Water Sector Reform Programme – Phase II

11Water DPG - 20 December 2011

Water Sector Reform Programme – Phase II

Agreed Reform Benchmarks, Performance Indicators Baseline Data and Means of

Verification

Ahmed BADR, PhDWater and Energy Programme Manager

Delegation of the European Union to Egypt

EUROPEAN UNION EGYPT-WATER SECTOR REFORM PROGRAMME–Phase II

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Impact of 25Impact of 25thth January 2011 Revolution January 2011 Revolution • Dramatic decrease in the collected billsDramatic decrease in the collected bills• EGP 500 million (=approx. € 60 million) add-up on EGP 500 million (=approx. € 60 million) add-up on

the financial burden of HCWW the financial burden of HCWW • Decrease in annual average of the Government Decrease in annual average of the Government

production subsidy to sector by more than 40%production subsidy to sector by more than 40%• Decrease in the Government budget to the capital Decrease in the Government budget to the capital

investment budget to the sector (approx. percent investment budget to the sector (approx. percent of reduction is not yet definedof reduction is not yet defined

• Lack of, and vagueness in policy dialogue, Lack of, and vagueness in policy dialogue, especially regarding future plans and strategiesespecially regarding future plans and strategies


INTRODUCTION

Water DPG - 20 December 2011

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Total grant amount is € 120 Million:Total grant amount is € 120 Million: € € 110 million as budget support over three tranches110 million as budget support over three tranches First fixed tranche: € 22 millionFirst fixed tranche: € 22 million Second & third fixed tranches are variable equal:€ 44 millionSecond & third fixed tranches are variable equal:€ 44 million Technical Assistance: € 10 million Technical Assistance: € 10 million

Programme duration:4 Yrs + 2 Yrs as phase-out period Programme duration:4 Yrs + 2 Yrs as phase-out period Modus-Operandi:Modus-Operandi:

• General eligibility criteria that have to be verified by the General eligibility criteria that have to be verified by the Commission for the release of each tranche; plusCommission for the release of each tranche; plus

• Specific reform benchmarks that have to be verified by the Specific reform benchmarks that have to be verified by the Commission for individually and severally for the release of the Commission for individually and severally for the release of the second and third tranches. They are 12(instead of 13)*2 second and third tranches. They are 12(instead of 13)*2 outputs in 4 results areas outputs in 4 results areas

INTRODUCTION



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Eligibility Criteria


Area Eligibility Criteria Source of Verification

Sector policy and strategy

Satisfactory progress in the implementation of the Government of Egypt National Water Supply and Sanitation Sector Development Policy and of the approved National Water Resource Plan 2005-2017.

Annual reports transmitted to the EU Delegation by MoIC and co-signed by MWRI and MHUUD.

Macroeco nomic stability

A stability oriented macroeconomic policy with satisfactory macroeconomic management.

EU Delegation macroeconomic stability report and/or IMF Article IV consultation report. Egypt's Medium-term macroeconomic framework.

Public finance management

The existence of a credible and relevant programme to improve public financial management is in place or under implementation.

EU Delegation PFM report and/or reports by the Ministry of Finance and/or other donors.


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1. The Annual Information Return Reports (AIRs) and EWRA Annual reports

2.Performance monitoring system by the Holding Company for Water and Waste Water (HCWW) for its subsidiary companies.

3. Indicators related to the National Water Resources Plan (NWRP) 2005-2017. ( a) economic development, b) social objectives , c) basic water supply and demand data and d) health and environment.

4. Monitoring indicators related to the National Water Supply and Wastewater Sector Development Policy.

Indicators and Means of Verification



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Area No. A: 2 Reform BenchmarksFostering General PFM Reform

________________________________________________________________________________________________________

Area No. B: 2 Reform BenchmarksStrengthening and Enforcement of Water Sector Policies

________________________________________________________________________________________________________

Area No. C: 5-instead of 6-Reform BenchmarksImproving Quality and Strengthening Sustainability of

Operation of Service Providers ________________________________________________________________________________________________________

Area No. D: 3 Reform BenchmarksSupporting implementation of IWRM to Egypt’s Water

Strengthening & Enforcing Water Sector Policy Resources___________________________________________________________________________________________________

Specific Areas of Support and Related Reform Benchmarks



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First Fixed Tranche - € 22 Million


Benchmarks/Outputs Reform Benchmarks Determining the First Instalment (Euro 22 million) Means of Verification

1- Cross-sector coordination between the main national and international actors ensured.

An Inter-Ministerial Steering Committee (SC) will be established, with EU and DPG Co-Chairs as an observing members and institutional arrangements defined for guidance, support and monitoring of the Water Reform Support Programme- Phase II (WRSP-II). The SC is chaired by the Ministry of International Cooperation (MoIC) and includes all stakeholders such as the Ministry of Finance (MoF), the Ministry of Housing Utilities and Urban Development (MHUUD), the Ministry of Water Resources and Irrigation (MWRI), the Holding Company for Water and Wastewater (HCWW), the National Organization for Potable Water and Sanitary Drainage (NOPWASD), the Construction Authority for Potable Water and Wastewater (CAPW), the Egyptian Water Regulatory and Wastewater Agency (EWRA).

Ministerial decree establishing the SC.

2- Internal coordination in the WSS subsector strengthened.

In line with the memorandum signed by the Minister of Housing, Utilities and Urban development on 21/11/2005 as benchmark N° 16 of WSRP 1, a committee is created with a mandate to ensure joint action in the WSS subsector between NOPWASD and HCWW for: - Issuing proposals for policy changes -Formulating strategies-Elaborating action plans including master plans

Official notification of the creation of the committee by MHUUD.

3- Format of the sectoral reporting streamlined.

The EU and the GoE agree on the format and the content of the sectoral progress reports to be submitted by MOPIC to the SC Proposed format as per attached Appendix 4 to the TAPs

EU-GoE agreement on a reporting format.


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OUTPUTSOUTPUTS

A1: Improving financial A1: Improving financial transparency of HCWW & transparency of HCWW & Affiliated drinking water Affiliated drinking water and wastewater companies and wastewater companies

BENCHMARKSBENCHMARKS

11stst tranche tranche• Annual public disclosure for FY Annual public disclosure for FY

2012/13 audited financial 2012/13 audited financial statements on MOF and/or HCWW statements on MOF and/or HCWW internet site(s)internet site(s)

22ndnd tranche tranche• Annual public disclosure for FY Annual public disclosure for FY

2014/15 audited financial 2014/15 audited financial statements on MOF and/or HCWW statements on MOF and/or HCWW internet site(s)internet site(s)

2nd & 3rd Variable Tranches – Each of € 44 millionArea No. A : Fostering General PFM Reform



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OUTPUTSOUTPUTS

A2: Improving budget A2: Improving budget planning for sector reform planning for sector reform process process


11stst tranche tranche• Publication of the sector Water Publication of the sector Water

Public Expenditure Report (PER) on Public Expenditure Report (PER) on MOF internet siteMOF internet site

22ndnd tranche tranche• Satisfactorily progress report Satisfactorily progress report

transmitted by MOF on the transmitted by MOF on the implementation of the conclusions implementation of the conclusions and recommendations of the Water and recommendations of the Water PERPER


2nd & 3rd Variable Tranches


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OUTPUTSOUTPUTS

B1: Promote decentralized B1: Promote decentralized implementation of new WSS implementation of new WSS capital investment by HCWW capital investment by HCWW Affiliated Companies (ACs)Affiliated Companies (ACs)


11stst tranche tranche ACs extend their direct ACs extend their direct implementation of new capital implementation of new capital investment showing for FY investment showing for FY 2012/13, an increase of at least 2012/13, an increase of at least 100% in value compared to the 100% in value compared to the baselinebaseline

22ndnd tranche tranche ACs extend their direct ACs extend their direct implementation of new capital implementation of new capital investment showing for FY investment showing for FY 2014/15, an increase of at least 2014/15, an increase of at least 200% in value compared to the 200% in value compared to the baselinebaseline


2nd & 3rd Variable TranchesArea No. B: Strengthening and Enforcement of Water Sector Policies


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OUTPUTSOUTPUTS

4/13: Increase Public 4/13: Increase Public Private Partnership (PPP) Private Partnership (PPP) by implementing the PPP by implementing the PPP policy of the Government of policy of the Government of EgyptEgypt


11stst tranche trancheThe accomplishment of at least 2 new PPP The accomplishment of at least 2 new PPP transactions in WSS sector and the related transactions in WSS sector and the related signature of contracts with private parties. signature of contracts with private parties. Focus years: 2011-2012.Focus years: 2011-2012.

22ndnd tranche trancheTechnical and financial studies including due Technical and financial studies including due diligence for the implementation of additional diligence for the implementation of additional PPP greenfield projects are completed for at PPP greenfield projects are completed for at least another PPP transaction in addition to the least another PPP transaction in addition to the 2 mentioned in 4.1.2 mentioned in 4.1.

RESULT 2: Strengthened WSS Policy + better enforcement

BASELINE MHUDD official list of planned PPP projects in WSS sector 2010 – 2014


2nd & 3rd Variable TranchesStrengthening and Enforcing Water Sector Policy

THIS REFORM BENCHMARK IS DELETEDTHIS REFORM BENCHMARK IS DELETED


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OUTPUTSOUTPUTS

B2: Preparation of a B2: Preparation of a National Water Resources National Water Resources Strategy (NWRS) to 2050 Strategy (NWRS) to 2050 horizonhorizon


11stst tranche tranche Draft NWRS 2050 is issued for Draft NWRS 2050 is issued for circulation among relevant circulation among relevant Ministries and relevant stakeholders Ministries and relevant stakeholders

22ndnd tranche tranche NWRS 2050 has received the NWRS 2050 has received the consent by the Cabinet of Ministries consent by the Cabinet of Ministries as the basis for the update of the as the basis for the update of the National Water Resources Plan National Water Resources Plan 2005/20172005/2017

Area B



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OUTPUTSOUTPUTS

B3 : Support MWRI in its B3 : Support MWRI in its efforts for the development efforts for the development of a shared vision to IWRM of a shared vision to IWRM at Nile Basin level. at Nile Basin level.


11stst tranche tranche Before end of 2013:Before end of 2013:(i) MWRI holds at least two workshops (i) MWRI holds at least two workshops on adaptation measures on CC at Nile on adaptation measures on CC at Nile Basin Level;Basin Level;(ii) MWRI awards at least 7 short term (ii) MWRI awards at least 7 short term scholarships, 2 MSc scholarships and 1 scholarships, 2 MSc scholarships and 1 PhD scholarships for students from Nile PhD scholarships for students from Nile Basin Countries.Basin Countries.

22ndnd tranche tranche Before 30 June 2015, at least 30 Before 30 June 2015, at least 30 technical staff of Ministries of Water technical staff of Ministries of Water Resources and Research Centers of Nile Resources and Research Centers of Nile riparian countries as trained on MWRI’s riparian countries as trained on MWRI’s model on regional climate change.model on regional climate change.

Area B

BASELINEMWRI documents describing: -Proposed scholarships curriculum;-Proposed workshops on Climate Change (CC)-General description of the regional model on CC impact-Proposed training course on regional CC model



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OUTPUTSOUTPUTS

C1: Expand access to safe C1: Expand access to safe drinking water at country-drinking water at country-wide levelwide level

BENCHMARKSBENCHMARKS11stst tranche tranche Increase by at least 100,000 billing Increase by at least 100,000 billing points for drinking water uses at points for drinking water uses at national level for FY 2012/13national level for FY 2012/13

22ndnd tranche tranche Increase by at least 200,000 billing Increase by at least 200,000 billing points for drinking water uses at points for drinking water uses at national level for FY 2014/15 national level for FY 2014/15

2nd & 3rd Variable TranchesArea No. C: Improving Quality and Strengthening Sustainability of

Operation of Service Providers



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OUTPUTSOUTPUTS

C2: Extend the coverage of C2: Extend the coverage of rural and urban sanitation rural and urban sanitation services country-wideservices country-wide


11stst tranche tranche Increase by at least 100,000 billing Increase by at least 100,000 billing points for drinking water uses at national points for drinking water uses at national level for FY 2012/13 level for FY 2012/13

22ndnd tranche tranche Increase by at least 200,000 billing Increase by at least 200,000 billing points for drinking water uses at national points for drinking water uses at national level for FY 2014/15level for FY 2014/15

Area C



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OUTPUTSOUTPUTS

C3: Improve wastewater C3: Improve wastewater treatment at national leveltreatment at national level


11stst tranche tranche Increase the volume of sewage Increase the volume of sewage processed with secondary processed with secondary (biological) treatment by at least 0.1 (biological) treatment by at least 0.1 million m3/day at national level for million m3/day at national level for the FY 2012/11the FY 2012/11

22ndnd tranche tranche Increase the volume of sewage Increase the volume of sewage processed with secondary processed with secondary (biological) treatment by at least 0.2 (biological) treatment by at least 0.2 million m3/day at national level for million m3/day at national level for the FY 2014/15the FY 2014/15

Area C



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OUTPUTSOUTPUTS

C4: Improve monitoring C4: Improve monitoring capacities regarding water capacities regarding water quality for drinking waterquality for drinking water


11stst tranche tranche Achieve before 30 June 2011, at Achieve before 30 June 2011, at least 1 new accreditation for central least 1 new accreditation for central water quality laboratory of HCWW water quality laboratory of HCWW Affiliated Company compared to the Affiliated Company compared to the baseline. baseline.

22ndnd tranche tranche Achieve before 30 June 2015, at Achieve before 30 June 2015, at least 2 new accreditation for central least 2 new accreditation for central water quality laboratories of HCWW water quality laboratories of HCWW Affiliated Company compared to the Affiliated Company compared to the baseline.baseline.

Area C



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OUTPUTSOUTPUTS

C5: Support service C5: Support service providers in the process of providers in the process of achieving cost recoveryachieving cost recovery


11stst tranche tranche Restore for FY 2012/13 aggregated Restore for FY 2012/13 aggregated sectoral cost recovery ratio “R” to be sectoral cost recovery ratio “R” to be at least 0.84 at least 0.84

22ndnd tranche tranche Restore for FY 2014/15 aggregated Restore for FY 2014/15 aggregated sectoral cost recovery ratio “R” to be sectoral cost recovery ratio “R” to be at least 0.89at least 0.89

Area C




The consolidated ratio "R" is to aggregate the F4 and F20 ratios monitored by EWRA. F4 and F20 include – as per EWRA’s AIR – respectively for water and for sanitation services, with a calculation for each AC and for the consolidated 23 ACs: As numerator, the revenue billed, exclusive of non-recurrent revenues and of subsidies. As denominator, the operation and maintenance costs, excluding depreciation, amortization and all other costs (provisions).


Area C – Reform Benchmark C5 …continued…

2020

OUTPUTSOUTPUTS

D1: Increase the efficiency of D1: Increase the efficiency of water pumping stationswater pumping stations


11stst tranche tranche Detailed design for the rehabilitation / Detailed design for the rehabilitation / reconstruction of at least 2 high reconstruction of at least 2 high priority pumping stations described in priority pumping stations described in the baseline is completed before mid the baseline is completed before mid 2013.2013.

22ndnd tranche tranche By 30 June 2015, achievement of at By 30 June 2015, achievement of at least 10% reduction of average energy least 10% reduction of average energy consumption from the baseline figures consumption from the baseline figures in at least 2 pumping stations in at least 2 pumping stations responding to the conditions of 2responding to the conditions of 2ndnd variable tranche. variable tranche.

2nd & 3rd Variable TranchesArea No. D: Improving the Use of Existing Water Resources



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OUTPUTSOUTPUTS

D2 : Implement water D2 : Implement water conservation practices for conservation practices for reducing Non-Revenue Water reducing Non-Revenue Water (NRW) in water networks(NRW) in water networks


11stst tranche tranche Calculation of NRW is improved from Calculation of NRW is improved from desk estimates to actual desk estimates to actual measurements in at least one (two) measurements in at least one (two) new ACs by 30 June 2013 compared to new ACs by 30 June 2013 compared to the baseline.the baseline.

22ndnd tranche tranche The ratio (Rn) of NRW towards total The ratio (Rn) of NRW towards total water input measured in the water water input measured in the water districts where measurements of NRW districts where measurements of NRW is implemented in (at least 2 ACs) is is implemented in (at least 2 ACs) is decreased, for the reference year decreased, for the reference year 2015, by at least 1% from the Rn 2015, by at least 1% from the Rn measured in the baseline year of 2013.measured in the baseline year of 2013.

Area D




Thanks for Your Attentions ……..

Questions…..!!!!!!


Water Sector Reform Programme – Phase II

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