GTZ Project Number: 93.2257.9 - 011.00/062.00

January 1998

2.2.2 Development-policy status 5

2.2.3 Target group(s) of the project 6

3.1.1 Previous measures 7

3.1.2 Relationship to other projects 8

3.2.1 Brief description of the methodology used 9

3.2.2 Results and activities 9

6.1.1 Micro-economic assessment 16

6.1.2 Macro-economic assessment 16

6.1.3 Socio-cultural assessment 16

6.1.4 Ecological assessment 17

The project purpose is:

Essential results:

1. The water quantity pumped by the JWU is increased and at the same time the possibility of long-term use of the groundwater resources is taken into consideration.
2. The water losses are reduced further with consideration given to economic aspects.
3. The JWU manages the water supply and wastewater disposal divisions on an economically sound basis.
4. The staff expertise of the JWU personnel is enhanced further.
5. Consumer awareness regarding water supply and wastewater disposal and the image of the JWU are improved.
6. The bases for bringing together the water supply and wastewater disposal divisions are worked out in agreement with an existing master plan.

Within the scope of the German inputs the assignment of a long-term expert for technical advisory services in the sector of water supply and wastewater disposal as well as assignments of international and local short-term experts are planned. In addition the supply of equipment and materials, counterpart training and fitting out of two wells which were drilled in the previous phase will take place.

The area serviced by the JWU extends for about 50 km from the northern outskirts of East Jerusalem and covers most of the towns and villages in the government district Ramallah - Al Bireh. The approx. 190,000 inhabitants are currently supplied with water from the distribution network. A small percentage obtains water from networks of the West Bank Water Department (WBWD) and from the Israeli enterprise MEKOROTH.

The JWU, which has been an economically independent organisation for about 30 years, produces about 33% of the water it distributes from its own wells (proportion in 1996) and purchases a further 66% from Israel. It supplies the water to the Palestinian population as well as to a few Israeli settlements. In 1996 approx. 17% of the total production was supplied to Israeli settlements and Israeli military camps located in the government district. As a result of internationally financed network rehabilitation and well construction measures, the JWU has been able to assure uninterrupted supplies of water for the first time since 1996. In addition to increased production by the JWU itself, substantial increases in purchased water quantities were necessary to achieve this situation. The share of water not invoiced ("Unaccounted-for water") was 22% in 1996, which is a good value based on international comparisons. However, if one takes into consideration the bulk buyers who operate their own distribution networks, this figure is still too high.

Shortfalls in the management of the JWU lead to inexpert planning of finances and make the reliability of supplies partly dependent on financial commitments from international donors, despite the fact that the organisation managed to cover operating costs in 1996. The planned integration of wastewater disposal services in the JWU must be implemented carefully in order not to prevent deterioration of the economic situation of the organisation. At the present time only the communities of Ramallah and Al Bireh have a sewer system. The sewage purification plant in Ramallah is much too small for the connected inhabitants and has a negligibly low degree of efficiency. Work has commenced on construction of the Al Bireh sewage purification plant financed by Germany. The sewage from both towns - as well as from the remaining communities - has so far flowed into the receiving streams without purification treatment and thus represents a high danger potential for the population and the groundwater resources in the region.

The proposed integration of the wastewater and sewage sector presents a massive challenge for the JWU. Responsibility for the sewer system and sewage purification plants currently rests with the community administrations who operate the plants with considerable subsidies from the community budgets. In order to design the integration successfully and to achieve coverage of operating costs as soon as possible for the wastewater and sewage sector too, elementary changes in the financial management, the technical qualifications of the staff and the current corporate structure of the JWU will be necessary and the organisation is not able to effect these on its own.

In particular the financial burden on the households due to water and sanitation charges may not be increased substantially, since otherwise public resistance is to be expected. In particular the widely differing economic situation of the populations in the government district must be taken into account here.

2.2.1 Project purpose

The following indicators measure the achievement of the project purpose:

• The rising demand for drinking water is satisfied constantly and without interruption.
• Up to the end of the year 2000 the share of purchased water is reduced to 25%.
• Full cost coverage based on the current value of the plant facilities has been achieved for water supply by the end of the year 2000.
• Agreement between all participating institutions on the integration of the wastewater disposal sector is achieved by the end of 2000.
• At least 30% of the total capital investment in the buyear 2000 is financed from JWU's own funds or loans.

2.2.2 Development-policy status

The living and hygiene conditions of the population in the government district Ramallah - Al Bireh are improved and the competent institutions are strengthened in carrying out their tasks.

The development of the water sector enjoys particularly high priority with the Palestinian Autonomous Administration. This applies not only to developing water resources, but also to institution building. The integration of the wastewater disposal sector in water supply operations and the introduction of cost-covering tariffs are also among the declared goals of the Palestinian Water Authority (PWA) and the project executing organisation (JWU).

The Government of the Federal Republic of Germany has been supporting projects in the water sector of the Palestinian territories, primarily at local authority level, since 1990. Both the Palestinian and the German side have long recognised the national and supraregional importance of the sector for the peace process (see also "Regional Water Study"). That is why water supply and wastewater disposal projects form the focal area of German-Palestinian development cooperation.

The confidence of the population in the performance capability of the young Autonomous Administration of the Palestinian territories will be strengthened by improvement of services in the water supply and wastewater disposal sector aimed at by the planned projects. The project therefore makes a contribution to stabilising the peace process. A direct poverty relation of the project is not evident.

2.2.3 Target group(s) of the project

The target group of the project is made up of the Palestinian population of the town and government district Ramallah - Al Bireh (total population approx. 240,000, of whom approx. 190,000 are supplied by the JWU) as well as approx. 2000 industrial firms. Although a not exactly quantifiable share of the Israeli population (estimate: 12,000 inhabitants) is also supplied, they do not belong to the target group. These are Israeli settlers and military camps who, as bulk customers of the JWU, consume up to 17% of the total water quantity.

Among the Palestinian consumers the following different socio-economic groups are encountered: the urban population with a medium-level standard of living, the population of the smaller villages and the population of refugee settlements who have a low standard of living.

Within the Palestinian society women have wide-ranging responsibilities as providers for the family, which explicitly include water supply, sewage and waste disposal and domestic hygiene training. The achievement of an uninterrupted water supply made it possible to relieve the workload of women considerably in the year 1996. Women still represent an important part of the target group who will be addressed specifically within the scope of awareness-raising measures of the project.

There are no differing interests regarding water supply and sanitation within the target group. All Palestinian inhabitants of the government district Ramallah - Al Bireh are interested in retaining the standard of water supply achieved, tariff stability and an improvement in services in the wastewater disposal sector. The participation of the target group in the planned water and sanitation-related awareness-raising campaigns is therefore expected to be high. The project aims to achieve active participation of the population in hygiene and water-saving campaigns. The measures concentrate on schools and private households. The hygiene campaigns in particular are implemented in close cooperation with the local authorities who are still responsible for the sector of urban waste disposal.

The increase in water prices will represent an unavoidable hardship for the population, but will probably be unavoidable in order to achieve full cost coverage, especially as of the time the wastewater disposal sector is integrated in the scope of tasks of the JWU. This will presumably be accepted by the population if the price increase is accompanied by a clear improvement in the sanitation-related hygiene situation.

3.1.1 Previous measures

The previous measures of the project have concentrated on reducing the proportion of water purchased from the Israeli supplier MEKOROTH, which supplied about 66% of total water consumed in the year 1996. As a result of an unsuccessful drilling operation it was not possible to satisfy the high demands for a substantial reduction in this percentage as formulated in the indicators. Due to the very difficult hydro-geological situation unsuccessful drilling cannot be ruled out completely.

Clear improvements have been noted in the reduction of line losses. The current proportion of unaccounted-for water of approx. 22% is relatively high by international comparison. However, the distribution characteristics of the network with a very high share of long-distance pipelines of large diameter and the fact that approx. 20% of the water is supplied to large-scale customers with their own distribution networks, whose line losses are of a much higher percentage, are partly responsible for this situation.

Organisational development measures have been planned to date, but could only be implemented partly due to differences between the supervisory board and the management level of the JWU. Constructive work towards improving internal structures of the JWU only appears possible since posts on the supervisory board were reallocated in the year 1996. The existing shortfalls in the financial management of the organisation have not yet been eliminated so that the current favourable financial situation is not secured.

In the training sector the JWU has been supported in the implementation of the CDG Programme and a national training strategy was developed for the water sector. Responsibility for implementation now rests with the PWA.

The activities undertaken to date to integrate the wastewater disposal sector in the organisation have shown that there are shortfalls here which make massive changes in the corporate structure necessary. Representatives of the new supervisory board and the management level of the JWU made it clear during the planning workshop conducted in September 1997 that they are willing to accept this challenge and wish to implement the necessary measures.

The JWU should be supported in this difficult undertaking within the scope of the ongoing phase, whereby care should be taken to ensure that the achievements reached so far are not jeopardised.

3.1.2 Relationship to other projects

• Several projects for rehabilitation and expansion of the water supply networks;
  Objective: Reduction of water losses, supplies to parts of the town which have so far not been serviced adequately (donors: Saudi Arabia, Italy, USA; implementing organisation: PECDAR, UNDP).
• A project to set up a wastewater disposal concept for the government district Ramallah/Al Bireh (donor: Finland: implementing organisation: FINIDA/UNDP). Cooperation is to be continued subsequently with a view to integrating wastewater disposal. Close coordination with the TC project is necessary.

Close cooperation exists with the ongoing TC projects "Water Supply and Sanitation Nablus" (PN 93.2155.5) and "Management Consultancy Water Supply Hebron" (PN 96.2203.6), since the concept is similar.

Until recently important cooperation also existed with the training programme "Water supply and wastewater disposal" supported by the Carl-Duisberg Society (CDG) and financed by the BMZ. For the second phase of the programme the JWU has handed over responsibility as project executing organisation to the PWA, but will continue to play an advisory role.

3.2.1 Brief description of the methodology used

Attempts are being made to achieve the project purpose primarily through advisory services by international and local experts.

In addition to advisory activities and coaching of the management and operative levels at the JWU, training inputs for all sectors of the organisation ra crucial component of the methodology.

With the aid of a financial contribution the two well drilling operations commenced in mid-1997 will be completed.

A coordinated policy for advisory services relating to setting up and strengthening enterprises for water supply and wastewater disposal in the Palestinian territories is to be secured by inter-project cooperation between the Nablus, Ramallah and Hebron projects. The advisory team consists of experts from various disciplines and can therefore assure a broad spectrum of consulting inputs for the individual projects.

3.2.2 Results and activities

Indicators:

• Wells no. 6 and 7 produce at least 500m³/h together at the end of 1999.
• The dynamic water levels in the wells do not show any reduction over the complete project duration.
• A radio-linked monitoring system for important hydro-geological and pump data is in operation at the end of the year 2000.

Essential activities:

• Complete drilling and fitting out of wells no. 6 and 7.
• Set up a quality and quantity monitoring system for the existing wells.
• Implement studies on the development of additional water sources in the government district Ramallah - Al Bireh, such as e.g. spring curbs and systems for using rain water.
• Set up a monitoring system at central points of the distribution network.

Indicators:

• The technical water losses are reduced from 5.2 m³/km and day in 1997 to 4.77 m³/km and day by the end of 1999.
• The total losses are reduced in accordance with the standard values of the International Water Supply Association (IWSA).
• The costs of measures to reduce water losses further are always more favourable than the mean dynamic production costs.
• The average pressure head in the distribution network is reduced by 20 m between 1997 and the end of 1999.

Essential activities:

• Set up a system to monitor unaccounted-for water
• Prepare and set up the existing databases and the necessary specifications for setting up a geographical information system (GIS).
• Build up a leak detection unit within the JWU.

Indicators:

• Assessment of the plant assets of the JWU is prepared on the basis of the replacement value by the end of 1998.
• Recommendations of the institution analysis are implemented by the end of 1998.
• A corporate development plan is adopted by the supervisory board by 12/98 and is implemented and updated annually.
• The charges for wastewater disposal cover operating and maintenance costs at the start of assumption of the wastewater disposal sector by the JWU.
• A modern management information system is introduced and is used by the end of 1999.

Essential activities:

• Work out a strategic corporate plan with regard to achieving full cost coverage.
• Adapt rules, administration and staff of the JWU to the current and future requirements.
• Set up a modern financial management and cost-accounting system.
• Set up a new charge collection system for joint levying of sewage and water charges.
• Introduce a management information system.

Indicators:

• An effective personnel development management is introduced by the end of 1998.
• A personnel assessment system is introduced by the end of 1998.
• A training programme for JWU staff is introduced in 1999.
• A personnel development plan adapted to requirements is set up by 1/1999.

Essential activities:

• Appraise current and future personnel suitability.
• Work out an upgrading plan.
• Implement upgrading in accordance with the plan for JWU personnel and members of the supervisory board.
• Introduce a personnel assessment system.

Indicators:

• The introduction of joint water and wastewater disposal bills does not encounter any major public resistance.
• A department for public relations work is operational at the JWU as of mid-1998.
• A survey to appraise the image of the JWU shows a positive result one year after the start of the joint collection of charges.
• The per capita consumption of the population rises by not more than 10% between 1997 and 2000 (basis 1996 - 90 I/Inhabitant/day).

Essential activities:

• Identify JWU requirement for effective public relations work with regard to the wastewater disposal sector.
• Conduct a study to ascertain customer behaviour in relation to dealing with water and wastewater, paying special attention to the role of women.
• Build up a department for public relations work and in-house publicity.
• Implement a public awareness-raising campaign, concentrating on participation of women.
• Evaluate the campaigns conducted continuously, as regards both customer attitude to and extra financial burden by the integration of wastewater disposal in the JWU.

Indicators:

• The assimilation of the existing customer databases for water supply and wastewater disposal at the JWU and the urban administration of Al Bireh and Ramallah is completed by the middle of 1999.
• Receipts from wastewater disposal charges have increased by 20% by the year 2000 compared with the level in 1997.
• Information on the financial and institutional conditions and impacts of integration of the wastewater disposal sector are presented to the decision-makers at the JWU by the end of 1998.
• The hand-over of collection of wastewater disposal charges to the JWU is completed by 1999.

Essential activities:

• Participate in meetings and decisions of the "Bridging Team"
• Together with the municipal administrations of Ramallah and Al Bireh work out a catalogue of the necessities connected with taking the wastewater disposal sector into the JWU.
• Identify the structural changes necessary in the JWU for its future broader scope of tasks.
• Work out a tariff structure for the water and wastewater disposal charges and suggest a plan to introduce tariffs.
• Start joint collection of charges in the communities Al Bireh and Ramallah as a pilot project.

A project progress review is planned for mid-2000 in order to assess the success of the project and to decide on a follow-up phase.

The current technical and financial status of the JWU indicates that the organisation will be in a position to meet customer requirements for cost-covering and ecologically sound water supply and wastewater disposal after completion of the assistance.

The project executing organisation is the public-sector enterprise Jerusalem Water Undertaking (JWU). The mayors of the two largest towns in the government district Ramallah and Al Bireh appointed by President Arafat as well as representatives of other communities are members of the supervisory board of the JWU. There are thus close working links with the local authority administrations of these two towns and with the representations of the other small towns and villages.

The JWU is an organisation managed in accordance with the private sector of the economy and is under public supervision by a supervisory board.

The organisation with its approx. 140 permanent employees and an average annual number of approx. 30 employees with limited term contracts is divided into four divisions under the general manager: Accounts, Construction Engineering, Mechanical Engineering and a Service Division. It consists of a very flat hierarchy allowing very direct exchanbetween managerial staff and operative personnel, which are in fact made use of.

33 employees have a local university degree. Most of the 14 graduates of international universities also have additional formal qualifications. Consequently the academic level of the JWU is very high. Most of the non-academic staff have no formal qualifications - as is common in the Palestinian territories. This circumstance is considered to be a clear shortfall. The proportion of women among the staff is extremely low in accordance with the traditions of the Arab culture. Female staff are found almost exclusively in the secretarial sector.

The JWU has been able to improve its financial operating results constantly during recent years so that in 1996 a surplus of approx. DM 1,600,000.00 was shown in the organisation's balance sheet. However, this balance sheet is based on unrealistic assumptions of the costs for depreciation and other reserves. Despite this, the organisation has been able to cover operating costs since about 1995.

The conditions for building up an economically completely independent organisation probably exist for the water supply sector up to the end of the project term. However, the situation in the wastewater disposal sector will be able to jeopardise this achievement since the currently responsible communities include a subsidy component of approx. 75% in their relevant tariffs solely to cover operating costs, so that a complete revision of the tariff structure will be inevitable. An attempt will be made to cover operating costs at the time the wastewater disposal component is taken over.

The relationship to the target group, the consumers of the water supplied by the JWU, can be described as very good. The average value of collection efficiency of over 96% during the last 12 years illustrates this very clearly. The exceptionally good reputation of the JWU is largely due to its excellent service which is held in high regard by the customers. With its supply service the JWU contributes to maintaining peace in the region. It also makes an important contribution to implementing the national sector policy.

The support for the JWU primarily addresses the sectors of organisational development, technical operation, financial management and training. The planned integration of the wastewater disposal services requires careful actions and external support.

The technical equipment ranges from very modern means of communication (wireless transmission of operating data) to simple customer files and calculations which are carried out cumbersomely by hand. The ongoing phase addresses this aspect and will build up a logical and transparent information system from the data available.

With regard to the pending restructuring measures the project calls for a high personal input from the staff and appointment of additional personnel. This will be reflected in higher operating costs which must be absorbed by adjusted tariffs.

The planned integration of the wastewater disposal sector presents an enormous challenge for the JWU which might influence its current positive image among the population and community administrations. This past and possibly future success of the organisation occasionally leads to undesirable resentment among other private or public sector organisations which are not so successful and this could be expressed in a competitive attitude.

Total contribution of the Federal Republic of Germany up to DM 11,800,000.00

allocation through GTZ for 2nd promotion phase (3 years) up to DM 4,500,000.00

Contribution of the JWU up to DM 1,000,000.00

Estimated total costs of Technical Cooperation Project up to DM 12,800,000.00

Contribution of third parties (FINNIDA/UNDP) up to DM 1,300,000.00

6.1.1 Micro-economic assessment

The introduction of a cost-covering tariff structure connected with the integration of the wastewater disposal operation in the scope of tasks will make a rise in tariffs indispensable even if work is carried out with maximum efficiency. A mean burden of 5% of the income of an average household should not be exceeded here. This will not represent a social hardship for most of the customers in the area covered by the supply system.

It is expected that the advantages of a sustainable financial situation, a development which is self-determined and largely independent of donors and a clear improvement in the environmental situation due to purification of the wastewater disposal will result in a high level of acceptance among the population for the extra costs which become necessary.

6.1.2 Macro-economic assessment

The reduction in the cost of public-sector subsidies which have so far been necessary for the wastewater disposal sector will have a positive impact on the local community budgets. This will release funds for other important investments. Impacts on regional employment are expected to a slight extent by this shift, but these are not quantifiable.

The creation of a largely independent planning and development potential can have positive impacts on the dynamics of economic development. The JWU will thus become a model public sector service organisation, able to gain influence and significance beyond the borders of Palestine. The improvement in the living conditions of the population in general and in the production conditions of some industries will also have positive impacts on the national budget in the medium term.

6.1.3 Socio-cultural assessment

The planned project aims to achieve a situation in which the public sector water supply and wastewater disposal services are improved so that the confidence of the population in the performance capability of community self-administration is strengthened.

The public relations campaigns to be conducted within the scope of the project will take this aspect into account. They will address economical as well as expedient and environmentally sound use of water. The purpose of integrating the wastewater disposal sector and the associated introduction of cost-covering tariffs must be explained to the target group.

Women in the project region are an important part of the target group since they are responsible for domestic use of water and procurement of water. It is to be assumed that they will profit particularly from the desired improvements in the water supply and sanitation system. They thus assume a central role in planning of awareness raising campaigns.

Within the scope of the project possibilities of the population initiating direct influence on the design of the water supply and sewage disposal system will be reviewed, for instance in the form of local committees in urban districts. Attempts will be made to give women crucial influence here. Since additional experience relating to the role of women in the sector described here has to be collected, and this depends on the realisation of the measures described, the project is currently classified in the category FR (risk for women).

6.1.4 Ecological assessment

The currently still prevailing losses of approx. 22% represent an economic and ecological wastage of resources. The expected more careful use of water and the ongoing measures to rehabilitate the pipeline network will contribute to reducing this loss quota. That is why the project also makes a contribution to conservation and efficient use of the scarce water resources in the region. The introduction of a system of groundwater monitoring in particular will be important for the water management plans of all users and help to contribute to greater conservation of the groundwater. For this reason the advisory project is allocated to category U0 (environmental pollution negligible).

The following important assumptions at project purpose level were defined in the planning workshop:

• The politicsituation remains stable.
• The national levels of the Palestinian Autonomous Administration give their consent to the restructuring measures.
• The annual population growth rate does not exceed 5%.

For Result 1:

• The groundwater aquifers are productive as expected.
• There is no excessive groundwater removal by other users.
• No drought years.
• No unexpected pump failures.

For Result 3:

• Structural modifications of the JWU meet with the consent of the supervisory board and staff.
• The responsible authorities of the Palestinian Autonomous Administration issue the necessary consent.

For Result 4:

• The staff are willing and satisfy the necessary conditions for participation in upgrading sessions.
• The staff accept the personnel assessment system.

For Result 5:

• The water supply and sewage charges do not exceed 5% of the average family income.

For Result 6:

• Sufficient office space is available for the expanded scope of tasks of the JWU.