Institutional Reform Vision for the Irrigation Sector in Egypt

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This article was downloaded by: [TOBB Ekonomi Ve Teknoloji] On: 19 December 2014, At: 20:16 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK International Journal of Water Resources Development Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/cijw20 Institutional Reform Vision for the Irrigation Sector in Egypt Hesham Mohamed Kandil a a Ministry of Water Resources and Irrigation , Egypt, Kornish, El Nil Imbaba, Giza, Egypt E-mail: Published online: 21 Jul 2010. To cite this article: Hesham Mohamed Kandil (2003) Institutional Reform Vision for the Irrigation Sector in Egypt, International Journal of Water Resources Development, 19:2, 221-231, DOI: 10.1080/0790062032000089338 To link to this article: http://dx.doi.org/10.1080/0790062032000089338 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use of the Content. This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. Terms & Conditions of access and use can be found at http://www.tandfonline.com/page/terms- and-conditions

Transcript of Institutional Reform Vision for the Irrigation Sector in Egypt

Page 1: Institutional Reform Vision for the Irrigation Sector in Egypt

This article was downloaded by: [TOBB Ekonomi Ve Teknoloji]On: 19 December 2014, At: 20:16Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

International Journal of WaterResources DevelopmentPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/cijw20

Institutional Reform Vision for theIrrigation Sector in EgyptHesham Mohamed Kandil aa Ministry of Water Resources and Irrigation , Egypt, Kornish, El NilImbaba, Giza, Egypt E-mail:Published online: 21 Jul 2010.

To cite this article: Hesham Mohamed Kandil (2003) Institutional Reform Vision for the IrrigationSector in Egypt, International Journal of Water Resources Development, 19:2, 221-231, DOI:10.1080/0790062032000089338

To link to this article: http://dx.doi.org/10.1080/0790062032000089338

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the“Content”) contained in the publications on our platform. However, Taylor & Francis,our agents, and our licensors make no representations or warranties whatsoever as tothe accuracy, completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views of the authors,and are not the views of or endorsed by Taylor & Francis. The accuracy of the Contentshould not be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions, claims,proceedings, demands, costs, expenses, damages, and other liabilities whatsoever orhowsoever caused arising directly or indirectly in connection with, in relation to or arisingout of the use of the Content.

This article may be used for research, teaching, and private study purposes. Anysubstantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,systematic supply, or distribution in any form to anyone is expressly forbidden. Terms &Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

Page 2: Institutional Reform Vision for the Irrigation Sector in Egypt

Water Resources Development, Vol. 19, No. 2, 221–231, June 2003

Institutional Reform Vision for the Irrigation Sector inEgypt

HESHAM MOHAMED KANDIL

Ministry of Water Resources and Irrigation, Egypt, Kornish, El Nil Imbaba, Giza, Egypt.Email: [email protected]

ABSTRACT Challenges facing the water sector in Egypt call for the adoption of anintegrated water resources management (IWRM) approach, which integrates all avail-able resources to meet escalating water demands of the different water use sectors. Thispaper intends to provide a review of the irrigation water sector drivers in Egypt in termsof challenges, policies and their characteristics. The paper also introduces a proposal fora vision for institutional reform in the irrigation water sector to provide the properenabling environment for wide application of the IWRM concept and a greater role ofthe private sector in the irrigation sector. Some key steps to realize the institution reformvision in the irrigation water sector are also presented.

Introduction

Worldwide, the challenges faced by many countries in their exertion for econ-omic and social development are usually related to water. Population increaseand the need for economic development on the one hand, and water shortagesand quality deterioration on the other hand, are among the problems whichrequire greater attention and action. Integrated water resources management(IWRM) is recognized as a process that can assist countries in their endeavourto deal with water issues in a cost-effective and sustainable way.

On the other hand, there are opportunities for private sector participation inboth physical infrastructure development and human capacity building. Newtechnologies, in particular, provide a considerable potential for deliveringefficient and affordable infrastructure services, even to rural areas (DSE (GermanFoundation for International Development), 2001).

Investment in infrastructure, in general, has accelerated in recent years,particularly in those countries that have taken brave measures in attractingforeign funding via private sector participation schemes. In developing coun-tries, there is considerable potential for private sector participation in watersector development. For the irrigation sector in Egypt to realize this potential, onthe one hand, government should put in place the appropriate enabling environ-ment and make the necessary long-term commitment to development. On theother hand, in those countries, the local private sector should also help lead theway.

This paper intends to provide a review of the irrigation water sector driversin Egypt in terms of challenges, policies and water characteristics. The paper alsointroduces a proposal for a vision for institutional reform in the irrigation water

0790-0627 Print/1360-0648 On-line/03/010221–11 2003 Taylor & Francis Ltd

DOI: 10.1080/0790062032000089338

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sector to provide the proper enabling environment for IWRM concept appli-cation and a greater role of the private sector in the irrigation sector.

The Main Irrigation Sector Drivers in Egypt

One of the major challenges facing the water sector in Egypt is to close therapidly increasing gap between the limited water resources and the escalatingdemand for water that development in various economic sectors creates. Tomeet the increasing demand and at the same time ensure the sustainable use ofwater resources, Egypt has to optimize the use of conventional sources of wateras well as investigate the means for making non-conventional sources of waterfeasible.

The Ministry of Water Resources and Irrigation (MWRI) is mandated tocontrol and manage all freshwater resources in Egypt, including surface andsubsurface water. In addition to the construction, supervision, operation andmaintenance of water structures, wells, irrigation and drainage networks andpump stations, the MWRI is also responsible for providing all other sectors withtheir needs for good-quality fresh water in due time. In the meantime, thegovernment of Egypt intends to reclaim an area of 3.4 million acres to add to thecurrent 8.0 million acres of arable/cultivated lands which will increase the areaof MWRI responsibility by around 42% by 2017.

Environment Law 4 of 1994 has been issued to protect the environment inEgypt in general including water resources. Law 4 refers to Law 48 of 1982 forpollution abatement on the water resources in Egypt and mandates the MWRIto implement the law in collaboration with other concerned ministries, whileLaw 12 of 1984 is the law governing the management and operation of theirrigation and drainage systems in Egypt.

In addition to the efforts to expand the supply of available fresh water, Egyptis addressing the issue of limited water quantity by managing the demand side.The MWRI has formulated a water master plan in 1981 that it is currentlyupdating through the National Water Resources Plan project. This project isdirected towards developing a National Water Resources Plan that describeshow Egypt will safeguard its water resources (quantity and quality) and how itwill use the resources in the best way from socio-economic and environmentalpoints of view. The plan will be completed by the end of 2002 and put forwardfor final discussion among the various stakeholders.

The MWRI has also prepared a National Water Policy till 2017, including threemain policy themes.

(1) Optimal use of the available water resources. Several programmes have beencarried out by the MWRI to optimize the use of the limited availablefreshwater resources. These programmes include: the improvement of theirrigation systems on the branch and field canal levels in the old land, whichis expected to result in a 5–10% saving in irrigation water; the installation oftile drainage systems to leach salt from the soil profile and improve the soilfertility; the rehabilitation of irrigation and drainage pumping stations; theintroduction of new crop varieties such as early maturing and salt-tolerantseeds; and the replacement and rehabilitation of the existing grand barragesand control structures on the Nile and main canals (Technical Assistance forToshka Project, 2003).

(2) Water quality protection and pollution abatement. The policy theme is

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realized through preventive measures and long-term policies. The preven-tive measures are carried out through the regular assessment of waterquality status and the suitability for various uses in addition to law enforce-ment to protect water resources against pollution. The MWRI has establishedand operates a national water quality monitoring programme on the Nile,two branches, the main canals and drains and Lake Nasser. On the otherhand, the long-term policies to control pollution include: coverage of theopen conveyance system passing through the urban system to closed con-duits; to set up a co-ordination committee with other concerned ministriesand follow up on priorities for wastewater treatment plants; and the intro-duction of environmentally safe weed control methods (mechanical, biologi-cal and manual) and banning the use of chemical herbicides. Subsidies onfertilizers and pesticides have been removed and some agricultural chemi-cals with long-lasting effects have also been banned. Public awarenessprogrammes are taking place about the importance of conserving Egypt’swater resources in terms of quality and quantity.

(3) Development of new water resources in co-operation with the Nile basinriparian countries. On the regional scale and recognizing that co-operativedevelopment holds the greatest prospect of bringing mutual benefits to theregion, the Nile riparian countries, including Egypt, have established theNile Basin Initiative. Launched in February 1999, the initiative includes allNile countries and provides an agreed basin-wide framework to fightpoverty and promote socio-economic development in the region. To raisebroader donor support for the Nile Basin Initiative and its portfolio ofco-operative projects, a first meeting of the International Consortium forCo-operation on the Nile took place on 26–28 June 2001 in Geneva, throughwhich the donor community pledged around US$140 million to support theNile Basin Initiative programmes.

The Special Characteristics of the Irrigation Sector

There are certain general characteristics that need to be taken into considerationwhen thinking about possibilities for private sector involvement in water man-agement in general and the irrigation sector in particular. These characteristicsinclude the following (Rees, 1998).

• The irrigation sector is vital for the Egyptian economy and is also crucial forthe government of Egypt to fight poverty and provide a better populationdistribution. On the other hand, there is an inextricable link between waterinfrastructure and urban and economic development. Socio-economic, publichealth and environmental benefits often surpass financial benefits and re-quired sector investments are likely to exceed what the private sector investor(and the consumer) is willing to pay. For a potential investor only the financialreturns and not the socio-economic benefits count.

• In water services, the monopoly level is naturally high due to the lack ofsubstitute products. For example, it would be inefficient to have severalcompeting irrigation networks in an agricultural area or water distribution orsewerage networks in a city. Consequently, the single service provider is in adominant position, making it necessary to protect the consumer againstmonopolistic behaviour.

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• The water sector is a capital-intensive sector. The financial requirement forirrigation improvement projects in the Nile delta and valley alone is aroundUS$500 million to US$700 million up to 2017.

Each of these characteristics of water has implications for the involvement anddistinct roles of the public and private partners in the water sector. Togetherthey highlight the manifold challenges to public–private partnerships in theconstruction and operation of water infrastructure.

The Need for Institutional Reform

The challenges facing the water sector in Egypt call for the adoption of anintegrated water resources management approach, which integrates all availableresources (fresh canal water, drainage water and groundwater) to meet thewater demands of the different water use sectors. Additionally, the IWRMapproach requires full co-ordination between government institutions, and ac-tive participation of water users in the planning, management and operation ofthe irrigation and drainage systems. In general, the government of Egyptrecognizes the need for institutional reform in the water sector to promoteeconomic efficiency and support sustainable water use in addition to environ-mental and ecological sustainability. Institutional reform would also support themove from subsectoral to cross-sectoral water management, thus realizing theIWRM approach. The reduction of government interference at an operationallevel would in turn require more direct involvement of related stakeholderspromoting wider ownership. This would result in a greater role for the users andthe private sector in water management and services. More specifically, majorchanges are required in the present water management institutions, policies andpractices to ensure the proper implementation of the IWRM approach. Thegovernment of Egypt also realizes that the reform provides opportunities tointroduce competition and encourage the private sector to contribute financiallyto water sector development.

The water users recognize the need for reform to provide improved systemperformance, including operational and maintenance services. The reform pro-cess is expected to offer greater participation and involvement of variousstakeholders through which transparency and better communication can beachieved. Additionally, participation in the decision-making process wouldreduce water-related conflicts and provide the commitment and support to thewater system that are currently lacking.

Institutional Reform Principles

In pursuing IWRM there is a need to recognize some overriding principles thattake account of social, economic and natural conditions. First, water must beused with maximum possible efficiency due to the increasing demand on thelimited water and financial resources. Secondly, there is a basic right of allpeople to have access to water of adequate quantity and quality. Thirdly, thepresent use of the resources should be managed in a sustainable way that doesnot compromise future uses of the same resources by generations to come(Global Water Partnership, 2000).

For the private sector large-scale investments always involve significant risks

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and particularly so when the assets cannot be removed for use elsewhere orredeployed on-site for other purposes. The case is crystal clear in the watersector: there are no obvious alternative uses for the irrigation system or pumpstation. Risk comes in a variety of forms: (1) construction risks, if the costs of newdevelopments or system renovation exceed expectations; (2) commercial risks, ifthe demand for products changes or new competitors enter the market; (3)financial risks, if interest rates on borrowed capital rise or exchange rates shift; (4)regulatory risks, if regulators alter standards of service requirements, refuse pricerises or fail to prevent the pollution of water sources; and (5) political risks, ifpolitical instability, asset expropriation or expulsion from the country occur. Themore risk there is perceived to be, the higher will be the return on capitalrequired by the private sector.

Competition in the market provides the proper investment climate andself-control for investors to a great extent. In the meantime, competition policy,transparency and monitoring should be in place to avoid the replacement of thepublic monopoly by a private one.

Decisions to protect the private companies from risk might be costly, as itmight require shifting some of these risks towards the government side. How-ever, the end result is that companies will only invest in the water sector if riskand uncertainty are kept to acceptable levels.

A sound, enabling framework for private investment is a prerequisite forpromoting business opportunities and reducing risks. Public–private partner-ships can serve as effective instruments to mobilize the private sector. These caninclude improving the regulatory framework and business facilitation, andbringing in an investment consortium. This will contribute to the developmentof a reliable market.

Moreover, there are also ways to establish an effective framework of financialincentives for the investor. Management contracts as an instrument can reducecosts and lower charges to the end user through improved efficiency. Ifefficiency improvement can be realized, cost recovery through the ‘consumerpays’ principle can make economic sense. Provided user charges are reasonableand affordable, consumers often prefer efficient service delivery to subsidizedservices that often do not reach them. If the consumer cannot afford the servicecharges, the government can allocate funds to support service delivery as partof its commitment to poverty alleviation.

Water infrastructure is more than hardware. It includes human capital andsocial infrastructure. Policy efforts have not always given equal weight to bothaspects. In some countries, economic reforms have been at the expense of humanadvancement. Human resource development and reform in the irrigation watersector in Egypt are essential for successful partnership in project development,implementation and maintenance (DSE, 2001).

To help mitigate risks and weaknesses, the MWRI has established an Institu-tional Reform Unit (IRU). The IRU is mandated (Zigterman et al., 2002) to:stimulate, facilitate and promote the progress of institutional reform in the watersector at strategic and operational levels; promote reform-related sector activi-ties; co-ordinate the strategic and operational reform agenda; assure the partici-pation of all involved stakeholders; arrange for further development of reformconcepts; assess institutional reform in the irrigated agricultural water sector andthe wider economy; and monitor the reform process.

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Figure 1. Schematic of the irrigation and drainage systems and areas ofresponsibility.

The Institutional Reform Vision

Decentralization and Management Transfer in the Old Lands

In the old lands of the Nile valley, delta and fringes, 90% of the land ownershipis of less than 1 acre (1 acre � 0.405 ha). This fragmentation in land is expectedto increase with time. With expansion of agricultural lands to new areas and toreduce the burden on the government, the MWRI’s responsibility is withdraw-ing up to a higher level of management. The left-hand side of Figure 1 showscurrent lines of responsibility at various levels of the operation and maintenance(O&M) of the irrigation and drainage system in Egypt. With regard to theirrigation sector, currently the MWRI is responsible for the O&M of the irri-gation canals down to the farm distribution level. The O&M of field ditches isthe responsibility of farmers and water user associations. On the other hand, theMWRI assumes the responsibility for the whole drainage systems, starting withlaterals and collectors and ending with open drains and pump stations, etc.

In the 1970s, the US Agency for International Development (USAID) supportedwater research through the Egypt Water Use and Management Project. Researchfindings of this project were the basis for the major irrigation improvement projectthat is currently taking place in the Nile delta and valley. A multidisciplinary

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approach to water management was introduced through this project. One possibleoption is to reduce MWRI responsibility by withdrawing up to the district level.

At the branch canal level the water board concept, Dutch model, is currentlyunder evaluation and adoption to fit the Egyptian system and conditions. Waterboards could be considered as a form of decentralized water management. Aclosely related concept is irrigation management transfer, through which themanagement of the branch canal is transferred to the users. These concepts arecurrently under consideration and securitization to adopt a model at a certainmanagement level and to be replicated in other areas.

For the future, the government is also considering scaling up the water boardsto the primary canal level or the district level to have a sustainable organiza-tional structure for user involvement in water management. At the district level,on the right-hand side of Figure 1, the stakeholders form a much more heteroge-neous group. Besides farmers, other users have interests in the water and wouldneed to be included in the organization. IWRM schemes at this level could alsobe more viable. In this case, all the water board’s mandates and authoritieswould be placed with the water board at the higher level, while the waterboards at the lower levels would become branches of this water board, respon-sible for implementation of the agreements and instructions.

Regarding the management (O&M) of the government-owned water manage-ment infrastructure, a modified version of Law 12 on irrigation and drainagewas drafted to provide the basis for government intervention and action, and itestablishes the context and framework for the functioning of non-governmentalentities, including water boards. The modified law provides the possibility todelegate part of the management or to transfer the complete management towater boards/associations or to specialized companies. The level at which thewater boards or specialized companies could operate is at the secondary(branch) canal level or above. This provision in the draft law is sufficient toaccommodate the various conditions encountered in the irrigated areas and alsoallows adequate room for broadening the implementation of the concept ofdecentralized management and a greater role of the private sector in future.Through this law, water boards will be allowed to raise funds to cover O&M andother service expenses including the cost of contracting service-providing com-panies.

However, the adoption and application of an accepted decentralization modelwill in turn result in major shifts in policy making and the planning ofprogrammes and projects that are currently handled by the central authority.Additionally, the whole legal framework, regulations and licensing systemsmight also be changed to address new roles for various private and publicentities. This highlights the need for monitoring and evaluation of the trans-ferred systems.

In addition to required changes in current policies, MWRI staff and managerswill have to acquire the institutional capacity to undertake a large-scale ex-panded programme that would cover a large geographical area. These institu-tional capacities might include the need for a thorough understanding of therationale for decentralization and public–private partnerships, to communicate aclear message to both farmers and to their own colleagues within the irrigationsector. Institutional capacity also requires training in communication for effec-tive interaction, and in social analysis.

On the other hand, an effective system of participatory planning and manage-

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ment of water resources must be able to provide timely information on whatkind and quality of water is available where, and on who is using the water andfor what purposes. Therefore, effective water management systems require thatthe government is to be trusted to provide adequate official surveys, andinventories of water sources and water supplies, as well as up-to-date registersand records of water uses and discharges into waters, and water allocations forvarious sectors.

Public–Private Partnerships in Mega Projects

The government of Egypt is planning to increase habitable land from the current5% to 25%. The projected increase is planned through a series of mega landreclamation projects of which the North Sinai and South Valley developmentprojects rank top in terms of size and goals.

The South Valley Development Project aims at reclaiming an area of around1 million acres in three regions: around the Toshka depression; in East Oweinat;and in the New Valley governorate oases. Toshka and East Oweinat areconsidered the most important phases of the project, since, combined, theyaccount for over 750 000 acres of the total targeted area. The total investmentrequired for developing the region is estimated at LE300 billion over the coming20 years. The government will finance up to 20–25% of the total expenses ofconstructing the main irrigation canal and branches, installing the pumpingstation and setting up a convenient infrastructure network. The rest will befinanced by the local and foreign private sector in five major sectors: landdevelopment, new community development, industry, agriculture and tourism.

The North Sinai Development Project is a multisectoral initiative. Total invest-ment needed for the whole development programme is projected to reach LE64billion by 2017. The private sector is expected to provide 62% of this amount.The development project includes land reclamation of 400 000 acres in Sinai.This amount includes financing the construction of new communities within theproject site. Landholdings in the project area are a mixture of both small andlarge farms.

Towards greater participation of the private sector in these two mega projects,the government of Egypt has established two holding companies to manage,operate and maintain the irrigation and drainage networks in both projects. Thecurrent vision of these companies is that they will offer mechanisms to provideappropriate services to both investors and small farmers. However, the maininfrastructure, including irrigation and drainage networks and pump stations,will still be the property of the government, maintained and operated by theMWRI. The companies will raise enough funds through the collection of servicecharges from beneficiaries in the projects and selling new lands to investors.Each of the holding companies will comprise several smaller companies givinga greater role to the private sector from the beginning.

Institutions for these companies are currently under development in greaterdetail. Table 1 shows various institutional options under consideration.

In all the proposed options, the government of Egypt, represented by variousministries, will own and operate the main infrastructure. For instance, the MWRIwill own and operate the main pump station and main canals. This is mainlydue to the strategic nature of these infrastructures. On the other hand, theholding company and the private sector will be contracted to provide certain

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Table 1. Institutional options under consideration for holding compa-nies in land reclamation projects

Institutional optionServicenumber Service A B C

1 Water allocation to the project area inrelation to other command area within MWRI MWRI MWRIthe country’s irrigation system

2 MOM of the main pump station MWRI MWRI MWRI3 Development and selling of new land

within the area to attract private HC HC PS–HCinvestment

4 MOM of public irrigationinfrastructure and public water HC HC PS–HCdelivery to all users

5 Development of operating rules to MWRIregulate the development of irrigation PS–HC and PS–HCin area (master plan, environmental PSstandards, etc.)

6 Research and development and HC MWRI PS–HCextension

7 Setting up public supporting services HC GOE PS(roads, settlement, etc.)

8 Co-ordinating private initiativeregarding investments of joint interest HC GOE PS(packaging, refrigerator facilities, etc.)

GOE, Government of Egypt; HC, holding company; MOM, management, operation andmaintenance; PS, private sector.

services, as shown in Table 1. In option A, the holding company will be trustedwith a greater role than just the management and O&M of public irrigationinfrastructure as in option B. Option A suggests full authorization from appro-priate ministries to the holding company to provide services 6–8, which willhave the advantage of less routine and will achieve the purpose of decentraliza-tion. Option A will also achieve the desired goal of a reduction of the burden onthe government budget. Option B gives the government of Egypt, representedby various ministries, the traditional role for its entities. Option C presents theother extreme, with the private sector assuming a large role in services 3–8.Options A and C might look attractive from the point of view of enhancementof the role of the holding company and the private sector; however, this willdepend mainly on the interest of investors and the revenue expected from theseservices. The government is also projected to provide attractive incentives interms of legislation and tax exemptions to provide an enabling and attractiveenvironment for the private sector to assume a greater role.

Public–Private Partnership in Services Provided by the MWRI

The MWRI provides a wide scope of services to the public in general and tovarious sectors in the country. Its overall responsibility is to authorize water useand to manage the national surface water and groundwater resources. Thedesign, construction and O&M of all infrastructures for water resources develop-

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ment and irrigation and drainage networks are also among the core work of theMWRI in addition to actions for implementation of the national water qualitylegislation and Nile protection. There are many opportunities for the MWRI toenhance involvement of the private sector in water resources management. Ingeneral, three forms of public–private partnership models can be adopted:

• privatization of part of the activities or responsibilities;• privatization of all activities or responsibilities;• privatization of ownership.

In all cases, the government will have to make a contract with the private partyto provide the required service. This private party could be a private company,a public sector company or a water user organization, etc. In such an agreement,arrangements will be made with regard to levels of services, prices, consumerrights, legal obligations and risks, etc. Many kinds of arrangement or contractare possible. Various types of contracts could be used for each of the models;each contract type might give the government a different degree of influence onthe execution of the privatized activities. This is reflected not only by the lengthof the contract but also by the level of transferred responsibilities and financialrisks (World Bank, 1999).

For each of the services provided by the MWRI, the role and degree ofpublic–private partnership involvement could be based on the following criteria(Attia, 2001):

• scope and domain of the service;• the need for self-financing mechanisms for O&M;• the need for continuous improvement and upgrading;• existing governmental constraints;• the financial resources to improve and expand the service;• the advantage of creating a scheme for competition;• the existing laws and regulations and their modification;• the political and social constraints.

Attia (2001) carried out a strength–weaknesses–opportunities–threats analysisfor private sector participation (PSP) in the irrigation sector. Results of theanalysis showed the importance of selecting and adopting the appropriateoutsourcing service contracts to minimize risks and ensure service improvement.PSP is also viewed as a good opportunity to introduce new technologies in watermanagement and continuous improvement and upgrade of the services pro-vided. Social and economic considerations need to be properly addressed forfuture institutional reform, which might require some capacity building for newroles and responsibilities.

Process to Realize the Vision

The multipurpose and hydrologically interconnected nature of the water re-source is complicated. Change in one part of the system tends to set up chainreactions affecting the availability, quality and cost of supplies elsewhere withinthe water region. Governments will want to ensure that private companyoperations do not impose unacceptable externality costs on other resource uses(by, for example, depleting underground aquifers or polluting the drinkingwater sources of downstream users). Moreover, governments will want to make

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sure that current practices do not compromise the ability of the water system toprovide essential supply and ecological functions in the future. However, theprivate companies will also want assurances that the water resources law andany resource allocation or environmental agencies are capable of protecting theirinterests from the activities of upstream water and land users. Development ofnecessary regulations to protect various interests is a complex process.

The following are key steps to realize the vision of institutional reform in theirrigation water sector.

(1) Throughout the institutional reform process, the proper informing andmobilizing of stakeholders should be carried out through a consultationprocess to explain the vision and its course of implementation. The consul-tation needs to highlight the important message that stakeholders in thecourse of the reform process will gain more influence on the performance ofirrigation and drainage systems and will also obtain more control overfinancial contributions to maintain the water management infrastructure.The proper informing of stakeholders on the reform process would buildinterest and commitment in addition to the consensus on the need forchanges.

(2) Based on the vision, the institutional reform policy for the irrigation watersector would be developed and promoted. The institutional reform policydevelopment needs to be co-ordinated and agreed upon with agencies,departments, entities and stakeholders.

(3) The creation of an enabling environment for IWRM application and a greaterrole for the private sector will require the review and update of the existinglegal framework. Human resource development in both the government andthe beneficiaries is also essential.

(4) Prior to large-scale application, the institutional reform policies and activitiesshould be implemented first on a pilot scale. The implementation processneeds to be monitored and evaluated regularly through performance indica-tors. The evaluation should also include the assessment of the economic andsocial impacts of institutional reform in terms of efficiency, cost and humanresources. The evaluation would provide feedback to policy makers fornecessary changes in the policies and the implementation process.

References

Attia, B. (2001) The vision of the Ministry of Water Resources and Irrigation towards privatization,Advisory Panel Project Workshop on Water Management and Drainage, March, Cairo.

DSE (2001) Attracting private sector participation to infrastructure development in LDCs, Inter-national Policy Dialogue, Bonn/Petersburg, 31 October–1 November 2000.

Global Water Partnership (2000) Integrated water resources management, Technical AdvisoryCommittee Background Paper 4 (Stockholm, Global Water Partnership/Swedish InternationalDevelopment Co-operation Agency).

Rees, J.A. (1998) Regulation and Private Participation in the Water and Sanitation Sector, TechnicalAdvisory Committee Background Paper 1 (Stockholm, Global Water Partnership/Swedish Inter-national Development Co-operation Agency).

Technical Assistance for Toshka Project (2003) Mission Report, October (Consulting Services for theSouth of Egypt Development Project, Water Management and Post-implementation Studies,forthcoming).

World Bank (1999) Review of Government and Private Sector Roles in Public Works and Water Resources(Cairo, MWRI).

Zigterman, E., Jr, Kandil, H.M. & Vulto, C. (2002) Appraisal of the Institutional Reform Unit Report(Cairo, MWRI).

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