June 11, 2003—A recent two-day roundtable in Lebanon looked at the critical financing and policy needs for the water and power sectors in the Middle East and North Africa—the driest region in the world. The event gathered, by invitation only, 150 participants from governments, the private sector and the donor community for horizontal discussion, the presentation of case studies and workshop-style debate.
While home to five percent of the world’s population, the region has only one percent of the planet’s accessible fresh water. Available water resources per capita in the region are one sixth of the world average. That leaves 45 million people with no access to safe drinking water; more than 80 million lack access to safe sanitation. The region’s high population growth rate is compounding the problem—annual per capita availability has fallen by 60 percent since 1960.
Against that backdrop—and as the cost of supplying clean water increases sharply in many places—private sector investment in water infrastructure is on the decline.
"Private investment to the water sector over the past decade only accounted for 10 percent of total investment, of which the region only attracted 1 percent," Jamal Saghir, World Bank Director of Energy and Water, said in his opening remarks to the roundtable, which took place May 27-28 in Beit-Meri, Lebanon.
Access to electricity is very high—on average 90 percent—but 28 million people still lack access. Because of the region’s high population growth, energy investment needs are also high, estimated at about $300 billion between 2000 and 2010.
Aside from more financing, Saghir noted that reforms and structural changes in each sector, such as tariff rebalancing and taking into account social considerations, will be critical for improving the quality of water supply, sanitation and electricity.
"The main concern of the Bank is that water and energy services reach the poor in developing countries with an acceptable quality, at an affordable cost and in a sustainable manner. This can be done efficiently by the private or the public sectors or by public/private partnerships, or by partnerships with civil society organizations. We need to have financially viable utilities," Saghir said.
"It will depend on the cultural, political, economic, and social reality of the country in question. There is no universal dogma. What works in the Latin America reality might not necessarily work in the Middle East and North Africa, Africa or Asia."
In the Middle East and North Africa, resolving the challenges for infrastructure is closely linked to generating economic growth.
Françoise Clottes, World Bank Manager of Energy and Water for the Middle East and North Africa region, told the roundtable that many countries in the region face budget imbalances, which public utilities are unnecessarily fueling. Clottes also highlighted the paradox of water scarcity and waste in the region: "Water sector reform is essential to increase the efficiency of water use."
Despite high access to power in the region, Clottes noted, "subsidies are depleting national budgets and tend to favor the richest part of the population." She said millions of people will need to be connected to sustain current levels of access. That requires substantial investment flows that can only materialize if adequate policies are put in place.
Participants at the roundtable discussed several critical areas for improving water and power infrastructure, like private sector participation and regulation. It is clear that the private sector will play a significant role in meeting the financing needs of both sectors. But to attract the private sector, proper regulatory frameworks based on transparent procedures need to be in place. Private sector participants at the roundtable called for more streamlined procedures for transactions and enhanced upstream involvement of the Bank in risk sharing.
"The roundtable stressed the importance of open and candid discussions of reform and private sector participation and demonstrated that we—the Bank—still have a very important agenda to pursue in water and power in the region," said Anna Bjerde, World Bank Task Manager.
Organized by the World Bank, the roundtable was supported and sponsored by the Joint European Commission/World Bank Program on Private Participation in Mediterranean Infrastructure (PPMI), the Public-Private Infrastructure Advisory Facility (PPIAF), the Energy Sector Management Assistance Program (ESMAP) and the Water and Energy Anchor.
The roundtable's opening session: seated, from left to right: Omar Razzaz, Lebanon Country Manage, Jamal Saghir, Director of Energy and Water, Ayoub Humayyed, Lebanese Minister of Water and Electricity, Patrick Renaud, Head of European Commission Delegation in Lebanon, and Francoise Clottes, MNA Sector Manager of Energy and Water.
A breakout session on electricity
A reception hosted by Omar Razzaz, Lebanon Country Manager.
Task Manager Anna Bjerde: "The roundtable stressed the importance of open and candid discussions of reform and private sector participation and demonstrated that we – the Bank – still have a very important agenda to pursue in water and power in the MENA region."