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WATRF AD Wasm1atflr SECTOR ASSES M ,T IMSAID

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WATRF AD Wasm1atflr SECTOR ASSES M ,T IMSAID WATRF AD WASM1ATflR SECTOR ASSES M ,T IMSAID/CAIRO A'PRIL 1983 MAIN REPORT (VOL. I) LIST OF AB P.EIATIONS Development of AID - The Agency for Internatiopal which USAID/Cairo is one overseas mission. for Sanitary A/GOSD - Alexandria General Organization Drainage. Authority. AWGA - Alexandria Water General GOE budget- Bab I Bab ­ A chapter or section of the = salaries -and wages; Bab 2.=other current operating expenses; Bab 3 = capital investment. inassociation BVI-ATK ­ Black and Veatch International with A.T.Kearny, consultants. and CAOA - CentralAgency for Organization Administration. C/GOSD - Cairo General Organization for Sanitary Drainage. Resources and DRPS - USAID Division of Development Program Support. GDP - Gross Demestic Product. GOE - Government of Egypt. Cairo Water GOGCWS - General Organ-ization for Greater Supply. Water. GOPW - General Organization for Potable and Sanitary GOSSD - General Organization for Sewerage Drainage. LE - Egyptian Pounds. Potable Water and NOPWASD - National Organization for Sanitary Drainage. Document. PAAD - Program Assistance Autlhorization SCA - Suez Canal Authority. UAD - Urban Administration and Development. USAID/Cairo - The United States Agency for International Development inCairo,. A.R.E. INDLX. LIST OF ABBREVIATIONS Page . j EXECUTIVE SU ,MY . • • .1 INTRODUCTION .. .. .. .... 1. CURRENT SITUATION . .... • • 3 Urbanization ............ 1.1 Populatioand 5 1.2 Present Service Levels . 1.3 Public Health ............. ... 6 1.4 Sector and USAID Organizations . 7 . 1) 1.5 Sector Financirg by USAID ard GOE . 13 2. SECTOR CONSTRAINTS AND PROPOSED IMPROVEENTS 2.1 Sector Investment Plans . .. .. 13 2.2 Revenue Generation.............. 16 . 20 2.3 Sector Orgarizational Arrangements . 2.4 USAID Organizational Arrangements ........ 33 • • • 36 2.5 Project Planning, Design and Implementation and Maintenance of Systems . 38 2.6 Operation 42 2.7 Manpower and Training . 46 3. SECTOR DEITELOPMENT PROGRA\1FOR USAID ........ 46 3.1 Geographic Distribution of Investment ...... Considerations . 47 3.2 Technical . 49 3.3 Program Structure . 3.4 Program Implementation ........ 59 EXECUTIVE SM4MARY A. Background Water and wastewater services in Egypt's major urban complexes are woefully inadequate. After years of neglect, failures in the systems are constant. Most of the present systems were designed to handle water demands and wastewater loads of less than one-half of that which.they now face. Despite adequate levels of water production, water shortages exist in many areas due to distribution system problems. Rapidly urbanizing areas, particularly on the growing peripheries of Cairo. and Alexandria, develop far ahead of the ability of service facilities to catch up. Poor pressure and high leakage in the and existing systems result in a very low quality of service growing consumer dissatisfaction. However, on the wastewater side, the issues are even more pressing and acute. Wastewater systems are incapable of handling current flows. As many as 500 flooding incidents occur each day in Cairo alone. These incidents pose severe health risks and major inconveniences to local residents. The present water and wasteater system deficiencies will only grow worse unless concerted effort is brought to bear on the problems. Cairo, Alexandria and to a somewhat lesser degree, the Canal cities, will experience major population increases over the coming decades as the country as a whole becomes predominantely urban. Increasing numbers of persons will from systems require and demand water and wastewater services that already are seriously inadequate. - ii - Over the past five years, USAID has obligated $146.8 million for the water sub-sector and $242 million for the wastewater sub-sector of which only slightly more than 25% has been expended to date. Greater Cairo received about half of the total obligated funds and Alexandria and the Canal Cities each received one quarter. During this same time period, the GOE expended nearly 6% of its total investment, or 1.3% of its GDP, in the water/wastewater area. From 1977 to the end of FY 1982, the GOE spent LE SOS million in the water sub-sector and LE 457 million in the wastewater sub-sector. By the beginning of FY 1983, it was budgeting LE 77 million for operations and maintenance in the water and wastewater sector. The 1983-1987 Five Year Plan, only recently approved, calls for a 250% spendirg increase over the 1977-82 investment program, or a total investrent of L 3.4 billion. This represents a substantial shift in investment priorities. The sector will claim 2.7% of total GDP generated by 1987. The greatest percentage of total investments, over 60%, will go to Cairo, Alexandria and the three Canal cities, exrluding the Suez Canal Authority investments in the water sub-sector. Of this amount, the largest investments will go to the wastewater sub-sectcr, with Cairo receiving LE 1.1 billion; Alexandria, LE 3gO million; and the Canal Cities, LB 101 million. Forei ,n assistance over the 1983-87 period will be in addition to th, GOE commitments. AID has pledged to seek auLhorization of an additional .$1 billion and it is anticipated that otber donors will contribute the equivalent of approximately $180 million over the same time period. B. Sector Constraints The huge planned GOE investments in the sector, as well as the expected substantial increase in foreign donor assistance, raise many questions of absorbtive capaity. Not only will the capacity of the Egyptian construction sector be stretched beyond present capacity but also local material production will not be able to meet the sudden surge in demand *for pipe, fittings and related materials, and equipment. Foreign construction contractors and material suppliers will have to provide much of the new material and construction services for system improvements and enlargements. The foreign exchange demand in the sector will likewise increase. In addition to these material and construction capacity constraints, there are a number of other more far-reaching problems which may not lend themselves to easy resolution. The present system suffers from a series of institutional, financial and operational constraints and obstacles. Institutionally the sector lacks direction. There is no overall set of coherent goals and aims. Water and wastewater organizations and. authorities are poorly coordinated. Chairmen of authorities and their Board of Directors have little fiscal control over their organizations,. i.e. they cannot set water or wastewater tariff rates and are completely dependent upon central authorities for their operating and investment budgets. They do not have sufficient internal management authority to reorganize their operation as may be appropriate, - iv ­ nor do they have sufficient control over employee wages and bonus incentive schemes. Moreover, the authority that does exist, often rests with the Chairman alone. Little authority is delegated to line and staff personnel in water or wastewater organizations. Financially the sector is beset by numerous difficulties. To date, GOE. expenditures have been ..far. below system. needs particularly in the area of operation and maintenance. Moreover, the operation and maintenance needs in the sector necessitated by the current five-year investment plan will call for a fourfold increase in operating expenditures over present levels. -Without substantial improvements in the capacity of sector organizations to generate revenue, the entire system will become more and more dependent upon government subsidies during a period cf shrinking central capacity to provide such subsidies. Revenue generation in the sector will depend almost completely upon the amount of water sold and the applicable tarrif rate, since wastawater services will depend on a surcharge which can be added on water tariffs. Currently the water/wastewater tariff schedules are grossly deficient and fall far short of paying for the operation and maintenance of even the water sub-sector. Wastewater tariffs are non-existent. Operationally the sector is performing inadequately. Water flows are irregular and insufficient in many areas and constant wastewater flooding exists in many areas as well. The reasons for the sub-standard level of performance are many, including underfunding of the system, lack of proper operation and and maintenance, as well as inadequate numbers of professional attract and retain skilled workers. The sector is unable to workders needed. the numbers of professional staff and skilled competent personnel, Severe shortages of experienced and workers in the wastewater particularly skilled and semi-skilled of the system to respond sub-sector, severely limit the ability of maintenance to daily problems and to provide the level including low wages and needed. Inadequate personie1 policies, benefits, lack of bonus and promotion schemes tied to merit, training, contribute and/or additional skill. attainment through in the sector. to limiting the number and quality of key staff C. USAID Sector Program that the sector is The proposed USAID program design recognizes and operational beset with numerous organizational, financial that there are strcng and constraints. Moreover, it realizes which on the one hand often conflicting forces within the GOE yet on the other hand wish to improve the delivery of services, without substantially wish improvements to be accomplished Inherent in the increasing the cost of service to consumers. major material GOE's position is the belief that without additional charges
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