an earlier stage within 1-2 years and prepare the ground for other forms of Privatization/Commercialization.
The conclusion, of the participants of an OMS organised workshop on "Micro PSP - A Fast Track Option towards Commercialisation in WAJ" was:
“Micro level PSP is a complementary approach to increase service efficiency. It could be a preparatory phase for any large scale PSP, providing more realistic performance criteria and flexibility”.
MWI, WAJ, PMU and OMS shall pursue this option further and hope to realise first contracts in early 2004.