Strategic Assessment: The 2019 Project Pipeline for Jordan

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Wissam Harake | February 28, 2019 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Standard Disclaimer: This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. Strategic Assessment: The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the The 2019 Project Pipeline for Jordan accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. And Investment Opportunities

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Photo Credits Cover Photo: Ancient Temple in Petra. Kanuman / Shutterstock.com Page 6: Aerial View of Amman City, Jordan. Ayman Alakhras / Shutterstock.com Page 22: Ferghana Valley. Water infrastructure. Matluba Mukhamedova / World Bank Page 32: Rows of solar panels. Dana Smillie / World Bank Page 38: New Downtown of Amman – Abdali Area. Ayman AlAkhras / Shutterstock.com Page 46: Abstract mash line and point scales on dark background with map of Jordan. A World Bank Group Document The ornbills Studio / Sutterstock.com Page 52: Girls School in Sahab, Jordan. Ashraf Al Saeed/World Bank February 28, 2019 Table of Contents List of Figures

Figure 1: Growth breakdown in pre- and post-crisis periods...... 8 I.. Assessment Synopsis ...... 7 Figure 2: More capital is required to produce a unit of output...... 9 A.. Investments for Jordan...... 8 Figure 3: Sector share in investment cost of the PP...... 10 B. a National Growth Strategy...... 9 Figure 4: Sector share in investment cost of 2019 PP...... 11 C.. Jordan’s Pipelines of Projects...... 10 Figure 5: 2019 PP public financing...... 18 D. assessment Methodology...... 14 Figure 6: 2019 PP private financing...... 18 E.. Results in Aggregation...... 15 Figure 7: Infrastructure project finance volume in selected countries...... 19 F. enabling Environment...... 17 Figure 8: Infrastructure project finance debt volume, average 2013-2017, (% of GDP)...... 20 G.. Maximizing Finance for Jordan’s Pipelines of Projects...... 19 Figure 9: Evolution and planned trajectory of operating cost coverage ratio from 2010 to 2020....24 II.. WATER AND WASTEWATER...... 23 Figure 10: Consolidated revenues, operational expenditure and depreciation for WAJ and utilities.....25 A.. Growth and Job Creation ...... 24 Figure 11: Composition of WAJ liabilities as at end 2017...... 25 B.. State of Sector ...... 27 Figure 12: Jordan’s 2016 water policy aims to increase the amount of water channeled from C.. Project Assessment...... 27 the Jordan River to municipal water and substitute this with an equal amount of treated waste- D.. Reform Needs...... 29 water for agriculture...... 26 Figure 13: Implementing a financial sustainability plan for Water Authority of Jordan municipal III..ENERGY...... 33 water services through combination of tariff increases and reduction of operational costs...... 29 A.. Growth and Job Creation ...... 34 B.. State of Sector...... 35 C.. Project Assessment...... 36 D.. Reform Needs...... 37 IV..Transport...... 39 A.. Growth and Job Creation ...... 40 B.. State of Sector ...... 41 C.. Project Assessment...... 41 D.. Reform Needs...... 43 V.. INFORMATION AND COMMUNICATION TECHNOLOGY...... 47 Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic A.. Growth and Job Creation ...... 48 B.. State of Sector ...... 48 C.. Project Assessment...... 49 D.. Reform Needs...... 50 VI..Education...... 53 A.. Growth and Job Creation ...... 54 B.. State of Sector ...... 54 C.. Project Assessment...... 55 D.. Reform Needs...... 56 Annex A...... 57 Annex B...... 61

 List of Tables

2 Table 1. Percentage of investment cost in the sector which meet the strategic criteria...... 15 3 Table 2. Percentage of investment cost in the sector which meet the growth, employment and inclusion criteria...... 16 Table 3. Percentage of investment cost in the sector which meet the feasibility criteria...... 16 Table 4. Percentage of investment cost in the sector that need reforms...... 17 Acknowledgements Abstract

This document was led by Wissam Harake (Senior Economist, IBRD), with a team comprising of: Jordan’s growth model is highly dependent on investment, with contractions in the magnitude, quantity and efficacy of investments being key drivers in the sharp deceleration of growth since 2010. Global Practice / CCSA / Unit Team members As such, boosting investment, specifically private investment, is critical to increasing the economy’s Communications Zeina Elkhalil potential growth. In response, Jordan is developing a Pipeline of Projects (PP) in order to chart the way for investments over the medium to long term. From this list, the Government of Jordan has identified Education Mohamad Yassine; Juan Manuel Moreno a Pipeline of Projects for 2019 (2019 PP) spanning water, energy, wastewater, transport, digital Energy Mikul Bhatia; Monali Ranade economy and education sectors, for a total investment cost of JD 3 (US$ 4.25) billion. Finance Competitiveness and Innovation Arnaud Dornel; Haocong Ren ICT Carlo Rossotto; Ali H. Abukumail In this document, the World Bank, which has had a long-term engagement with Jordan, both sectorally and cross-sectorally, presents a strategic assessment for the 2019 PP. The Assessment was undertaken Naji Abou Hamde; Christos Kostopoulos; Macro, Trade and Investment on the basis of the listing and data provided by the Government, which is presented in Annex A, as Wissam Harake well as other adhoc information. This Assessment does not supplant obligations that are beyond the Transport Mira Morad; Ibrahim Dajani mandate of this document, and that include (i) for each project to undergo an independent appraisal Water and Sanitation Dominick Revell de Waal; Amal Talbi; Iyad Rammal as per highest standards; (ii) for a careful examination of issues associated with land management and allocation; and (iii) for analysis that incorporates the pipeline into a sustainable macro-fiscal framework and debt strategy. Sherien Krikorian (Program Assistant) provided support to the team. The team relied substantially on sector-specific expertise from across the World Bank Group’s units, Global Practices (GPs) and Cross The Assessment generally finds that the choice of the 2019 PP for the water, wastewater, digital Cutting Solutions Areas (CCSAs). economy and education sectors is highly appropriate, and moderately appropriate for transport and energy. Nonetheless, all were assessed as either a priority or “good to have” for the sector, and all are The work was carried out under the supervision of Saroj Kumar Jha (Country Director) and Kevin consistent with a sector strategy. The Assessment also takes note of the Government’s five-year reform Carey (Practice Manager) who provided continuous guidance, support and comments throughout matrix, which prioritizes reforms that are critical to achieving Jordan’s growth objectives, as well as to the process. The preparation of the report greatly benefited from the close collaboration and strong enabling the implementation of its pipeline. engagement of the Government of Jordan. Valuable contributions were provided by representatives of the Royal Hashemite Court, The Ministry of Industry and Trade and The Ministry of Planning and The Assessment highlights good potential for complete private sector financing for a majority of International Cooperation. the 2019 PP. Given Jordan’s limited sovereign borrowing headroom due to high indebtedness and large debt service obligations relative to GDP (and relative to government revenues), the Jordanian authorities may wish to maximize the volume of commercial investment and finance in infrastructure. Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic 

4 5 I. Assessment Synopsis This compares to 8th out of 16 factors (6.1) A. Investments for Jordan Figure 1: Growth breakdown Figure 2: More capital is required and 10th out of 15 factors (3.3) in 2014- in pre- and post-crisis periods to produce a unit of output 2015 GCI and 2010-2011 GCI, respectively. 1. Jordan’s economy has endured a prolonged period of low economic growth 10 ICOR 14 as it faced a succession of external 8 shocks. Th economy entered into a period 12 6 B. A National Growth of protracted slowdown in 2010, on the 10 back of the 2008-09 Gulf Cooperation 4 8 Strategy Council (GCC) financial crisis, itself a 2 6 second-degree ripple effect from the 2008 0 4 6. Jordan 2025: A National Vision and 1 global financial crisis. This was followed -2 2 Strategy is a ten-year vision that was by the eruption of regional wars, first in developed in 2014 by the Government of

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2000-2007 2008-2017 -4 2000-2009 2010-2017 Syria and then Iraq. Regional headwinds Jordan (GoJ). The vision pivots economic Private consumption Public consumption involved spillovers on the security front, transformation on export development by Public investment Net Exports leading to the closure of trade routes Private investment RGDP building on existing strengths in various with Iraq and Syria, both having been sectors, as well as improvements in export final destinations and transit routes for Source: DOS and WB staff assessment. Source: DOS and WB staff assessment. promotion, natural resource management, Jordanian exports. While these borders infrastructure, finance as well as the have since been re-opened, recovery of macroeconomic environment. deficit, excluding grants, is close to 10 4. Investment efficacy has also been on trade for Jordan has been gradual and percent of GDP, while gross public debt the wane since 2008. The Incremental 7. In 2017, the Jordan Economic Growth insufficient to regain lost markets. The is estimated to have reached 95 percent Capital Output Ratio (ICOR)3 has more regional turmoil also induced a large influx Plan (JEGP) 2018-2022 was developed by of GDP by end-2018. Within a context of than doubled since 2007 (Figure 2), the Economic Policy Council.5 The JEGP of Syrian refugees into Jordan, which the a fixed exchange rate regime, large fiscal an indication of regressed efficacy of country has generously hosted, incurring is comprised of economic, fiscal and imbalances along with sizable current investments. A possible explanation is sectoral strategies that outline the vision additional fiscal costs. Consequently, real account deficits subject the economy to that, foreign aid needed to meet large GDP growth declined sharply from a 2000- and policies pertaining to each sector. substantial financing needs. Traditionally, financing needs and prevent balance of It further identifies policy interventions, 2009 annual average of 6.4 percent to 2.5 a considerable portion of Jordan’s payments crises, are directed toward percent (Figure 1) since 2010. public projects and private investments financing needs has been sourced from investment projects with less emphasis on that must be undertaken to realize these 4 2. Investment is a primary component of bilateral and multilateral grants and feasibility. sectoral visions. The Government, which Jordan’s growth model, with contractions concessional finance, rendering such is mandated with increasing investment, Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic 5. As a result, the quality of Jordan’s instruments key ingredients for macro- developing an efficient government and in the magnitude, quantity and efficacy infrastructure network has deteriorated of investments being key drivers in the economic stability in Jordan. In fact, when bringing the country together around a including grants, the annual overall fiscal markedly since 2009. According to the sharp deceleration of growth since 2010. 2017-2018 Global Competitiveness Index fair and just tax system, has confirmed its Total investment (public and private) deficit falls to an average of 3.5 percent commitment to the business environment, of GDP in the pre-crisis period, increasing (GCI) by the World Economic Forum (WEF), contributed positively and significantly Jordan ranked 63 out of 137 countries in labor market reforms and fiscal to real GDP growth in the pre-crisis period to 6.4 percent since. In response, Jordan consolidation efforts. entered into successive programs with quality of overall infrastructure, compared of 2000-2009, averaging 2.6 percentage to 48 out of 144 countries in the 2014- points (pp) annually. It has since fallen the International Monetary Fund (IMF)—a 8. The new Government also introduced US$ 2 billion IMF Stand By Arrangement 2015 GCI, and 35 out of 139 countries a two-year priority plan for 2019‑20 in sharply, becoming a drag on growth with in the 2010-2011 GCI. Concurrently, an average annual contribution of -1.3 pp. (SBA) program in 2013 and the current November 2018, with the aim of reviving US$ 723 million Extended Fund Facility the 2017-2018 GCI ranked inadequate economic growth, improving public While both public and private investment supply of infrastructure as 6th out of 16 shared this trend, the latter’s regression (IMF-EFF) in effect since 2016—which service delivery and creating more motivated significant fiscal consolidation factors (with a score of 7.2) that are most jobs. Key features of the plan hinge on has been quite striking, falling by around problematic for doing business in Jordan. 3.5 pp between the two periods. As such, effort.2 Notwithstanding other significant enhancing Jordan’s competitiveness boosting private investment is critical to policy measures, capital expenditures through improving ranking in the Doing increasing potential growth in Jordan. contracted from a pre-crisis (2000-2009) Business indicator via cost reductions in

energy and support for entrepreneurship Assessment Synopsis annual average of 7.4 percent of GDP to 4.2 3 ICOR measures the efficiency of investments by 3. Public investment has been a casualty and SMEs. On fiscal front, the plan puts 8 percent since. quantifying the additional capital required to increase 9 of Jordan’s fiscal consolidation drive output by one unit. forward an ambitious goal of reducing the since 2010. The average overall fiscal 2 Jordan has also had a strong engagement with the 4 For example, in 2012, and as Jordan struggled with budget deficit (excluding grants) by 0.5 World Bank, with major programs that include a severe balance of payments pressures resulting from pp of GDP annually and a decrease in the Programmatic Development Policy Loan (DPL) in 2012 the interruption of Egyptian gas supply in the wake public debt-to-GDP ratio to 92.4 percent by 1 Jordan’s economy enjoys strong linkages with the GCC and 2013 (US$ 500 million) and an energy and water of the so-called “Arab Spring”, the GCC pledged US$ via a number of channels including investment, tourism sector DPL (US$ 250 million) in 2015. Jordan is also 5 billion in grants over a period of 5 years. These and remittances. For more on these linkages, see: currently engagement in a programmatic DPL with the funds were directed toward specific investment 5 the Economic Policy Council is headed by the Prime World Bank (2016), Jordan Economic Monitor: Toward World Bank, the first part of which dispensed US$500 projects that the Jordanian government identified and Minister and includes the Governor of the Central Bank Stronger External Trade Performance, Fall 2017. million in June 2018. negotiated with the donors. of Jordan, private sector organizations and experts. the end of 2020. Moreover, the plan aims Energy to create 30,000 additional jobs through Figure 3: Sector share in investment Figure 4: Sector share in investment vocational training centers, by providing cost of the PP cost of 2019 PP tax incentives for companies in support 17. Since 2011, Jordan has achieved a strategic Education of training and employment for fresh Health objective towards enhanced energy Education 3% 1% Digital Economy Water Following the revolution in Egypt, graduates, and through improving the 1% 39 % security. business environment. The priority plan 3% interruptions in Egyptian gas supply, its Solid Waste Other further targets increasing investments and 8% sole source at the time for gas to operate 1% Energy Transport access to finance for specific sectors as 8% power plants, forced Jordan to switch to Wastewater 37% well as improving efficiency of the private 3% more expensive and less efficient diesel

sector. Digital Water Wastewater and fuel oil. This, along with higher energy Economy 9% 9% prices, had significant implications on 9. The Government, with assistance from 3% Tourism Transport Jordan’s balance of payments. In response, the World Bank and other development 16% 21% Jordan rapidly prepared and commissioned partners, is developing a five-year reform Energ y a Floating Storage and Regasification Unit 38% matrix that prioritizes reforms that (FSRU) to be deployed in Aqaba. By 2015, are critical to achieving the objectives Jordan began receiving Liquified Natural identified by Jordan 2025 and JEGP. The Source: GoJ Source: GoJ Gas via the FSRU in Aqaba establishing a matrix is structured around three pillars/ key objective in energy security. However, objectives: (i) reducing business costs cost, while tourism and water and digital Benchmark - Action Plan to Reduce Water for the bulk of its primary energy needs and improving market accessibility; (ii) economy are assigned 16 percent and 9 Sector Losses (‘Action Plan’), to increase for non-electricity sector, Jordan remains creating more flexible and integrated percent, respectively (Figure 3). water sector revenues, thus enhancing dependent on imported fossil fuels. This labor markets and providing better and cost recovery to cover operation and continues to impose an energy security more efficient social assistance; and (iii) 12. From the PP, GoJ has identified a Pipeline maintenance. Since 2013, the Water risk as well as a balance of payment improving fiscal sustainability and taking of Projects for 2019 (2019 PP) at a total Authority of Jordan (WAJ) implementation burden on the Jordanian economy. more informed decisions regarding risk. investment cost of JD 3 (US$ 4.25) of the ‘Action Plan’ has partially absorbed Effective implementation of this reform billion, divided between water, energy, the effects of successive external shocks 18. Efficiency improvements in the energy program is critical to the viability of wastewater, transport, digital economy through a combination of modest tariff sector have been identified by the GoJ Jordan’s investment plans. and education. Annex A presents the 2019 increases, reductions in non-revenue as a priority to support economic growth PP as received from the GoJ. The largest and job creation. This translates into the 10. The above consistently highlight Foreign water, replacing inefficient pumps and investment share is allocated to water, expanding renewable energy production. following: reduction in overall cost of Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic Direct Investments and exports of goods energy, representing 39 percent of the electricity, increased grid resiliency to and services as key enablers of growth and This progress between 2013-2017 led to total 2019 PP investment cost. Energy improvements in the cost recovery ratio. high share of variable renewable energy, employment for Jordan that needed to be comes in second with a 38 percent share of reduced dependence on imported fossil boosted. Vital sectors identified include: total 2019 PP investment cost, followed by 15. Water and sanitation still however impose fuels, improved handling of excess business, information technology and wastewater and transport with 9 percent a heavy fiscal burden due to elevated contracted capacity, and a shift to more professional services; education services; and 8 percent, respectively (Figure 4). energy costs. Half of the cost for delivering ‘green-clean’ energy. Jordan should healthcare services; creative industries; municipal services is to cover high consider leap-frogging to renewable tourism services; transport services; electricity for pumping and treating water energy by leveraging local high-quality construction materials and services; and Water Supply and Sanitation and wastewater. Following interruptions in wind and solar resources. Investments in agriculture and food processing. the Egyptian natural gas supply in 2009, concentrated solar power (or solar heat) Jordan had to move to more expensive and energy storage systems, and a faster 13. Jordan ranks as the world’s second poorest electricity generation methods and to transition to e-mobility can help transition C. Jordan’s Pipelines country in per capita water availability; diversify its energy mix, increasing its to domestic clean sources of energy. thus, optimizing water allocation is a exposures to global energy markets. 19. The PP contains 17 separately classified long-standing focus of the Government. of Projects 16. The PP contains 10 separately classified investment projects in the energy sector The per capita annual renewable water investment projects in water and for a total of JD 4,600 (US$ 6,490) million, 11. Jordan’s Pipeline of Projects (PP) includes resource is about 105 cubic meters per Assessment Synopsis sanitation for a total of JD 1,512 (US$ from which 1 energy project with an 123 projects at a total investment cost capita, far below the threshold of severe 10 2,132) million, from which 5 water and investment cost of JD 1,140 (US$ 1,608) 11 of JD 12.6 (US$ 17.7) billion, divided water scarcity of 500 cubic meters per sanitation projects with an investment million is included in 2019 PP. capita. This does not even account for the between energy, transport, tourism, cost of JD 1,442 (US$ 2,034) million are Syrian refugee population. water, digital economy, wastewater, included in 2019 PP. solid waste, education, health and other 14. Strong Government commitment to projects. The largest investment share is reforms in the water sector has led to allocated to energy receiving 37 percent some efficiency gains. In August 2013, of the total investment cost. Transport the Government approved the Structural receives 21 percent of the total investment Transport significant growth over the years, East average of 64.5 percent.7 Jordan is the Ministry of Health the largest service becoming an increasingly strategic sector classified as a Fast Grower market by provider, contributing 1,545 primary for the economy. The services sector is the GSMA. healthcare clinics and 31 hospitals. 20. The transport sector6 contributes to main source of employment opportunities over 10 percent of the GDP in Jordan, for Jordanians, generating 60 percent of 27. The PP contains 5 separately classified 31. The PP contains 6 separately classified employing about 7.2 percent of the the around 54,000 new jobs (net) created investment projects in the digital economy investment projects in education and 9 work force. The sector has consistently in 2017. In 2016, 4.7 percent of total for a total of JD 326 (US$ 460) million, from in health, for totals of JD 151 (US$ 213) shown that it can be a major creator of exports (amounting to US$ 648 million) which a single digital economy project and JD 89 (US$ 126) million, respectively, employment opportunities in Jordan, was also attributed to the ICT sector. A year with an investment cost of JD 100 (US$ and from which a single education project especially for the disadvantaged and low- earlier, in 2015, IT revenues reached more 141) million is included in the 2019 PP. with an investment cost of JD 88 (US$ 123) skilled (truck drivers, taxi drivers, workers than USD 600 million, while the telecom million is included in the 2019 PP. at the airports, construction workers etc.). sector’s total revenues reached more than It can also be a main catalyst for increasing USD 1.35 billion. Human Capital female participation in the labor force. Tourism 25. The Government of Jordan identified 21. Jordan has the potential to be a major digital development as a high priority 28. Investment in human capital is critical trade and transport hub. Jordan has a for the country’s social and economic for increased productivity and growth. 32. Tourism is an important contributor to geostrategic location and can be the development. Jordan formulated Based on Jordan’s Human Capital Index Jordan’s economy and has been prioritized gateway between Asia and Europe, as well a comprehensive digital economy (HCI), a child born in Jordan today will be by the Government as a key sector for as Turkey and the GCC. Jordan played a key strategy, Reach 2025, with a vision to 56 percent as productive when they grow economic growth. According to the World role in regional trade until the beginning raise productivity and ensure growth up as they could have been if they enjoyed Travel and Tourism Council (WTTC), of regional turmoil, the resultant closure by becoming an attractive business complete education and health. which compiles tourism statistics for 185 of the borders with Syria and Iraq and the destination for investments and countries, the direct contribution of Travel imposition of stringent border crossing international partnerships. Jordan also 29. The Jordanian education system has & Tourism (T&T) to Jordan’s GDP in 2016 regimes with Saudi Arabia. These committed to the launch of the World shown great resilience by absorbing represented close to 5 percent, while measures had a toll on the Jordanian Economic Forum “Internet for All Initiative.” a large number of Syrian refugees in the total contribution of this sector was economic activities in general and on the This initiative aims at ensuring inclusive public schools. Jordan has enrolled more equivalent to almost 20 percent of GDP.8 logistics and freight industries in specific. digital development, focusing on creating than 130,000 Syrian refugee children opportunities for economic growth and in public schools as of December 2018, 33. Jordan’s tourism sector is an important 22. Investments in transport infrastructure jobs across the Kingdom. It also focuses which corresponds approximately to 10 source of employment, with potential are needed to align with international on digital government and using digital percent of the public education student foci on less developed areas and female

Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic comparators of middle-income countries. infrastructure to increase work efficiency, population. The increase in enrollment has employment. WTTC reports that Jordanian Despite Jordan’s investment of about US$ improving work mechanisms and exacerbated a supply shortage of public T&T directly generated 80,500 jobs in 1.7 billion over the last 5 years, it remains promoting socio-economic development. schools and increased overcrowding in 2016, equivalent to 5.1 percent of total less than 1 percent of GDP annually, classrooms, leading to the operation of employment. This includes employment compared to between 1 and 3 percent of 26. Jordanian mobile and fixed broadband an increased number of second shifts by hotels, travel agents, airlines and other GDP in middle income countries. Such connections are adequate compared to the in schools and the reliance on rented passenger transportation services as well investments require adequate financial Arab region, however there is still room for schools. as the activities of the restaurant and allocations for maintenance to sustain the development to catch up with developed leisure industries directly supported by longer-term benefits. economies in Europe and the US. While 30. A dynamic private healthcare system is a travellers. When including wider effects the usage of internet by individuals in strong asset for the Jordanian economy, from investment, the overall supply chain 23. The PP contains 30 separately classified Jordan (53.4 percent) is above the global but long-term challenges in the public and induced income impacts, WTTC reports investment projects in the transportation average (44 percent), internet speed is health system need to be addressed. The the total contribution of T&T to employment sector for a total of JD 2,700 (US$ 3,810) below; in June 2018, average download private health sector, composed of for is 287,500 jobs in 2016 or 18.1 percent of million, from which 2 transport projects speed in Jordan was 14.4 Mbps, compared profit and not for profit providers, includes total employment. Ministry of Tourism and with an investment cost of JD 242 (US$ to 23.5 Mbps globally. Jordan also has highly qualified staff known for their Antiquities estimates that 9 percent of 341) million are included in 2019 PP. a fixed broadband download speed skills in many areas of specialized care travel and tourism employment is held by (21.6 Mbps) that is lower than the global throughout the region. On the other hand, women. There is significant opportunity to Assessment Synopsis average (46.1 Mbps download average the public health system faces challenges expand these numbers through targeted 12 Digital Economy in June 2018). Meanwhile, more than that include quality of care, fragmented investment and development of related 13 75 percent of Jordan’s population have health financing functions and limited hard and soft infrastructure. access to mobile broadband (Q4 of 2017). flexibility to adapt to epidemiological 24. With a GDP contribution worth around 12 Internet penetration reached 87.8 percent change. Moreover, the public sector percent, information and communication in Jordan, which is way above the Middle dominates overall health provision, with technology (ICT) has witnessed 8 World Travel and Tourism Council, Travel and Tourism Economic Impact 2017 Jordan. See: https://www.wttc.org/-/media/files/reports/ 6 this includes aviation, public transport, marine, economic-impact-research/countries-2017/ railways and roads. 7 source: Internet World Stats. jordan2017 34. The PP contains 10 separately classified project appraisal (i.e. feasibility, financial, investment projects in the tourism sector environmental etc.), which need to be Table 1. Percentage of investment cost in the sector which meet the strategic criteria. for a total of JD 2,000 (US$ 2,830) million, conducted independently and at the from which none are included in the 2019 highest standards. PP. Strategic Assessment 40. A sector-level assessment is conducted Is

in the form of a short sector note that D highlights the following: Other Sectors i. Growth and Job Creation: illustrating The project: the strategic relevance of the sector in 35. The PP contains 4 separately classified relation to Jordan’s growth and reform investment projects in solid waste for agenda. belongs to an official sector strategy is a strategic priority (good to have) for the sector alleviates significant supply bottlenecks in the sector helps attract F in the sector contributes to increased exports helps reduce the cost structure in the sector is an appropriate technical solution a total of JD 194 (US$ 274) million, from Yes Yes Yes Yes Yes Yes Yes which none are included in the 2019 PP. ii. State of Sector: presenting a brief overview on the state of the sector and Water 100 97 (3) 97 97 N/A N/A 97 36. The PP contains 32 separately classified the main bottlenecks. Energy 100 0 (100) 0 100 0 0 N/A investment projects in a variety of other sectors at a cost of JD 980 (US$ 1,383) iii. Reform Needs: identifying key Wastewater 100 77 (23) 77 77 77 77 100 sectoral (vertical) reforms that will million, from which none are included Transport 100 52 (48) 52 100 100 100 100 in the 2019 PP. These sectors include (1) improve performance of the sector in sustainable ways; and (2) that are agriculture, environment, labor and Digital Economy 100 100 (0) 100 100 100 100 100 youth and gender, as well as other mostly needed to make the projects viable. construction projects. 41. At the macro level, conclusions are drawn Education 100 100 (0) 0 N/A 0 N/A N/A on the plan with views presented on N/A denotes ‘unassessed’, as more information is required to assess the statement. N/A was assigned to criteria strategic relevance, impact on economy, for which 10 percent or more (in investment cost) could not be assessed. D. Assessment feasibility, as well as manner to enforce Source: WB staff assessment. the enabling environment, including maximizing finance for development. Methodology 2019 PP investments in digital economy A sustainable macro-fiscal framework E. Results in Aggregation and water, and by the vast majority (77 and debt strategy that incorporate the 37. Based on a request from the GoJ, the World percent) of the wastewater investments. pipeline are beyond the mandate of this Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic Bank (WB) conducted an assessment of 43. The strategic Assessment of the 2019 10 projects that make up the 2019 PP. Assessment but is a necessary exercise for PP reveals that all projects are part of an 44. The vast majority of the 2019 PP In light of the afore-highlighted need project pipeline viability. GoJ can ill afford official sector strategy and are regarded investments can attract foreign direct for investment, a well-designed project to ignore fiscal constraints and should aim as either a strategic priority for the investments (FDIs), while those in digital pipeline can be an effective tool to help to have them incorporated and accounted relevant sector or are good to have (Table economy, transport and (the majority in) reinforce Jordan’s infrastructure, abetting for in the final plan. 1). All 2019 PP projects in water, energy, wastewater will contribute to increased a boost in economic growth. The WB’s wastewater, transport, digital economy exports and help reduce the cost structure. 42. The Assessment affords a chance to review long-term engagement with Jordan affords and education are assessed as part of an Jordan’s growth strategy identifies opportunities for private investment in its staff country context and sector insight, official sector strategy. The two projects FDIs and exports as main channels for Jordan. Public-private partnerships (PPP) in addition to the technical know-how in digital economy and education are growth. Moreover, high input costs in is an important tool to help boost much and international best practices, that can assessed as strategic priorities for their the production of goods and services needed investment within the context provide an effective assessment of 2019 corresponding sectors. This also applies is a significant hurdle for Jordanian of minimum fiscal space, provided that PP. to almost all 2019 PP investments in water competitiveness. The Assessment finds financial contingent liabilities are well (97 percent), a vast majority in wastewater that all 2019 PP investments in the energy, assessed and sufficiently mitigated. 38. The Assessment was conducted at three (77 percent) and over half in transport. transport and digital economy sectors, Capital investment projects are no longer levels: project, sector and macro. The single energy project in the 2019 PP as well as the great majority in water (97 the exclusive purview of government is assessed as good to have.9 Significant percent) and wastewater (77 percent) are 39. At the project level, a framework for the investment departments. Many countries Assessment Synopsis supply bottlenecks in the respective capable of attracting FDIs. Meanwhile, Assessment, henceforth termed the have found that the private sector provides sector are expected to be alleviated by the only 18 percent of 2019 PP investments 14 Framework Assessment, was designed quality investments and value for money 15 in the transport, digital economy and based on four main categories: (i) in critical infrastructure areas—energy, (majority of) wastewater, are expected to Strategic Assessment; (ii) Assessment telecommunications, transportation etc. increase exports and help reduce the cost for Growth, Employment and Inclusion; At the same time, investors see capital 9 In this regard, while the assessment recognizes the structure of the respective sector. (iii) Feasibility Assessment; and (iv) projects as opportunities to participate need for Jordan to become less dependent on fossil Reform Needs Assessment. Annex B in critical investments of national priority fuel imports—due to the large balance of payment presents the Framework Assessment. This effects—priority should be given to efficiency with substantial international attention, gains, reduction in costs and renewables, over the assessment does not supplant necessary including co-financing. development of its own fossil fuel industry. 45. The Assessment for growth, employment 46. The feasibility Assessment for 2019 PP concurrently with implementation. For costs (including power) and subdued and inclusion shows all 2019 PP shows that the education and digital water, wastewater and digital economy, competitive pressures in key segments investments, other than those in energy economy projects, and half of the reforms are effected via cabinet decrees, of the economy. A key indicator of and education, are anticipated to have a investments in transport are ready to be whereas half of the transport 2019 PP competitiveness, Jordan’s real exchange growth dividend in the short to medium implemented within a period of 18 months investments need cabinet-decreed rate has appreciated significantly since term, while 2019 PP investments in (Table 3). Further, the implementing reforms, while the other half and all the 2010, despite the modest reversal due energy, digital economy and to a lesser agency has the necessary capacity for all education projects need parliament to act. to deflation in recent years. At the same extent, transport are expected to 2019 PP investments in the energy, water, time, Jordan’s relatively large financial generate a large or moderate number wastewater and digital economy and for sector does not play a role in financing of high-skilled jobs (Table 2). All 2019 half of investments in transport. private sector activity commensurate with PP investments in energy, transport and F. Enabling Environment its size. Exports have also been reduced digital economy are expected to generate 47. The reform needs Assessment shows that, by endemic conflict in two key regional a large or moderate number of jobs. while all 2019 PP investments, other than 48. The Government, with assistance from markets: Syria and Iraq. Improvements in Moreover, the digital economy and energy those in the energy sector, are in need the World Bank and other development the enabling environment will be achieved, projects can contribute significantly to of reforms, these reforms do not have partners, is developing a five-year on the one hand, through measures that high productivity jobs. to be frontloaded but can be introduced reform matrix, which prioritizes reforms reduce the cost-base, improve regulatory that are critical to achieving Jordan’s predictability and ease access to finance growth objectives, as well as enabling for Jordanian businesses, and on the Table 2. Percentage of investment cost in the sector which meet the growth, the implementation of its pipeline. The other, by measures that improve the ability employment and inclusion criteria. matrix is structured around three pillars/ of those businesses to access markets. objectives: (i) reducing business costs Better reform implementation will be key Assessment for Growth, Employment and Inclusion and improving market accessibility; (ii) to success, and a significant investment in Growth impact The growth The completed creating more flexible and integrated The project improved reform governance is needed. of completed impact of the project contributes labor markets and providing better and creates a large or project in less completed significantly to more efficient social assistance; and (iii) 50. Governance challenges are particularly moderate number than 36 months project is highly high productivity improving fiscal sustainability and taking pertinent when it comes to the business of jobs from initiation sustainable jobs more informed decisions regarding risk. enabling environment. Many of the Water 97 0 0 0 Effective implementation of this reform uncertainties and administrative burdens program is critical to the viability of faced by investors and businesses are Energy 0 0 100 100 Jordan’s investment plans. a function of inadequate governance Wastewater 77 0 0 N/A practices related to the way rules impacting

Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic 49. The first pillar supports a better operating Transport 100 52 48 100 businesses are prepared, coordinated, environment for the private sector in consulted, implemented and updated. Digital Economy 100 0 100 100 terms of costs, regulatory complexity An effective cross-ministerial regulatory Education 0 N/A 0 0 and predictability. Jordan’s productivity reform and oversight body will need to be growth has been modest since 2010, N/A denotes ‘unassessed’, as more information is required to assess the statement. N/A was assigned to criteria established. Beyond the direct effects, the for which 10 percent or more (in investment cost) could not be assessed. weighed down by unpredictable reforms will also have a positive signalling regulatory processes, high business input Source: WB staff assessment.

Table 3. Percentage of investment cost in the sector which meet the feasibility criteria. Table 4. Percentage of investment cost in the sector that need reforms

Feasibility Assessment Reform Needs Assessment Reforming Institution Reform Timeline Readiness to implement (0-18 months The implementing agency has the

for shovel readiness) necessary capacity Cabinet Parliament Front end With implementation Water 4 97 Water 96 0 0 96

Energy 0 100 Energy 0 0 0 0 Assessment Synopsis Wastewater N/A 100 Wastewater 100 0 0 77 16 17 Transport 48 52 Transport 52 48 N/A N/A Digital Economy 100 100 Digital Economy 100 0 0 100 Education 100 0 Education 0 100 0 100 N/A denotes ‘unassessed’, as more information is required to assess the statement. N/A was assigned to criteria N/A denotes ‘unassessed’, as more information is required to assess the statement. N/A was assigned to criteria for which 10 percent or more (in investment cost) could not be assessed. for which 10 percent or more (in investment cost) could not be assessed.

Source: WB staff assessment. Source: WB staff assessment. effect to investors on the Government’s G. Maximizing Finance 54. Although commercial infrastructure Figure 5: 2019 PP public financing commitment to strengthening the includes projects fully in the private environment for business. for Jordan’s Pipelines sector, in practice most private sector investments in infrastructure involve Pub Financing < 25% 51. The second pillar helps foster a more some form of public-private partnership 14% flexible and inclusive labor market and a of Projects (PPP) arrangement. At one end of the PPP more effective social safety net. Pillar 2 is Unknown 53. Given Jordan’s limited sovereign borrowing spectrum, many investments in telecom, structured around three sets of reforms. Financing headroom due to high indebtedness and airports and power generation can be fully 1% These are designed to address two pressing large debt service obligations relative financed by the private sector, although issues that affect the job performance of to GDP (and relative to government some (independent power producers the Jordanian economy; namely (a) reforms revenues), the Jordanian authorities may and internet services) may give rise to that address the drastically low female wish to maximize the volume of commercial significant contingent liabilities for the labor force participation rate by removing investment and finance in infrastructure. state. In other infrastructure projects barriers to women’s ability to participate in In such projects, equity return and debt (particularly in water supply and urban 25% < Pub Financing the labor market; (b) reforms that address < 50% service are underpinned by commercial transport), user fees often fall far short the growth of the informal sector through 85% revenues (stemming from ratepayers) of capital cost. For the latter group with better management of the foreign labor rather than the national budget (ultimately high rates of social and economic return, Source: WB staff assessment. force entering legally and staying illegally funded by taxpayers). These projects can this often involves large amounts, long in Jordan; and (c) reforms designed to also provide “value for money” through investment horizons, relatively low provide better and more efficient social their efficient allocation of incentives financial returns and complex structuring assistance. Figure 6: 2019 PP private financing and risks between the public and private involved. As a result, there is a need for 52. The third pillar supports fiscal parties. This helps reduce the life-cycle state involvement to attract commercial consolidation efforts by focusing cost of projects and improve the quality investment and finance in infrastructure, 100% Private Sector in current conditions of service. Capital investment needs for such that countries often find it necessary 8% on efficiency in public investment, ensuring maximum opportunities for Jordan far exceed current fiscal capacity to implement specific facilitation schemes Other in parallel with broader sector-level and Financing private investment in traditional public and to be realized will require a crowding Modalities investment areas through the adoption in of private financing. The banking sector cross-sector enabling policies. 38% has a primary role in financing the pipeline. of a Maximizing Finance for Development 55. The Assessment finds good opportunities Still, and despite the fact that capital approach, and updating the approach to for private financing for the 2019 PP markets remain too nascent to play a role managing debt and contingent liabilities. investments. Public finance is expected to in the short to medium term, the potential Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic Public investment averaged 7.4 percent cover less than 25 percent of the financing on longer horizons is strong and progress 100% Priv; with of GDP in 2000-2009, and 4.4 percent of for 14 percent of the 2019 PP investments, change to on that front would send a good signal to GDP in 2010-2015 and 3.7 percent of GDP and less than 50 percent of the financing environment/ policy international investors. 54% in both 2016 and 2017. With a significant for 85 percent (Figure 5). The Assessment fiscal consolidation pending in the medium also highlights the need for an improved Source: WB staff assessment. term, fiscal space for public investment will likely be limited. Yet Jordan needs significant amounts of investment to boost growth and to improve the efficiency Figure 7: Infrastructure project finance volume in selected countries of the economy. Jordan will have to seek efficiency gains in public investment and to significantly increase its reliance on the 2.0% private sector, through making effective the newly-adopted Public Investment 1.5% Management—Public-Private Partnership (PIM-PPP) Governance Framework. At 1.0% the same time, Jordan needs to make 0.5% Assessment Synopsis progress in managing emerging contingent liabilities as part of an updated approach 18 0.0% 19 to managing public investment and debt. Kenya Morocco Georgia Jordan Jamaica Colombia Peru Lebanon Lower Middle Income Upper Middle Income Avg deal 327 772 102 307 83 411 251 0 size ($m) # Deals/yr 0.6 0.6 0.8 2.6 1 4.8 4.2 0

Source: WB staff assessment. environment for private financing; in current conditions, only 8 percent of Figure 8: Infrastructure project 2019 PP investments can be financed finance debt volume, average 2013-2017, completely from the private sector, but (% of GDP) with policy changes, this could rise to 62 percent (Figure 6). A- Peru, 0.5%

56. It is important to keep in mind that the BBB+ Colombia, 0.6% Assessment on financing was done on a BBB Morocco, 0.5% project by project basis and “in principle”. BBB- BB+ Georgia, As such, it should be considered as a 0.5% BB Jordan, >1.6% target to approach. BB- B+ Kenya, 0.3% 57. Since 1994, Jordan achieved financial B Jamaica, 0.6% closure on several PPPs across several B- sectors, including electricity, telecoms, 10 100 1,000

transportation, water, wastewater and GDP, USD bn. (log scale) telecoms.10 A cross- country analysis on infrastructure private debt finance Source: WB staff assessment. indicates volumes reaching 1.6 percent of GDP for Jordan each year, surpassing by a significant amount other comparator countries (Figure 7, Figure 8). This translates to around US$ 700 million annually. For total private financing of projects an average of 25 percent equity is added, to arrive at US$ 875 million per year of private infrastructure financing. 58. Projects with high rates of social and economic return but low financial rates of return may need financial support from Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic the state to make them commercially viable and attractive to private sector investors. The Global Concessional Financing Facility, the GCFF, can thus be a source of financing. Among all financing sources, official development assistance (ODA) from concessional multilateral and bilateral development institutions offer the most favorable terms (longest maturities, lowest interest rates, simpler documentation). The GCFF is an established concessional financing facility, which can effectively implement programs that address Jordan’s long- standing development needs, while at the same time, help mitigate the impact on the

refugees. Assessment Synopsis 20 21

10 Projects include, among others, the AES Amman Jordan IPP (2007), the Al Qatrana IPP (2009), Queen Alia International Airport (2007), the Disi Water PPP (2009), the As-Samra wastewater treatment plant (2012), the Tafila windfarm (2013), several solar power projects (2015 and 2016), including IFC’s Seven Sisters projects, and lately Daehan windfarm (2017). II. WATER AND WASTEWATER The 2019 PP contains 5 separately classified passing these onto consumers, including 62. Despite making good progress in projects in the water and sanitation sector for a A. Growth and the Water Authority of Jordan (WAJ), the absorbing these shocks, the combination total investment of about JD 1,440 (US$ 2,030) Job Creation provider of municipal water services. With of increased electricity costs and the need million. Three of these projects are in the water half the cost of municipal water service to purchase additional bulk water has led supply sector: Aqaba-Amman National Water 59. Municipal water services have experienced delivery driven by electricity for pumping to WAJ accumulating debt. By the end of Conveyance Project (PP18); Non-Revenue Water a series of external shocks, such as the and treating water and waste water, WAJ 2017 WAJ had accumulated JD 2.4 (US$ Reduction (PP20); and Hisban brackish water influx of refugees from Syria and sharp has struggled to cover the increase in 3.4) billion in debt as accounts payable to desalination (PP21). The two remaining are in increases in energy prices, exacerbating electricity costs. electricity companies, bulk water suppliers sanitation: As Samra Treatment Plant (PP19); and as advances from MoF and larger long-term water scarcity. Over the period 60. Strong Government commitment to and Al Ghabawi Wastewater Septic Tank Facility of 2011 to 2015, an estimated 1.3 million annual deficits (Figure 10) and ultimately Project (PP23). The WB assesses that PP18, PP19 reforms in the water sector has led a JD 2.4 billion in debt (Figure 11). refugees moved to Jordan displaced to some efficiency gains, partially and PP20, at a combined investment cost of JD by the conflict in Syria. The influx was 1,300 (US$ 1,832) million, are priorities. absorbing these shocks. In August 2013, 63. At the end of 2017, the Ministry of Finance equivalent to 20 percent of Jordan’s pre- the Government approved the Structural assumed WAJ’s debt but further reforms The Assessment recommends that projects be crisis population. This placed tremendous Benchmark - Action Plan to Reduce Water in both efficiency and cost recovery are done in partnership with the private sector, pressure on water services throughout Sector Losses (‘Action Plan’), to increase needed to ensure the financial viability supported by legal, regulatory and policy the country but especially in the northern water sector revenues, thus enhancing of municipal water services. In July changes that need to be made by the Government. governorates. Moreover, interruptions in cost recovery to cover operation and 2018, a further 40 percent increase in Although the investments seem reasonably the Egyptian natural gas supply in 2011, maintenance. The ‘Action Plan’ has costed, when compared to other projects in forced Jordan to switch to more expensive become core to the policy dialogue and Jordan and the region, it is essential to confirm electricity generation methods and to the resulting policy commitments in the Figure 10: Consolidated revenues, that these amounts are based on (or will be diversify its energy mix, increasing its water sector. With strong government operational expenditure and depreciation updated by) detailed design and that the costs of exposure to global energy markets. It was leadership, the ‘Action Plan’ is supported for WAJ and utilities expropriation and environmental mitigation are estimated in 2014 that energy related analytically, technical and financially by factors induced a 5 percent of GDP annual included. a range of development partners. Since 2014 2015 2016 2017 2018 debt accumulation. In response, the 2013, WAJ implementation of the ‘Action 800 Government withdrew electricity subsidies Plan’ has partially absorbed the above 700 economic shocks through a combination 600 of modest tariff increases, reductions in Figure 9: Evolution and planned trajectory of operating cost coverage ratio 500 non-revenue water, replacing inefficient 400 from 2010 to 2020 pumps and expanding renewable energy

JD Millions 300 Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic production. This progress between 2013- 200 2017 led to improvements in the cost 100 recovery ratio (figure 1). However, the 0 positive projections after 2017 have not materialised due principally to increases OPEX + Depreciation OPEX Revenues in electricity costs and the need purchase additional bulk water. Source: WAJ audited financial statements. 61. Over the same period, coping with water scarcity in Jordan has required Figure 11: Composition of WAJ liabilities an expansion of bulk water production as at end 2017 facilities, including the Disi Pipeline PPP, with high recurrent electricity costs. The Disi Pipeline is a build-operate-transfer (BOT) PPP that pumps water from deep 10% aquifers in the south of the country for 300 km to Amman over an elevation of 1000 45% 22% m. The bulk water purchase of 100 million WATER AND WASTEWATER cubic meters a year from the Disi Pipeline Loans 24 11% 25 has added significantly to the costs Government bonds of municipal water supply. Though the Advances from MoF 9% Current loans pipeline was a necessary and appropriate Other liabilities 2% 1% response to water scarcity in Jordan, it has Electricity payables also added significantly to the operational BOT Liabilities: Disi pipeline + Al Samra WWTP costs of municipal water supply. Source: MoWI 2017. Structural Benchmark - Action Plan to Reduce Water Sector Losses. Source: WAJ audited financial statements. WSS is managed by three main utility Figure 12: Jordan’s 2016 water policy aims to increase the amount of water B. State of Sector companies: i) Miyahuna for the greater Amman area; ii) the Yarmouk Water channeled from the Jordan River to municipal water and substitute this with an equal 65. Jordan ranks as the world’s second most Company for the north of Jordan; and amount of treated waste-water for agriculture water-scarce country, thus, optimizing iii) Aqaba in the south of Jordan. WAJ water allocation is a long-standing is the asset holding company for these priority of the Government. The per capita three utilities and operates services in Total available water annual renewable water resource is about rural and small towns not covered by the per year= 1050 MCM 105 cubic meters per capita, far below the three main utilities. WAJ is also the asset 100 MCM o/w 22% is non-conventional threshold of severe water scarcity of 500 municipal & fossil groundwater 154 MCM holding authority for the Disi Pipeline, water from cubic meters per capita. This per capita Ag water Disi which is a public private partnership with from Jordan water resources estimate does not even a bulk water supplier. The 25-year contract River account for the Syrian refugee population with Diwaco is a joint venture between hosted by Jordan. The country draws 60 a Turkish company (GAMA) and the US- percent of its supply from groundwater based General Electric Financial Services. 144 MCM resources, which leads to unsustainable Ag water reclaimed As the asset holding company, WAJ takes use (withdrawals greater than natural 134 MCM from waste -water on all major borrowing for WSS, absorbs municipal recharge). The first element for the water Jordan the annual losses made by the other three River optimization of the water allocation is water utility companies and covers the bulk to reduce groundwater overuse. Toward water purchases from the Disi pipeline. that objective, the Government increased 286 MCM groundwater tariffs and embarked on an 265 MCM Ag water from municipal GW and springs aggressive anti-water theft campaign and water from strict groundwater licensing. A second C. Project Assessment GW element focused on the optimization of Opportunities include: surface water resources. The Government • Reducing non-revenue in municipal water – currently 50% 67. Project 1: PP18 — Aqaba-Amman National • Reducing electricity expenditure for water pumping and treatment – currently JD 200m a year has adopted several policies (see Figure Water Conveyance Project (AAWDC • In turn, use savings from energy to compensate agriculture for reduced water use 12) that aim to achieve more efficient Project) • Increasing water substitution – currently 144 MCM a year – to avoid building a new desal plant use of existing surface water resources • Increasing control of year-round wastewater transfers for Ag productivity for municipal and agricultural water. The • The investment cost of this project • Improving aquifer management through better water accounting Government increased reliance on reuse is estimated at JD 1,100 (US$ 1,551)

Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic Originally published in “IEEE Spectrum” Image © Emily Cooper 2009 of treated wastewater so that freshwater million. The project aims to construct can increasingly be substituted by treated a desalinated water production facility wastewater for farming and industry while in the Gulf of Aqaba and a pipeline to the electricity tariff for water pumping such as the As Samra plant, Jordan is able allocating freshwater for drinking water. convey 150 million cubic meters per created additional pressure on cashflow to reuse fully treated municipal wastewater In spite of this chronic water scarcity, year system. at WAJ leading to further accumulation of for irrigated agriculture. Jordan’s success as of 2017, 95 percent and 90 percent of debt. By the end of 2018 this stood at JD in advancing wastewater treatment had • Given high operation costs, the Jordan’s population had access to piped 84 (US$ 118) million in unpaid invoices to by 2017 enabled 164 million cubic meters financial ability of the sector to fund water supplies in urban and rural areas, electricity distribution companies, the Disi of water to be reused. This is a 67 percent the project is limited; thus, external respectively. Pipeline PPP and other contractors. These increase from 2007. Moreover, almost 91 sources, grant, concessional financing providers started charging WAJ and its percent of treated wastewater in Jordan 66. Water services in Jordan are institutionally or private sector will be needed. The utilities interest on unpaid invoices. The is reused for agriculture. This critical link divided between water for municipal design of the financing transaction will PPP commitments are underpinned by a between municipal water services and services and water for agriculture. need to be adequately conducted and sovereign guarantee and the Ministry of irrigated agriculture currently relies on The Ministry of Water and Irrigation optimized to avoid risk of significant Finance is working with WAJ to prevent this the financial viability of the municipal (MoWI) oversees both municipal water increase of cost. cashflow constraint from escalating into water supply services as the charges for supply and sanitation (WSS) as well as • There is a high need for the disorderly debt accumulation and to push agricultural water are very low. Policy irrigation. Jordan Valley Authority (JVA)

augmentation of the water supply WATER AND WASTEWATER for further reforms in efficiency and cost actions to return municipal water services manages irrigation. JVA is subsidized by for Amman; however, the current recovery are needed. to financial viability, so that the sector the Government, which transfers around 26 non-revenue water (NRW) is about 27 can continue to support PPP projects, will JD 35 (US$ 50) million annually, whereas 64. Financially sustainable municipal water 50 percent and needs to be urgently include a combination of subsidy financing revenues amount to less than JD 10 (US$ supply services are critical to Jordan’s reduced for the AAWDC. for WAJ and scheduled incremental 14) million per year. Though accounting overall water security that underpins increases in the municipal water tariff (see for half of the water sector’s abstractions • The environmental aspects related to growth and job creation, including in the section on reforms) (around 400 MCM), irrigation consumes the disposal of brines in the Gulf of agriculture sector. In line with Jordan’s less than 2 percent of the electricity Aqaba are critical. water reuse policy and along with consumed by municipal WSS. Municipal investments in wastewater treatment, 68. Project 2: PP19 — As Samra Treatment 70. Project 4: PP21 — Hisban brackish water options for both improving cost recovery Plant (third phase/second expansion) desalination D. Reform Needs of municipal water supply while protecting poorer households from those increases. • The investment cost of this project • The investment cost of this project 72. Looking ahead, water sector reforms is estimated at JD 200 (US$ 282) is estimated at JD 35 (US$ 49.35) need to focus on the financial viability 73. Financially sustainable municipal water million. The project aims to expand million. The project aims to augment of the municipal water and wastewater supply services are critical to Jordan’s the capacity of the As-Samra water sources by 10 to 15 million cubic services: The electricity tariff for pumping overall water security. The goal of reforms treatment plant from 365,000 cubic meters per year and develop solar water was increased to 140 fils/KWh in and policy actions in the water sector meters to 465,000 cubic meters per energy to provide about 15 Mw. July 2018. This 40 percent increase in is to return municipal water services to day. Additionally, the project will electricity costs has pushed WAJ and financial viability so that the sector can establish a solar power plant with • While this can be a strategic project, other utilities into a combined operating continue to attract new BOT projects that 10 MW capacity and will serve the the volume of water is limited deficit of JD 12.5 million per month. For support the augmentation of water for adjacent unserved communities with compared to the above project. Given WAJ and its utilities to continue to provide municipal supply and treat wastewater for wastewater networks. high operation costs, the financial uninterrupted services in 2019, a monthly reuse in agriculture. Restoring financial ability of the sector to fund the project subsidy will need to be transferred by the sustainability to municipal water services • Given high operation costs, the is limited; thus, external sources, Government to WAJ to cover the increase in requires a financing plan to sustain the financial ability of the sector to fund grant, concessional financing or electricity prices and to pay down sector viability of WAJ service delivery through the project is limited; thus, external private sector will be needed. debt. In the medium-term, the increase a combination of subsidy financing (for sources, grant, concessional financing in electricity costs will need to be passed deficit and debt) and scheduled water or private sector will be needed. • The environmental aspects related to the disposal of brine are important. through to water consumers to ensure tariff increases supported by poverty and • There is a high need for the that both the water and electricity utilities social impact analysis. 71. Project 5: PP23 — Al Ghabawi Wastewater remain financially viable. In the short- augmentation of the water supply for 74. This interim financing of WAJ’s deficit and Amman; however, the current NRW Septic Tank Facility Project term, however, additional analytical work and public consultation is required before debt will enable small but steady water is about 50 percent, and needs to be • The investment cost of this project implementing a water tariff increase. tariff increases to be made, smoothing urgently reduced. is estimated at JD 50 to 70 (US$ 70.5 The analytical work required include (a) the transition back to operations and to 98.7) million. The project aims to • The environmental aspects related to a tariff review and (b) a review of NAF maintenance cost recovery. The debt that construct a new septic tank facility to the disposal of sludge are important. targeting mechanisms and the extent of its WAJ accumulated was short-term and at replace and relocate an existing facility coverage. These two studies will provide high interest rates compared to the finance 69. Project 3: PP20 – Non-Revenue Water currently co-located at Ain Ghazal (NRW) Reduction Treatment plant due to odour, traffic, pollution and capacity concerns. The Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic • The investment cost of this project capacity will be 25,000 cubic meter per Figure 13: Implementing a financial sustainability plan for Water Authority of Jordan is estimated at JD 47 (US$ 66.27) day. The proposed new replacement municipal water services through combination of tariff increases and reduction million. The project aims to develop septic tank facility will be located at Al of operational costs appropriate techniques to reduce Ghabawi and is intended to serve the physical and commercial water losses unsewered areas of Amman, Zarqa and in Amman through the preparation the surrounding area. Annual Water and implementation of a performance Utility O&M Decreasing O&M costs costs by (e.g.20%) through based non-revenue water (NRW) • While this can be a strategic project, NRW reduction and cost effective energy contract under a hybrid financing the volume of wastewater is limited. JD 350M purchase modality, including grants and private Given high operation costs, the investment. This approach will start in financial ability of the sector to fund

Amman Governorate but will be rolled the project is limited; thus, external Financed by out to other governorates. sources, grant, concessional financing Government subsidy or private sector will be needed. Future tariff 100% • This is a high priority project as the Financed by of O&M current NRW is about 50 percent and • The environmental and social aspects utility customers needs to be urgently reduced so that related to the disposal of sludge are WATER AND WASTEWATER increases in water production such as important. 28 the AAWDC, are not wasted. 29

• The opportunity for private financing Current tariff 80% contribution is high as typically the of O&M NRW projects have short to medium Year term returns on investment. 2018 2019 2020 2021 2022

Source: World Bank staff. that the Government is able to access. committee would develop a plan with Government borrowing to refinance WAJ relevant stakeholders to reduce the energy debt would provide short-term relief from intensity of municipal water services, the high interest rates that WAJ has been which could bring a 20 percent reduction burdened with. In the medium-term, in the energy intensity of the sector Government borrowing could also smooth over the next 4 years. This committee the transition in bringing water tariffs would also facilitate increasing control back up to a sustainable level through of year-round wastewater transfers for small incremental tariff increases rather agricultural productivity and in improving than by passing the increase in electricity aquifer management through better costs through a one-time increase of 50 water accounting. percent. The incremental increases would be made through the existing water tariff Input Indexation Factor over a three-year period from 2020 to 2022 (Figure 13). These tariff increases should be based on sound analytical work examining their poverty and social impact along with mitigation measures for the poorest and most vulnerable households. 75. While WAJ is weaned off this interim subsidy, medium-term efficiency measures in the water sector would reduce the energy intensity of the sector and reduce non-revenue water. Replacing old inefficient pumps and introducing renewable energy into the water sector was a good start to reducing energy costs. However, there is interest from both the water and energy sectors to identify

Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic further synergies including: (i) directly connecting heavy loads such as water pumping stations to the grid; (ii) time of day pricing for water pumping; and (iii) increasing water storage to reduce the need for 24/7 pumping. All these and other synergies require detailed technical analysis and planning based on improved data on water sector energy use. Providing experts to facilitate dialogue would help speed this process up by generating a series of projects that could be outsourced as performance contacts. 76. Establishing an intersectoral committee MoWI, MEMR, MoAg at SG-level would facilitate actions such as optimizing energy-water linkages (e.g. time of day WATER AND WASTEWATER 30 tariffs) and implementation of water 31 substitution policy that generates treated wastewater for irrigated agriculture (Figure 13). While a ‘soft’ policy action, it is seen as necessary to breakdown the policy silos that exist in government that are holding back innovation and intersectoral synergy. This intersectoral III. ENERGY The 2019 PP contains a single project in the continues to impose an energy security related to these approaches need to be Downstream Petroleum energy sector for a total investment of JD 1,140 risk as well as a balance of payment the focus for Jordan’s priority investment (US$ 1,600) million. The project PP3 is the burden on the Jordanian economy. program over the next few years. Sector Fourth Stage Expansion of Jordan Petroleum Refinery Company since current production is 78. Jordan has emerged as a leader in 82. Downstream petroleum refining and not sufficient to meet the growing demand in the private-sector owned renewable energy supply business is largely commoditized. Jordanian market. The Assessment recommends in the MENA region. With more than 30 B. State of Sector Jordan drives its petroleum supplies from that this investment should be approached with existing and upcoming renewable energy Jordan Petroleum Refinery Company’s caution. The attractiveness of Fourth Stage independent power producers (IPPs), plant at Aqaba as well as from imports. Expansion project would be critically dependent Jordan has turned the energy security With no domestic production of crude oil, on securing Basra sweet crude through the crisis into an opportunity. The total Upstream Petroleum Sector Jordan is dependent on crude oil imports proposed Basra-Aqaba oil pipeline and finding a installed renewable energy capacity in via Aqaba port, where it receives crude strong strategic partner for the project. Jordan is expected to exceed 2,200 MW by 2020. Electricity from renewable energy 80. Import of fossil fuels imposes a significant oil as well as final distillates (diesel and Jordan should aim to reduce its dependence on projects already accounts for about 14 burden on the Jordanian economy. Unlike gasoline). With no specific strategic imported fossil fuels and leap-frog to greater use percent of the total power generated and its neighbours who have large fossil fuel advantage in the petroleum arena, Jordan of renewable energy (including for transportation) is set to achieve 20 percent by 2020. reserves, Jordan is dependent on import faces the commoditized supply of crude by leveraging its rich wind and solar energy However, sustaining the pace of progress of fossil fuels for all its non-power energy as well as processed fuels. As such the resources. Investments in Concentrated Solar in renewable energy development hinges needs, as well as for bulk of its electricity import dependence of the downstream Power (CSP); strengthening Grid-Interconnection on the Government’s ability to effectively generation needs. Jordan imports crude petroleum business does not pose a with neighboring countries (such as Egypt, Iraq, integrate larger amounts of variable oil, refined distillates, including gasoline strategic bottleneck to economic growth Saudi Arabia, Syria, Lebanon and Palestine); renewable energy into the grid. and diesel for transportation, and natural and business competitiveness of Jordan. battery-based energy storage systems; energy gas, which is imported through pipelines efficiency measures; and an expedited transition 79. Efficiency improvements in the energy as well as via the LNG terminal in Aqaba. to e-mobility are ‘clean and green’ projects that sector have been identified by the GoJ Import of fossil fuels imposes a significant need significant investments. as a priority to support economic growth burden on Jordan’s balance of trade, and job creation. This translates into the while exposing the economy to significant following: reduction in overall cost of energy security risks. electricity, increased grid resiliency to A. Growth and high share of variable renewable energy, 81. Jordan should leap-frog to use of domestic reduced dependence on imported fossil renewable energy for transportation and expedite transition to e-mobility. Oil shale

Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic Job Creation fuels, improved handling of excess contracted capacity, and a shift to more projects are often viewed as a strategic 77. Since 2015, Jordan has achieved a ‘green-clean’ energy. Specific approaches solution to Jordan’s critical dependence on strategic objective towards enhanced include: (i) setting up energy storage energy imports. Jordan is among the ten energy security. Following the revolution projects (hydro, thermal and battery largest oil shale endowed countries in the in Egypt, interruptions in Egyptian gas storage) for grid stability; (ii) adding world. Economic attractiveness of such supply, its sole source at the time for gas renewable energy capacity, which is projects is likely to face pressure from to operate power plants, forced Jordan ‘schedulable’ (concentrated solar power lower global crude oil prices, fast reduction to switch to more expensive and less - CSP) and can help in load shifting; (iii) in global renewable energy prices, and efficient diesel and fuel oil. This, along making transmission interconnections with transition towards e-mobility. Further, with higher energy prices, had significant larger grids (such as Egypt) for stability; oil shale projects are environmentally implications on Jordan’s balance of (iv) retrofitting conventional power plants harmful. Therefore, Jordan should payments leading to a 9.5 percent increase to allow flexible operation and shorter consider leap-frogging to renewable in imports and enlarging the trade deficit response time; (v) improved load despatch energy by leveraging local high-quality by almost 20 percent. In response, Jordan and control systems; (vi) renewable energy wind and solar resources. Investments in rapidly prepared and commissioned a forecast systems; (vii) smart-metering for concentrated solar power (or solar heat) Floating Storage and Regasification Unit self-generating consumers to shift from and energy storage systems, and a faster (FSRU) to be deployed in Aqaba. By 2015, net-metering to net-billing; (viii) faster transition to e-mobility can help transition ENERGY to domestic clean sources of energy. 34 Jordan began receiving Liquified Natural transition to e-mobility and investments 35 Gas via the FSRU in Aqaba establishing a in charging infrastructure; (ix) enhanced key objective in energy security. However, energy trade with neighbours for import of for the bulk of its primary energy needs cheaper piped gas and export of surplus for non-electricity sector, Jordan remains electricity; as well as (x) demand side dependent on imported fossil fuels. This management initiatives. The projects Electricity Sector a strong renewable energy sector, going Stage Expansion will be critical to still better policy measure would be to through three rounds of bidding process. achieve the minimum acceptable include the energy sector projects under The price of renewable energy has seen economic threshold for the project. the PPP law. 83. Jordan has a steady track record of a sharp decline across these three electricity sector reforms. As a result, rounds, with price of electricity from solar • The Jordanian Government is engaging 89. Additional reforms needed in the the country today has an unbundled, photovoltaic (SPV) projects dropping from closely with the Government of Iraq to electricity sector. These include (1) the single-buyer electricity market structure, $0.16 per kWh in 2013 (Round-1) to $0.025 secure crude (for transportation using introduction of cost-reflective wheeling an independent regulator, private sector per kWh in 2018 (Round-3), compared to an trucks initially), as well as to initiate charges for open access consumers (self- participation in electricity generation and average cost of generation paid by NEPCO the design of Basra-Aqaba oil pipeline. generation and third-party generation); distribution, and significant installation today of about $0.10 per kWh. However, a However, the pipeline itself may (2) restructuring of electricity tariffs to of renewable energy capacity. This large share of variable renewable energy take a long time to materialize. This rationalize cross-subsidy; (3) income- institutional set-up and asset base would make the grid unstable. Measures dilutes the business case for priority based targeting of subsidies for the remained strong despite the strains to enhance grid-stability and increase the investments in fourth stage expansion poor and vulnerable consumers; (4) caused by a major disruption in piped share of domestic schedulable renewable of Jordan Refinery, at least over the enhancing regulatory practices to meet natural gas supply in 2011 and the lack energy are needed to address this short term. global best practices; and (5) accounting of pass-through of the resulting fuel challenge going forward. and functional separation of NEPCO • Inadequate refining capacity does not into Strategic Business Units (SBUs) for price increases. The electricity sector has pose a critical bottleneck for Jordan’s since achieved cost recovery from tariffs greater transparency and performance economic growth or job creation. accountability. by developing the LNG port at Aqaba Refining margins are typically very thin to reduce fuel costs and by increasing C. Project Assessment globally and there is surplus refining tariffs under a structured plan. Further, an capacity available in many countries. 86. Project 1: PP3—4th Expansion of Jordan Automatic Tariff Adjustment Mechanism Further, Jordan does not have any Petroleum Refinery Company (JPRC): and a NEPCO Debt Management Plan were strategic advantage in this sector in adopted to ensure continued financial • The investment cost of project PP3 terms of having domestic oil resources, sustainability. Jordan has also been is estimated to be JD1,140 (US$ a large market, or technical knowhow continually taking measures to enhance 1,608) million. The project involves a to efficiently distil inferior crudes. its energy security. It has diversified LNG Fourth Stage Expansion to the Jordan imports across multiple supply contracts Petroleum Refinery, since current and signed agreements to obtain piped production is not sufficient to meet natural gas from Egypt and the Leviathan. the growing demand in the Jordanian D. Reform Needs Further, Jordan is rapidly developing its

Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic market. domestic energy resources, including 87. Integrated National Energy Strategy wind, solar and oil-shale projects to reduce • The viability of this project may be (INES) and Electricity Master Plan its dependence on energy imports. significantly enhanced by securing (EMP): There is a need for developing Basra sweet crude through Basra- an ‘Integrated National Energy Strategy 84. Relatively high cost of electricity has Aqaba oil pipeline. Therefore, in case (INES)’. The INES strategy should consider been identified as a bottleneck to faster Jordan and Iraq can make tangible least cost and risk responsive approaches economic growth. This is evident from progress on the Basra-Aqaba oil to address energy security concerns, prevailing high electricity tariffs for pipeline, an expansion of the refining strengthen business competitiveness business consumers and institutions. Many capacity may be considered to leverage and establish Jordan as a regional pioneer have opted to self-generate electricity the cheaper Iraqi oil. An earlier quick in the global transition towards more using solar photovoltaic systems, while assessment of the options ahead for sustainable and clean energy. availing the grid for capacity back-up, the Jordan Refinery identified two electricity-banking and balancing needs. main scenarios for the Fourth Stage 88. Mandatory competitive procurement of Jordan is making efforts to reduce the cost Expansion. In the scenario of low- all energy sector projects: Many of the of electricity by securing cheaper piped cost secure supply of Iraqi crude via projects in the energy sector have been gas from Egypt and other sources, as well the pipeline, the study projected that bilaterally negotiated and awarded. as by developing more domestic wind and the expansion would be inherently These projects could involve suboptimal ENERGY solar energy resources. In addition, Jordan project selection, design, pricing and risk 36 attractive, as Zarka will enjoy a US$ 37 is planning policy actions to address large 4 per barrel inland differential worth allocation. To address this problem, the cross-subsidy in tariffs, which results in US$ 170 million annually or US$ 1 World Bank has suggested that MEMR substantially high tariffs for businesses. billion NPV. However, if this crude and EMRC are mandated under a cabinet directive to adhere to competitive selection 85. The success in securing large quantities supply scenario does not materialize, aggressively optimizing the Fourth for all future energy projects following the of renewable energy is now posing a global best practices in procurement. A concern for grid stability. Jordan has been extremely successful in developing IV. Transport The 2019 PP contains 2 separately classified and create long term employment in to have been subjected to harassment. 96. The refuge-induced abrupt population projects in the transport sector for a total maintenance for roads, and in operation In this context, when only 14 percent of growth and associated rise in demand investment of about JD 242 (US$ 341) million. and maintenance for airports, ports and women are currently involved in the labor for transportation was difficult to The King Hussein Bridge (PP36) is assessed as railways, as well as related services. force in Jordan as compared to 19 percent meet by a corresponding development a priority for the short term, while Marka Airport average for Middle East and North Africa, in public transportation, resulting in (PP27) is assessed as needed for the medium 92. Jordan has the potential to be a major there is an obvious association between reduced public transport infrastructure term. These projects can be implemented by trade and transport hub. Jordan has a enhanced transport services, women’s and limited transport network. There are the private sector following the application of geostrategic location and can be the mobility and labor market outcomes, with several government initiatives including key sector reforms with minor public-sector gateway between Asia and Europe, as well the latter being the cornerstone of Jordan’s the development of a Bus Rapid Transit investments. The Assessment also finds that as Turkey and the GCC. Jordan played a key reform agenda. (BRT) within Greater Amman Municipality indicated investment costs for both projects role in regional trade until the beginning (GAM) and extended to serve commuters are reasonable. One additional project, the of regional turmoil, the resultant closure from Zarqa, the second largest city in the Amman Development Corridor Phase 2, is of the borders with Syria and Iraq and the Kingdom. Public transport strategies are suggested as a priority that can be implemented imposition of stringent border crossing B. State of Sector also being developed for Irbid, Madaba, within the coming few years as a Public Private regimes with Saudi Arabia. These Zarqa and Salt with a clear implementation Partnership (PPP). measures had a toll on the Jordanian 94. Investments in transport infrastructure program. These programs also aim to economic activities in general and on the are needed to align with international coordinate the transport services, which logistics and freight industries in specific. comparators of middle-income countries. are currently limited to buses and taxis While the transport and logistics sectors Despite Jordan’s investment of about US$ operated by small sized companies and A. Growth and can play a major role in the development of 1.7 billion over the last 5 years, it remains individuals. They will also contribute new export opportunities and reduction in less than 1 percent of GDP annually, to alleviating longer, more expensive Job Creation import costs, transport infrastructure is the compared to between 1 and 3 percent of trips and unreliable and uncoordinated backbone on which transport and logistics GDP in middle income countries. Such schedules, for many underserved urban 90. The transport sector11 contributes to over services operate. Competitiveness and investments require adequate financial and peri-urban areas. 10 percent of GDP while employing about efficient logistics services are key for allocations for maintenance to sustain 7.2 percent of the work force. The transport enhancing manufacturing and trade, as the longer-term benefits. The neglect sector has consistently shown that it well as associated employment. of such allocation will likely result in can be a major creator of employment increased future costs as for every US$ 93. Improved public transport will likely C. Project Assessment opportunities in Jordan, especially for 1 spent in routine maintenance, US$ 3 to result in reduced household expenditures the disadvantaged and low-skilled (truck 4 are saved in road rehabilitation cost. 97. Project 1: PP36 – King Hussein Bridge and an enhanced labor force that will be drivers, taxi drivers, workers at the Moreover, this will cause an increase (KHB) crossing terminal and truck yard

Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic more accessible to women and youth. Poor airports, construction worker etc.). It can in the cost of movement of goods and households’ expenditures on transport also be a major contributor to increasing people as they access services. It will • The investment cost of the project were about 15 percent of the total in 2010,12 female participation in the labor force. also cause a deterioration of traffic is estimated to be JD 100 (US$ 141) and this has certainly increased after the safety and an increase in traffic related million. KHB crosses the Jordan River 91. Investments in key transport removal of fuel subsidies. The fragmented injuries and fatalities. As infrastructure and connects Jordan to the West infrastructure including roads, airports, public transportation is resulting in development requires substantial budgets Bank, serving as the sole international ports and railway should be looked at longer and more costly trips, impacting in construction and then recurring budgets entry/exit point for close to 3 million with a broader lens to understand the women in particular due to their childcare, for maintenance, and taking into account Palestinians living in the West Bank and importance of the economic, public safety household responsibilities and associated the fiscal situation in Jordan, PPPs are a East Jerusalem. KHB also processes a and environmental benefit. In addition travel patterns. It is also impacting youth solution for developing new infrastructure, significant amount of trade in and out to providing enhanced local and regional and it represents, on average, about and then operating and maintaining it for a of the West Bank given that it serves connectivity, and creating short term 23 percent13 of employed youth salary. long period of time. West Bank businesses that import and jobs during construction, key transport On another note, women tend to avoid export to and from Jordan and the wider infrastructure leverage additional public transportation due to personal 95. Despite progress in recent decades, region (to Aqaba Seaport, Queen Alia economic activities. Moreover, benefits safety concerns; about 40 percent14 of the Jordan has not enjoyed full benefits International Airport (QAIA), GCC, etc). would be extended to public safety and in surveyed public transport users reported due to inefficient and costly freight particular to traffic safety, reducing loss transport sector. The closure of the • The current KHB facility has become Transport of life and economic losses associated borders with Syria and Iraq, as a result inadequate and is no longer capable 12 Review of the Transport Sector of the Hashemite of handling the increased number 40 with fatalities and injuries; economic and Kingdom of Jordan, World Bank, 2014. of the heightened security, has resulted 41 environmental benefits would also be in a decrease in demand for the trucking of passengers (2.6 million people 13 USAID, International Youth Foundation, and the traveled through KHB in 2017) secured from relieving traffic congestions Ministry of Social Development, 2014, Transport industry, and hence an excess supply. and associated losses from travel delays. Services and their Impact on Youth Employment and Several actions have been introduced and cargo volume (60,000 loaded In fact, these investments stimulate Development in Jordan. to safeguard the sector and in particular truckloads passed the bridge in 2017) flows. The implementation of PP36 local economies, reduce costs of trade 14 USAID, International Youth Foundation, and the the truckers’ livelihoods, but this has Ministry of Social Development, 2014, Transport impacted competition and cost. 11 Including aviation, public transport, marine, railways Services and their Impact on Youth Employment and and roads Development in Jordan. will enhance the efficiency and reduce • Considering the limited capacity • The ADC Phase II is a continuation of • Enhancing the mobility improves the processing time to enter and exist and resources for large scale project Phase I; it is a 50 km highway linking productivity, and therefore boosts Jordan to the West Bank. implementation, it is suggested the Airport Road to Jerash Road and the interest of foreign companies in to focus in the coming two years going through Dead Sea Road and Salt establishing offices in Jordan. The • KHB modernization and privatization on enhancing key priorities in the Road. It will divert traffic away from Urban Transport Project also creates will create sustainable employment for transport sector, mainly freight the center of Amman and reduce traffic an opportunity to establish a private both high skilled and low skilled labor transportation and logistics as well congestion and pollution along the sector bus leasing company that in logistics, IT, handling, security, as public transport as they have direct primary urban corridors. In addition, supplies modern and environment services and ancillary activities. impact on jobs and growth in the ADC Phase II is expected to generate friendly bus fleet, reducing health and • It is expected that investors (national short term. similar benefits of the existing Phase 1. medical related expenditures. and international) will be interested • In the medium term, Marka Airport • This corridor will facilitate movement • The implementation of the Urban in investing in this border crossing. can contribute to a reduction in of goods from factories in Irbid, Salt Transport Project might require Similarly, this can be a first example the cost structure through the and other locations in North West investments in infrastructure, and of a PPP in border crossings in Jordan, introduction of low-cost airlines and Amman towards QAIA, Aqaba Seaport short-term government support to and can be replicated on the borders through streamlining procedures for and other border crossings with public transport operators. However, with Iraq, and then potentially with transport of goods. It can potentially neighboring countries. this project should be sustainable Syria and Saudi Arabia. be an enabler for increasing exports. without any public-sector contribution • This project will likely require public • The historic growth track record is very Investments by low cost airlines and in the long term, while providing logistics companies attracting foreign sector investments for expropriation economic and social benefits. strong, and this is occurring despite and possibly to cover a proportion of the fact that trucks and bus passengers direct investment can be envisaged for the PPP. the construction cost. • An estimated budget for each are usually spending long hours governorate is being studied by EBRD. moving across the borders. Unless • As Marka Airport’s objective is to • The implementation of the ADC as Based on their preliminary assessment, there are major geopolitical changes attract low costs as well as freight a PPP would be a first step towards the costs of implementation for the in the region, the traffic is expected to transportation, and as QAIA hasn’t implementing tolling in Jordan and will cities of Irbid, Madaba and Zarqa is continue growing, especially with an reached its capacity, the impact on serve as a pilot for the government as 30 Million JD in fleet, 29 Million JD in enhanced travel experience. growth will not happen immediately well as for users. This will secure the infrastructure development and 0.5 after implementation, and sustainable financing to maintain the Million JD for the ticketing system. • Two major success factors for the key transport corridors. project are: (i) ensuring a reasonable sustainability without public support For the city of Irbid, the needed allocation of risks, and (ii) ensuring a will be moderate in the first few years. 100. The team also recommends the investment is 16.5 Million JD for the

Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic renewal of buses, and 14.6 Million for good structuring of the PPP agreement. • The estimated investment cost of prioritization of the Urban Transport Project. infrastructure development. • Necessary political enabling measures JD 114-119 (US$ 161-168) million is must be in place for this investment to reasonable for an existing airport • The Urban Transport Project is clearly pay off. which needs to be rehabilitated and a strategic priority for Jordan as it has modernized. a significant impact on the economy D. Reform Needs • The estimated investment cost of 99. The team also recommends the as well as mobility and access to JD 100 (US$ 141) million for the 101. Reforms are needed for enhancing prioritization of Amman Development employment and services. The lack of development of King Hussein Bridge the quality of the road infrastructure Corridor (Ring Road). an adequate, reliable and affordable and its related infrastructure seem to public transportation is weighting on in Jordan, and reducing future costs be reasonable. • The Amman Development Corridor the household expenditures and is for rehabilitation. These include: (i) 98. Project 2: PP27 – Marka Airport (ADC) has a total length of 118 km hindering the employability of women promoting PPPs for the development of out of which a first phase of 40 km and youth. key trade corridors; and (ii) introducing • The investment cost of the project is has been built between the Airport routine maintenance (Performance Based estimated to be JD 114-119 (US$ 161- HWY and Zarqa. This development • This project is expected to have long Contracts) to preserve the value of the 168) million. While the development has proven to have a very successful term economic and social return. assets, and generate opportunities for of the Marka Airport is potentially a impact in terms of reduced travel time The economic benefits are mainly: regular employment over an extended good project, it is not yet considered and cost, enhanced access to jobs and (i) reduced costs of transport, (ii) period of time. Transport a priority. In fact, Queen Alia enhanced productivity. In addition, reduced travel time, (iii) reduced 42 102. Reforms in the freight transportation and 43 International Airport (QAIA) currently jobs have been created along the costs of congestion, (iv) reduced logistics are needed to support reducing services 7.6 million passengers and corridor catering to the poor residents costs of environmental impact, (v) costs on the key trade corridor Aqaba- has the capacity to serve up to 12 living on the outer skirt of Amman and enhanced efficiency of workers, and Amman. These include: (i) updating and million passengers, expected in 8 to has opened up inexpensive vacant (vi) creation of sustainable jobs in the revising the current incentives for fleet 10 years’ time. land for investment and development. public transport industry. This project will also allow for better mobility and renewal, and implementing a scrapping access to jobs, education and health program based on global best practice; facilities. (ii) carrying out competition advocacy activities with associations along the transport & logistics value chain; (iii) enhancing the way bill; (iv) relaxation of regulations that are designed to spread demand between more operators than are needed; and (v) eliminating minimum prices for trucking services. 103. Reforms in the Public Transport Sector are needed to enhance the accessibility and employability of women and youth. These include: (i) piloting new public transport service agreements with consolidated operators to ensure KPIs on quality, safety and reliability of service; (ii) revising the fare structure in the view of implementing an integrated fare collection system including flexible ticketing system for off- peak and multiple use to accommodate travel patterns of women and operation subsidies for poor and vulnerable group of population; and (iii) renewal and modernization of buses could also be facilitated through the creation of a privately-owned bus leasing company, considering the introduction of electric clean energy buses (CNG, LNG, or Electric to benefit from the excess electricity supply by 2020). Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic Transport

44 45 V. INFORMATION AND COMMUNICATION TECHNOLOGY The 2019 PP contains a single classified project in and using digital infrastructure to strived to develop internet infrastructure the information and communication technology increase work efficiency, improving to make way for the robust diffusion of C. Project Assessment sector for a total investment of about JD 100 work mechanisms and promoting socio- technologies to all sectors, undertaking 110. Project 1: PP34 – Jordan National (US$ 141) million. This project (PP34) proceeds economic development.16 projects such as the National Broadband Broadband Network (NBN) with the rollout of a nationwide fiber-optic, Network. For these reasons, new high-speed network in support of e-learning, generations of innovative entrepreneurs • The investment cost of the project e-health and governmental e-services. PP34 is are continually emerging and coming up is estimated to be JD 100 (US$ 141) assessed as a priority and, under a PPP set up, B. State of Sector with more out-of-the-box ideas suited for million. This project finalizes the can immediately commercialize current spare the region. rollout of a nationwide fiber-optic high- capacity and significantly expand the network to 106. The potential of technology-enabled speed network, originally designed to 108. Jordanian mobile and fixed broadband provide commercial wholesale services to other services is still largely untapped in connect all public educational entities, connections are adequate compared to the service providers. Jordan and may significantly contribute governmental entities and healthcare Arab region, however there is still room for to increasing export revenues. Political entities, and aimed at supporting the development to catch up with developed stability, proximity to the Gulf Cooperation introduction and enhancement of economies in Europe and the US. While Council (GCC) market, bilingual university e-learning, e-health and governmental the usage of internet by individuals in A. Growth and graduates, good infrastructure, tax e-services. Completion of the NBN Jordan (53.4 percent) is above the global exemption on sales, and custom rollout is expected by 2021 and in Job Creation average (44 percent), internet speed is exemptions on imports are competitive its final stage will feature 3,268 below; in June 2018, average download advantages for the Jordanian market. To connected entities, 2,840 km of ring 104. With a GDP contribution worth around 12 speed in Jordan was 14.4Mbps, compared leverage the competitive advantages of fiber cable, 4,200 km of access fiber percent, information and communication to 23.5Mbps globally. Jordan also has Jordan, key global businesses moved cable and 130 Aggregation Sites. technology (ICT) has witnessed their operations to invest and serve the a fixed broadband download speed significant growth over the years, MENA region out of Jordan. Examples (21.6Mbps) that is lower than the global • Since the NBN holds significant excess becoming an increasingly strategic sector of these businesses include Amazon, average (46.1Mbps download average capacity the Government is evaluating for the economy. The services sector is the Cisco, Microsoft and Expedia, all of in June 2018). Meanwhile, more than options to commercialize this spare main source of employment opportunities which recruited hundreds of highly 75 percent of Jordan’s population have capacity through a PPP. The envisaged for Jordanians, generating 60 percent of qualified Jordanians and trained them to access to mobile broadband (Q4 of 2017). PPP setup will continue to provide the around 54,000 new jobs (net) created deal with complicated cases around the Internet penetration reached 87.8 percent connectivity and security services in 2017. In 2016, 4.7 percent of total globe. Private companies specialized in in Jordan, which is way above the Middle to the Government, which will be exports (amounting to US$ 648 million) information technology outsourcing (ITO) East average of 64.5 percent17. Jordan provided free of charge. The PPP can was also attributed to the ICT sector. A year and business process outsourcing (BPO) is classified as a Fast Grower market immediately commercialize current Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic earlier, in 2015, IT revenues reached more have expanded their operations in Jordan by GSMA. spare capacity and, with limited than US$ 600 million, while the telecom over the last decade to service regional incremental investment, significantly 109. There is currently a private fiber-optic sector’s total revenues reached more than and international clients. Key examples expand the network to provide MPLS network owned by GoJ, designed US$ 1.35 billion. include Aspire, which is specialized in commercial wholesale services to other for the connectivity of all governmental ITO services and targets the US market service providers. The service portfolio 105. The Hashemite Kingdom of Jordan entities to serve more than 4,000 nodes (retains 275 Jordanian employees); includes national and international identified digital development as a high governmental institutions and entities Extensya, which provides support to leased lines and connectivity services, priority for the country’s social and across all areas of Jordan. The GoJ already Vodaphone, Saudi Airline, MBC and others mobile backhaul, fiber-to-the-home economic development. Jordan formulated invested $US 200 million in a 6500 km (retains 1700 Jordanian employees); and connectivity as well as Value-Added- a comprehensive digital economy country-wide fiber-optic MPLS network Crystal, which is a call center that supports Services. strategy, Reach 2025,15 with a vision to with a 10 Gb/s DWDM optical ring structure regional operation (retains 1000 Jordanian “have a digital economy that empowers and point-to-point Giga Ethernet (GE) employees). • The PPP is expected to invest an people, sectors and businesses to raise over fiber link technology to provide high additional JD 100 (US$ 141) million productivity and ensure growth and 107. With a growing pool of talented Jordanians availability and sufficient scalability for over 10 years. Revenues are projected prosperity, creating a highly attractive and relatively low running costs, Jordan future use. to reach JD 45 (US$ 63.5) million per business destination for investments is regarded as an ideal testing ground year and EBITDA margin will reach and international partnerships.” Jordan for any startup. Home to more than 600 40 percent. The expected NPV is JD INFORMATION TECHNOLOGY COMMUNICATION AND also committed to the launch of the tech companies, of which at least 300 are 22 (US$ 31) million with an IRR of 13 48 World Economic Forum “Internet for All startups, Jordan continues to leverage its percent and a payback period of 10 49 Initiative.” This initiative aims at ensuring close-knit network of partners to promote years. The largest portion of revenue inclusive digital development and focuses the country as an ideal location to launch contribution is projected to come from on creating opportunities for economic a business. The country has continuously wholesale fiber access services (53 growth and jobs across the Kingdom. percent) followed by mobile backhaul It also focuses on digital government (24 percent), Value Added Services (16 16 https://english.aawsat.com/mohamed-al-daameh/ percent) and Leased Lines (7 percent). business/technology/world-economic-forum- 15 http://www.reach2025.net/ launches-internet-initiative-jordan 17 Source: Internet World Stats. D. Reform Needs

111. To broaden the base of digital economy in Jordan, the Government has set an action plan (Reach 2025) to transform Jordan into a digital economy, creating a highly attractive business destination for investments and international partnerships. The Ministry of ICT has started initial steps in implementing the digital economy action plan by working on the following reforms: i. Approving the lease-out of the NBN through a PPP model; ii. Enacting the Data Privacy Law to enable access to unclassified data for businesses; iii. Championing digital payments by implementing a new policy that transforms all national aid, bread subsidies, transport, and health payments into digital modes during by end of 2019; iv. Leading a participatory approach to identify and tackle legal and regulatory constrains facing entrepreneurs, and v. Coordinating with relevant entities

Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic to enable digital ID and e-KYC implementation. INFORMATION TECHNOLOGY COMMUNICATION AND

50 51 VI. Education The 2019 PP contains a single education project aspirations through reform of educational in 2017 to reform the curricula starting with on the relationship with the private sector, for an investment of about JD 88 (US$ 123) content and targeted teacher professional the introduction of new science and math in addition to financing skills development million. The project (PP70) is a pilot to construct development. curricula in Academic Year 2019/2020. in critical sectors and in lagging regions. 15-20 schools through the private sector using a Build, Finance, Operate, Maintain and eventual 114. Education sector is essential to close 117. The Jordanian education system has Transfer (BFOMT) model. This would be in the skills gap in the labor market. The shown great resilience by absorbing support of the Jordan Schools Program to build Jordanian education system, including a large number of Syrian refugees in C. Project Assessment up to 300 new schools over the next decade. The higher education and Technical and public schools. Jordan has enrolled more Assessment finds that the project is aligned with Vocational Education and Training (TVET) than 130,000 Syrian refugee children 120. Project 1: PP70 – Support to the Jordan the strategic objective of improving the physical can support growth through a stronger in public schools as of December 2018, Schools Program to build up to 300 new learning environment in Jordanian schools. alignment between skills and labor market which corresponds approximately to 10 schools over the next decade under a PPP It is one of several initiatives the Ministry of needs. A new TVET law is currently being percent of the public education student scheme discussed in Parliament. population. The increase in enrollment has Education is currently engaged in to leverage • The investment cost of the project is public-private partnerships to improve access exacerbated a supply shortage of public schools and increased overcrowding in estimated to be JD 75-100 (US$ 106- to education. A thorough comparative analysis 141) million. The proposed project focused on education outcomes and cost- classrooms, leading to the operation of B. State of Sector an increased number of second shifts in is a pilot to construct 15-20 schools efficiency is recommended to be conducted prior through the private sector using a to scaling up, considering the implications on schools and the reliance on rented schools. 115. Jordan has made great strides towards These factors are major obstacles to the Build, Finance, Operate, Maintain and public finances. The estimated investment cost improving education services to all eventual Transfer (BFOMT) model. The of PP70 is assessed to be high. Jordanian Government’s efforts to improve children. In 2016, the 10-year National the learning environment in public schools MOE is expected to provide land for Human Resource Development Strategy and consequently the student learning schools and teaching services while (NHRDS) was launched and the Ministry of outcomes. For example, double shifts in the private sector will be responsible A. Growth and Education (MOE) translated the strategy schools constrain instructional time for for financing, building and providing into an Education Sector Plan (ESP), students in both shifts and large class non-pedagogical services (i.e. Job Creation finalized in 2018 with broad support sizes make the school environment less facilities management) under a long- from local and international partners conducive for learning. The Government term concession contract. 112. Investment in human capital is critical and donors. The strategy targets critical of Jordan estimates that in order to meet • The project is aligned with the overall for increased productivity and growth. elements in development including equity, the demand for education services, it strategic objective of improving Based on Jordan’s Human Capital Index increased efficiency and sustainable will need to construct 600 schools in the the physical learning environment (HCI), a child born in Jordan today will growth through investment in human coming decade. through replacement of second Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic be 56 percent as productive when capital. It also builds on significant shift and rented schools and the they grow up as they could be if they achievements accomplished by Jordan 118. Jordan has been working on innovative reduction of class sizes, particularly enjoyed complete education and health. during the past two decades in ensuring tools for leveraging the private sector in the most vulnerable regions of Investments that would lead to increases near universal enrollment in primary for improvement in access to education. the country. Still, it is imperative to in learning outcomes are critical to higher education. Through support from the World Bank utilize limited resources on quality of productivity for the Jordanian labor force. Group, the Government of Jordan is 116. Jordan is committed to investing in human education investments by prioritizing This is true especially so for men since conducting several technical assessments capital starting with the early years. investments in early childhood boys are approximately one year behind for different models of public-private The NHRDS recognized the importance education, teacher professional girls in terms of learning-adjusted years partnerships for the provision of of investments in Early Childhood development, school leadership of schooling. education services. These include the use Education (ECE), where enrollment in of impact bonds as financing instruments, strengthening, and quality assurance 18 113. The education sector is a key enabler Jordan is still low , leading to poor school the introduction of vouchers for private and accountability systems. Quality for greater female labor participation. readiness, particularly for children from schooling, the reform of licensing improvement reforms are critical Despite higher learning outcomes for girls poor households. Since 2016, the MOE requirements for private education for the project to have an impact on than boys, female labor participation in has opened new Kindergarten 2 (KG2) providers, and the construction and growth and productivity. Jordan is extremely low (at 14 percent classrooms raising enrollment in KG2 operation of schools by the private sector • Given the limited fiscal space, it is in 2018) preventing the country from by 3 percentage points as of December prior to the transfer of those schools to the

essential that the technical assessment Education leveraging a significant part of its 2018. The MOE has also been working government. and the pilot be accompanied population for stronger economic growth on improving foundational literacy and 54 with an evaluation component for 55 and productivity. The education sector numeracy skills of primary school children 119. Jordan is committed to reform TVET outcomes, including cost-efficiency. in Jordan can support in unleashing this through the Early Grade Reading and Math to increase alignment between skills There are several impediments to the potential through: (i) the expansion Project (RAMP). A new National Center for development and labor market needs. sustainability of the proposed project, of early childhood education, which Curriculum Development was established A new law is being drafted for reforming including the lack of availability of provides both skilled jobs for women and TVET, which will place a larger emphasis land for construction and the teachers’ childcare options for working women; recruitment and management and (ii) stronger support for girls’ careers 18 Enrollment in ECE is at 65 percent for 5-year-olds, 15 percent for 4-year-olds and 6 percent for 3-year-olds. practices in the public sector. Jordan is planning to launch in the coming two at the service delivery level; and (iii) years, several initiatives focused on establishment of a feedback loop allowing Annex A increasing access through partnership for evidence-informed policy making at all Priority Projects for Jordan with the private sector. In addition levels of the system. to the project proposed, a technical assessment for an impact bond 122. Reforming teachers’ recruitment, D management and professional targeting access to early childhood P development practices is required for Government education is being undertaken and contribution delivery of quality education services. his Infra- S network.

is expected to be completed by M in a 6500 . T The need to expand access to education L o government M June 2019. Moreover, the Ministry he GoJ already T invested about J 120 km country-wide fiber-optic I PM Government contribution includes land use/existing infrastructure. structure will be allowed to be used by the private sector in a PPP model. And committed to continue additional 500 K N contribution of Education is procuring technical to all children has put pressure on the assistance to conduct a feasibility Government of Jordan in the past to recruit Median Investment large numbers of teachers, negatively size (Million JD) 100 200 study for different types of voucher if applicable 1,140 systems as one of many potential impacting teacher performance which PPP solutions being considered. It is current professional development Investment size (Million JD) 100 200 essential that a comparative analysis mechanisms are insufficient to offset. A 1,140 of all these instruments is conducted particular focus should be on recognizing before scaling up, especially that all and incentivizing high performance. USAID readiness assessment /A of them carry a burden on the public The MOE has been working toward /A In market but contracts have not been awarded N N finances in either the medium or long- reforming these mechanisms through the term. development and implementation of a comprehensive and integrated National GoJ readiness Level 4 Level 4 Level 4 • The investment cost of the project Teacher Policy and Strategic Framework is proposed to be JD 75-100 million, (NTPSF), which outlines policies for M with a median cost of JD 88 (US$ 124) teacher preparation, selection, utilization, M million for the construction of 15-20 development, performance evaluation and schools as a pilot. The costing seems career path. to be higher than the benchmark, as etroleum initial cost estimates for one school 123. Establishment and adoption of a depending on the location, size, comprehensive school maintenance system is needed for the sustainability design and structure, were around Description/notes Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic JD 2.1 (US$ 3) million, leading to an of infrastructure investment in the M per day). Additionally, the overall estimated cost of JD 43 (US sector. The existing maintenance system $60) million for 20 schools. does not support schools in preparing maintenance plans and conducting M per day (i.e. additional treatment

• Given that the project is one pilot preventive maintenance. In many cases, amra treatment plant from 365,000 C among several different initiatives there are also significant differences S exploring private sector solutions in how girls’ and boys’ schools are T is allowing it to be used by the private sector oIC W capacity and will serve the adjacent unserved he government has invested in around 7000 K andboxing other and value added services. efinery, since current production is not sufficient to efinery to cover most of the local demand, and this efinery. he project aims at ensuring inclusive digital he objective of the project is to expand the capacity he opportunity of converting the low value heavy he objective is to expand the Jordan P T development and using digital infrastructure to increase work efficiency, improve work mechanisms, promote socio-economicand development. T of fiber optical cable laid around the Kingdom that M to 465,000 C capacity of 100,000 C T of the As- project will establish a solar power plant with 10 M communities with wastewater networks. to create a whole sale operator through a PPP model which should: • Allow Broadband internet nationwide and reach the untapped market. • Increase the overall internet speed by providing fiber connectivity. • Allow the Mobile operators to use the already made investment to be their shared infra-structure to make investment efficient. more their • Provide additional services on top of the connectivity services on scale, where security, S R meet the growing demand in the Jordanian market. T fuel oil to more valuable products will allow the R is the basis for the fourth expansion project of the R to the school supply shortage, it managed and maintained. Moreover, T is recommended that the pilot size the large increase in enrollment driven be limited to 15-20 schools and the in part by the Syrian refugee crisis has costing be closer to the initial estimate exerted significant strains on schools’ Source lan 2018- lan 2018- conomic of JD 43 (US$ 60) million. infrastructure. For example, the average conomic Cabinet list of current projects Cabinet Jordan Jordan E Growth P 2022 Jordan Jordan E Growth P 2022 number of maintenance requests from schools to the MOE has increased by 8.8 percent in the three‐year period of D. Reform Needs Entity 2013–2015 compared to the 2010–2012 ineral

period, and total spending by the MOE on nergy inistry of inistry of Water inistry Annex A esources echnology M Information and Communications T M Irrigation/and Water Authority Jordan of 121. Strengthening the quality assurance and maintenance has nearly doubled over this M of E and M R 56 accountability system in education is same period. An improved maintenance 57 vital for driving improvements in learning system is currently under development at outcomes. This system would encompass Project name

the MOE and will include a reformed legal amra both the public and the private education PR C) etwork ational ational xpansion etroleum framework allowing higher autonomy and efinery Jordan Jordan N Broadband N As S treatment plant (third phase/ second expansion) sectors and would support: (i) setting up responsibility to schools in maintaining 4th E of Jordan P R Company (J of quality standards and benchmarks for 34 3 and upkeeping their premises Project ID 19 PP PP all stages of education; (ii) measurement PP of education and learning outcomes Priority # 1 3 2 Government Government OF contribution contribution /A /A cope for Government Government contribution includes land use/existing infrastructure. S additional contribution has not been determined yet Government Government contribution includes use of water assets/ infrastructure N Government Government contribution include may a sovereign- guarantee through M N

Median Investment Median Investment size (Million JD) size (Million JD) 1,100 35 60 47 if applicable if applicable 125

Investment size Investment size (Million JD) (Million JD) 1,100 35 50-70 47 100- 150

USAID readiness USAID readiness assessment assessment /A Level 3 Level 3 N Level 3 Level 2

GoJ readiness GoJ readiness Level 4 Level 4 Level 4 Level 4 Level 4 isi roject, reatment um/ D lant to the south of egional P ain Water Conveyance roject will include

Description/notes Description/notes W contract under a O plant and conveyance to the /year of additional water his approach will start in he capacity will be 25,000 m3 M C M per year everse Osmosis P W to reduce operational costs ea. hase II/ Component 2 will include roject Components – R Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic C ) of the water hese flows will be obtained from the ed S ) due to odor, traffic and pollution and isi Wellfield systems with associated ea; as well as a solar power plant with a he proposed new replacement septic tank TP TDS ead S um/ D isposal Facility)isposal ystem rivate investment. T hase Component I/ 1 of the P he projects consists of: his project is different from the R he project aims to develop appropriate techniques he objective of this project is to construct a new he objective of the project is to expand a key land he objective of the project is to construct a water S • Constructing a pipeline to transfer the brine to the D however interfaces exist between both (Brine D T • Drilling wells 10 (500 meters deep) in Hisban area to provide 20 M • Constructing a water treatment plant to treat the salinity ( • Constructing a water pipeline to deliver the water to pump station 2 of the Zara M capacity M of 15 P the R collection piping and conveyance transmission to Amman; while P the sea water intake, R wellfield area. T to Amman. T identified two P Wellfield and a R Aqaba the R T to reduce physical and commercial water losses in Amman through the preparation and implementation of a performance based NR hybrid financing modality grants including and P Amman Governorate but will be rolled out to other governorates. T septic tank facility to replace and relocate an existing facility currently co-located at Ain Ghazal T plant (AG capacity concerns. T per day. T facility will be located at Al Ghabawi and is intended to serve the unsewered areas of Amman, Zarqa and the surrounding area. T crossing for passengers and freight between Jordan and the West Bank. T conveyance system to enhance the Kingdom’s national water security by producing potable water through desalination at the Gulf of Aqaba and transferring M 150

Source Source inistry of OF PPP nit lan 2018- lan 2018- lan 2018- lan 2018- conomic conomic conomic conomic Jordan Jordan E Growth P 2022 Jordan Jordan E Growth P 2022 M Water and Irrigation Jordan Jordan E Growth P 2022 / IFC Jordan PPP Facility concept note / WB document/ M U Jordan Jordan E Growth P 2022

Entity Entity inistry of Water inistry of Water inistry of Water inistry of inistry of Water ublic Works & M Irrigation/and Water Authority Jordan of M Irrigation/and Water Authority Jordan of M Irrigation/and Water Authority Jordan of M P Housing M Irrigation/and Water Authority Jordan of / W) M Annex A C ank NR C

Project name D Project name 58 59 ational ational on- ational ational eptic T roject roject) roject roject roject) evenue eduction N Aqaba- Amman N Water Conveyance P (AAW Y ear Hisban Hisban brackish water desalination 10-15 M Al Ghabawi Wastewater S P ( N R Water ( R P Facility P King Hussein Bridge crossing terminal and truck yard P 36 18 21 23 Project ID Project ID 20 PP PP PP PP PP

Priority # Priority # 4 6 5 7 8 Annex B Priority Projects Assessment Framework

Government Strategic Assessment contribution /A /A Score Score N N 1- In Your View, Is the Project a Strategic 1e- How Likely is it that The Project Will Median Investment Priority for the Sector? Contribute to Increasing Exports size (Million JD) 116.5 if applicable 87.5 Resounding yes Y Very likely Y Investment size “Good to have” but not a priority E (Million JD) 114- 119 75- 100 No N Not likely N

USAID readiness I don’t know/don’t have enough information D I don’t know/don’t have enough information D assessment /A level 2 N Score Score GoJ readiness 1b- How Likely is it that the Project Will 2- Does the Project Belong to an Official Alleviate Significant Supply Bottlenecks In Sector Strategy/Plan? Level 4 Level 4 the Sector or Industry

Very likely Y Yes Y Not likely N RD was arka Civil B No N Not relevant L he expansion will

RD will provide I don’t know/don’t have enough information D I don’t know/don’t have enough information D B

Description/notes Score Score transaction, including 1c- How Likely is it that The Project 3- Is the Project an Appropriate Technical Will Help Reduce The Cost Structure Solution to the Challenge Identified? Significantly In the Sector or Industry Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic he agreement with IFC and E he project will serve regular low-cost

ec. 2018. 6000 students are expected to Very likely Y Yes Y rogram, which entails building up to 300 Not likely N No N chools P he project consists of the expansion of M he aim of the project is to support the Jordan he IFC in partnership with the E Not relevant L Airport as well as the rehabilitation of its existing terminals. T flights, commercial flights in addition to charter flights and offer aviation training. T increase the airport’s capacity to host up to 2 million passengers in the future. T T S new schools over the next decade under a PPP scheme. T advisory services to GoJ to assist in the design and implementation PPP a of undertaking structuring,and diligence due identify to and select a private sector participant to implement the project. T signed in D benefit from project. the pilot I don’t know/don’t have enough information D I don’t know/don’t have enough information D

Source Score s / WB lan 2018- conomic 1d- How Likely is it that The Project Will document document / Cabinet list of current projects Jordan Jordan E Growth P 8 2022/ PPP IFC Jordan Jordan IFC PPP Facility concept note Help Attract a Significant Amount of FDI in The Sector Concerned or In Upstream or Downstream Sectors

Entity Very likely Y inistry of inistry of ducation ransport ender documents ready by end of 2019 T M E M T Not likely N

I don’t know/don’t have enough information D Annex B Project name 60 61 arka chools upporting rogram. S the Jordan S P Build 15 schools using PPP model M Airport 70 Project ID 27 PP PP

Priority # Description of GoJ level of readiness Level 4 10 9 Assessment for Growth, Employment and Inclusion Feasibility Assessment

Score Score Score Score 4- Timing of Potential Growth Impact of 7- “Good Job” Potential of Completed 9- The Project Can and Should be 100% 11- In Your Judgment, Readiness to Completed Project Project Financed by the Private Sector Implement (is Project Shovel Ready?)

Less than 12 months from initiation 3 Contributes significantly to creating high 3 Yes, the institutional and policy Y 0-6 months for shovel readiness 3 productivity (or high skill) jobs environment are supportive

In 13 to 36 months from initiation 2 Contributes moderately to creating high 2 Yes, “in principle” but the institutional/ E 6-18 months for shovel readiness 2 productivity (or high skill) jobs policy environment needs changes first

In more than 36 months from initiation 1 Contributes marginally to creating high 1 No, for any reason N 18+ months for shovel readiness 1 productivity (or high skill) jobs

I don’t know/don’t have enough information D I don’t know/don’t have enough information D I don’t know/don’t have enough information D I don’t know/don’t have enough information D

Score Score Score Score 10- Expected Public Finance Portion 12- Does the Potential Implementing 5- Sustainability of Growth Impact of 8- Employment Creation of Completed Agency have the Necessary Capacity Completed Project Project (Staffing, Skills and Institutional Structure)

Highly sustainable without public support 3 Generates a large number of jobs 3 Public finance < 25% of total investment 3 Public finance < 50% of total investment 2 Yes Y

Moderately sustainabale without public 2 Generates a moderate number of jobs 2 Public finance < 75% of total investment 1 support Needs 100% public financing of total G No N investment

Not likely to be sustainable or will require 1 Generates a low number of jobs 1 significant public resources I don’t know/don’t have enough information D I don’t know/don’t have enough information D

I don’t know/don’t have enough information D I don’t know/don’t have enough information D Reform Needs Assessment Strategic Assessment: The 2019 Project Pipeline for Jordan for Pipeline Project 2019 The Assessment: Strategic Score 6- Inclusivity of Growth of Completed Score Project 13- Reform Complement 15- Please Specify Top 3 Reform Priorities Needed in Order for the Project to be Successful Project targets poor women And/Or youth 3

No reforms needed 3 Project targets the poor in general 2 1- Only cabinet decrees needed 2 None of the above 1 2- Parliamentary legislation needed 1 I don’t know/don’t have enough information D 3- I don’t know/don’t have enough information D

Score 14- Reform Timeline Annex B

Reforms to be front ended 3 62 63

Reforms to proceed with implementation 2

Reforms to be post- implementation 1

I don’t know/don’t have enough information D