February 3, 2003—Last week, the World Bank approved a US$15 million Municipal Water and Wastewater Project for Albania, to support the Government's efforts to implement institutional and financial reforms in the water supply and sanitation sector by improving water quality and quantity.

With a population of 3.4 million, about one out of three Albanians is poor, and more lack access to basic services. Feeble institutions and a tenuous rule of law are at the root of the country’s developmental problems.

Despite the country’s abundant water resources, water supply in almost all urban areas is intermittent because of the very poor condition of the country’s water infrastructure. Drinking water lacks adequate treatment and disinfection. Water and sanitation systems have received virtually no maintenance in the last decade, resulting in excessive water losses, water-borne disease epidemics, and a polluted environment. The water sector is currently suffering because in the past water supply and sanitation were the responsibility of the central government, which did not allow the local government to overcome insufficient management and revenue generation.

Albania has made significant progress during its ten years of transition from rigid communism to a market-based economy. It has achieved high growth while containing inflation, pursued far-reaching structural and economic reforms, and made advances in the establishment of democratic institutions. Nevertheless, the country faces considerable challenges. The Municipal Water and Wastewater Project will support long-lasting and sound private sector participation in the provision of water supply and sanitation services. A management contract has been awarded to a private operator to manage and operate the water services.

"The project will assist the Government in its approach by implementing a management contract under the decentralization strategy," said Andreas Rohde, World Bank Task Manager for the Project. "It will introduce in Albania a new incentive-based multi- city management contract approach and, through this new approach, will improve water supply and sanitation services and achieve financial viability in the participating water utilities".

The project will be implemented in four municipalities—Durres, Fier, Lezhe and Saranda—with the goal of replicating successful experiences across the country in the future.

Three elements of the water project include, a Management Contract component, which will finance the costs related to the five-year management contract; an Investment Fund component, which will finance works, goods and services aimed at improving the operation of water supply and sanitation services and achieving the performance targets in the management contract; and a Technical Assistance component to support project implementation and sector reform.

The project is expected to be implemented over a period of six years. It will bring rapid improvements in the quality of service and efficiency of the system and will increase the sustainability of water supply and sanitation services. The project is expected to finance the rehabilitation of the existing water supply and sanitation infrastructure, as well as expenditures to improve management and operations of water supply/wastewater companies, which should contribute to the improvement in the quality of life of the people in the project areas. The experiences gained from this are expected to be used in other cities and utility sectors.

Useful links: For more information about the World Bank’s work in Albania, visit: http://www.worldbank.org.al

For more information on the World Bank’s work on water, visit: http://www.worldbank.org/watsan/

The World Bank is organizing a conference on the theme of "Water and Development" on March 4-6, 2003. For further information, please visit: http://www.worldbank.org/waterweek/