Population: 3.5 million Urban: 72% Rural: 28% Annual Growth Rate: 4.1% Surface area: 6,200 km2 GNI per capita: $1,120 USD HDI Ranking: 102 of 177 Life expectancy: 72.7 years

 The water supply services were intermittent, the primary water resource was over extracted, and water quality was deteriorating due to the intrusion of deeper saline water, and contamination by seepage of pollutants from the surface. The latter was caused by the extensive use of cesspits and septic tanks. Approximately 50 percent of water in municipal distribution networks was lost through leakages in distribution networks, illegal connections, and inaccurate or no metering. Accordingly, the daily per capita consumption was estimated to be less than 70 liters a day, and the sewerage service coverage was only about 25%.

Building Consensus on a Solution
Consultations between the stakeholders resulted in a consensus that private sector involvement was the only way to rapidly improve water supply services.However, private operators were hard to attract due to the low water tariffs and high risk in investing in Gaza.  At the same time, the Palestinian authorities had just been empowered to manage water resources, and would be loath to agree to divestment. Additionally, the lack of information on the existing system would leave little basis for establishing the terms or expectations of the concession contract or lease. A performance-based management contract for a limited duration was found to be the most appropriate course of action. 

The World Bank Credit
In 1996 the World Bank provided a US$25 million trust fund credit to the West Bank and Gaza to improve water supply and sanitation services in Gaza. The project was implemented by the Palestinian Water Authority (PWA). The project supported the award of a performance-based management contract, the establishment of an infrastructure investment fund, and technical assistance to PWA. 

The Management Contract
In mid 1996, Lyonnaise Des Eaux/ Khatib and Alami (LEKA) was awarded a four-year management contract to help local government service providers and the PWA improve water supply services.The management contract was designed to be highly flexible. LEKA and PWA were allowed to invoke a force majeure clause of the contract for any event beyond their control that made it impossible to fulfill their obligation. Such events included strikes, lockouts, as well as confiscation or any other action by government agencies. The management contract was performance-based, with a contract fee split between a fixed payment and additional payments based on the achievement of performance targets. These targets included the number of meters repaired or replaced, reduction in unaccounted for water, and the development of maintenance management systems. The total incentive payment for the four years was US$3 million, which represented 50% of the fixed contract payment.

External Auditor
One essential feature of the contract was the use of reputable international audit firm to provide an independent assessment of the operator performance, and overcome potential tensions between the private operator and the Palestinian Authorities. This was an essential step in the light of absence of a clear regulatory framework in the Strip.

Implementing the Management Contract
The operator was successful in meeting the requirements of the contract terms under its direct authority. However, the local authorities were not always consistent in implementing their responsibilities. For instance, LEKA identified nearly 11,000 illegal connections, but action on the part of the PWA and municipalities to decrease the number of illegal connections was limited.

Financial and Human Capacity
The World Bank credit also contributed to establishing a US$12 million fund to invest in the WSS infrastructure. The funds gives the operator the means to make improvements in the system in much the same way a lessee would, based on needs identified by management. The operator had considerable flexibility in determining immediate investment needs and could procure goods and services as needed.

At the same time, technical assistance was provided to the PWA to build up longer-term sector capacity. The project also supported the drafting of a new water law, which reorganized the sector and established an autonomous regional water and wastewater utility to replace the fragmented and inefficient institutional structure.

 

Water & Sanitation Services Project Emergency Water Project Northern Gaza Emergency Sewage Treatment Project Water & Sanitation Project (02) Management Contracts in Water and Sanitation-Gaza’s Experience Â

Despite difficult circumstances, the project achieved its key development objectives of improving the WSS services in Gaza. By 2001, over 1,200 km of pipes were surveyed for leaks and over 16,000 illegal connections were identified, more than 20,000 meters were repaired and 30,000 meters replaced. The unaccounted for water dropped from around 50% in 1995 to 30% in 2001, and collections increased almost thirty fold in the course of two years. As a result, more water was provided to the people of Gaza. The per capita water consumption increased from 70 lcd in 1996 to 100 lcd by 2000. In addition, close to 100 percent of the water supply was chlorinated which reduced health risks. With the beginning of the 2^nd Intifada in September 2000, Palestinians were less able to pay for water. This adversely affected the financing of the WSS sector. Thus, some of the improvements that had been achieved were reversed.

 

Going Forward
At the end of the project, the World Bank maintained its support to the WSS sector in Gaza, and adapted to the economic and political changes as they developed. A US$6 million supplemental trust fund credit to the Water and Sanitation Services Project was provided in 2001. In 2003, US$12.5 million was provided to support the Emergency Water Project to address urgent water supply problems in the southern area of the West Bank. In 2004, US$7.8 million was provided to support the Northern Gaza Emergency Sewage Treatment Project to reduce critical sewage treatment and disposal problems in northern Gaza.

Water Supply & Sanitation Utilities Water in Middle East & North Africa World Bank in West Bank & Gaza Â