OBG talks to Jean Louis Chaussade, CEO, Suez Environnement

Interview: Jean Louis Chaussade

What recommendations do you have for governments in the Middle East seeking to improve interstate water policy coordination?

JEAN LOUIS CHAUSSADE: There are currently fewer than 2000 cu metres of freshwater resources per resident and per year in the Middle East, and by 2050 that number is expected to fall to under 500 cu metres. For instance, Jordan is frequently critically affected by water scarcity: according to the Jordanian Ministry of Water and Irrigation, in 2009 the country’s annual water resources were just 145 cu metres per person, while the annual threshold for water shortage is 1000 cu metres per person. The increasing and partially unmet demand for water may be a hindrance for Jordan’s social and economic development, and will likely worsen given the country’s rapid population growth.

Thus, regional water policy coordination has become the most appropriate approach for the resolution of this issue. Within an integrated management partnership between various Middle East governments, the development of consumer-oriented services and long-term interstate water projects could be enhanced.

What role can public-private partnerships (PPPs) play in the implementation of wastewater treatment and desalination projects in the region?

CHAUSSADE: PPPs can facilitate the execution of such projects by allowing the private sector to transfer its managerial, financial and technical expertise to the public sector. Moreover, the private sector can add value to regional governments by improving operational cost efficiency and by engaging in targeted research and development. Indeed, because several Middle Eastern nations have reformed their regulatory regimes, a greater number of PPP agreements are being formed in the region to combine the knowledge and experience of private operators with local governance.

In several countries in the Middle East, the involvement of private companies in infrastructure building is occurring more in the public utilities sector in areas such as drinking water distribution, customer management and wastewater collection. This move first involves the identification of areas for improvement, a service that can be fulfilled by a contract for technical assistance, such as engineering or consulting.

What steps should developing countries take to attract foreign investment in water projects?

CHAUSSADE: In light of the demand for water and sanitation, a strong political will to reform the water sector has emerged in the Gulf and the Middle East region. This reform process is occurring through major investments to improve the effectiveness of the distribution network and to develop alternative resources. As an example, the government of Jordan has been implementing a comprehensive reform process in the water and sanitation sector since 2007, which led to the establishment of Miyahuna, a company responsible for providing water distribution and wastewater collection services in the Amman governorate.

In addition, Jordan was the first country in the Arab world to attract foreign investment in the water sector, with the As Samra wastewater treatment project. The Jordanian Ministry of Water and Irrigation leveraged private sector experience through a consortium, and the contract signed with Suez Environnement originally took the form of a 25-year build-operate-transfer (BOT) contract. It was the first contract of its kind in Jordan and the first BOT project funded by the US Agency for International Development.

In exchange, the Jordanian government has committed to paying for the service provided through a fee to cover the plant’s operating activities and the depreciation of fixed assets. The plant will be transferred to the client at the end of the contract, and will thus benefit from the transfer of technical expertise and skills. Ultimately, the success of the approach has encouraged the Jordanian Ministry of Water and Irrigation to further expand the plant’s capacities under similar conditions of investment and long-term operations.