Water Governance in Palestine SECTOR REFORM TO INCLUDE PRIVATE SECTOR PARTICIPATION NATIONAL REPORT 2015 SECTOR REFORM TO INCLUDE PRIVATE SECTOR PARTICIPATION SECTOR INCLUDE PRIVATE REFORM TO SECTOR Governance & Financing for the Mediterranean Water Governance in Palestine Governance Water Water Sector With the support of: State of Palestine Palestinian Water Authority The present document was developed by Within the framework of: Project labelled under the Union for the Mediterranean With the support of: In partnership with: State of Palestine Under the guidance of: Palestinian Water Authority Cover Photo: © Guillaume Paumier WATER GOVERNANCE IN PALESTINE: SECTOR REFORM TO INCLUDE PRIVATE SECTOR PARTICIPATION PAGE I WATER GOVERNANCE IN PALESTINE: SECTOR REFORM TO INCLUDE PRIVATE SECTOR PARTICIPATION PAGE II TABLE OF CONTENTS CONTENTS TABLE OF CONTENTS ............................................................................................................................................ III ACRONYMS ............................................................................................................................................................... V 1. FOREWORD ............................................................................................................................................... 1 2. EXECUTIVE SUMMARY - DIAGNOSTIC ANALYSIS & RECOMMENDATIONS .................................................. 4 2.1. DIAGNOSTIC ANALYSIS ......................................................................................................................................... 4 2.2. KEY RECOMMENDATIONS ..................................................................................................................................... 9 2.2.1. Improving the budget processes ........................................................................................................ 9 2.2.2. Developing the regulatory framework ............................................................................................. 10 2.2.3. Promoting and ensuring stakeholders engagement ........................................................................ 13 3. GOVERNANCE CHALLENGES TO PRIVATE SECTOR PARTICIPATION IN THE PALESTINIAN WATER SECTOR 15 3.1. INTRODUCTION ................................................................................................................................................. 15 3.2. ENTITIES RELATED TO PRIVATE SECTOR PARTICIPATION IN WATER AND WASTEWATER ACTIVITIES IN PALESTINE .................. 15 3.2.1. The main institutions in water in Palestine and their development................................................. 15 3.2.2. Provision of Services and Water Utilities ......................................................................................... 24 3.2.3. Key issues to the municipalities structures ...................................................................................... 27 3.3. OVERVIEW OF PRIVATE SECTOR PARTICIPATION IN WATER INFRASTRUCTURE .......................................................... 28 3.3.1. Overview of investments and the limited private sector participation in water and wastewater services to date .............................................................................................................................................. 28 3.3.2. Lessons learnt and opportunities for further private sector participation ....................................... 32 3.3.3. The legal framework: compliance and enforcement ....................................................................... 35 3.3.4. The regulatory framework is not complete ...................................................................................... 36 3.4. FINANCIAL SUSTAINABILITY IN RELATION TO THE BUDGET .................................................................................. 37 3.4.1. Public Funding and debt sustainability ............................................................................................ 37 3.4.2. Tariffs and the financial sustainability of water systems ................................................................. 38 3.5. TRANSPARENCY, ACCOUNTABILITY, AND THE VALUE FOR MONEY ....................................................................... 40 3.5.1. Ensuring the value for money .......................................................................................................... 40 3.5.2. Engaging with stakeholders ............................................................................................................. 42 4. WAYS FORWARD: IMPROVING FINANCIAL SUSTAINABILITY, THE REGULATORY FRAMEWORK & STAKEHOLDERS’ ENGAGEMENT ........................................................................................................................ 43 4.1. INTRODUCTION ......................................................................................................................................... 43 WATER GOVERNANCE IN PALESTINE: SECTOR REFORM TO INCLUDE PRIVATE SECTOR PARTICIPATION PAGE III 4.2. IMPROVING THE BUDGET PROCESS AND STRENGTHENING FINANCIAL SUSTAINABILITY ............................................... 44 4.2.1. Strategic planning ............................................................................................................................ 45 4.2.2. Funding ............................................................................................................................................ 46 4.2.3. Procurement and VfM ...................................................................................................................... 47 4.2.4. Capacity ........................................................................................................................................... 47 4.3. IMPROVING THE REGULATORY FRAMEWORK FOR WATER .................................................................................... 48 4.3.1. Improving the regulatory framework through the establishment of the regulator ......................... 48 4.3.2. Supporting autonomous, efficient and financially sustainable service providers ............................ 50 4.4. ENHANCING STAKEHOLDER ENGAGEMENT TO IMPROVE ACCOUNTABILITY AND CITIZEN BUY-IN ................................... 51 4.4.1. Creating an equitable societal environment, promoting social justice, reducing poverty, and raising awareness on gender ..................................................................................................................................... 52 4.4.2. Strengthen existing mechanisms and platforms for stakeholder engagement in Palestine ............ 54 4.4.3. Information base to raise citizens’ awareness on the cost of water supply and sanitation ............ 55 4.4.4. Fostering greater multi-stakeholder interface between ngos, science and government on water services ......................................................................................................................................................... 56 4.4.5. Communication and capacity development strategy to address customers needs ......................... 57 5. RECOMMENDED ACTIONS FOR THE PALESTINIAN WATER SECTOR .......................................................... 60 6. ANNEXES ................................................................................................................................................. 71 Annex I: Roles and responsibilities of Water Sector entities as defined by the Palestinian Water Law of 2014 ....................................................................................................................................................................... 71 Annex 2: Case of a Successful PPP Solid waste landfill operations at Joint Services Council of Hebron and Bethehem JSC – H&B ...................................................................................................................................... 74 Annex 3: Examples of Selected PSP Activities: Jordan Water Sector .............................................................. 75 Annex 4: List of stakeholders consulted during the policy dialogue ............................................................... 77 Annex 5: Gender Situational Analysis, Strategy and Action Plan Summary ................................................... 81 7. BIBLIOGRAPHY......................................................................................................................................... 84 WATER GOVERNANCE IN PALESTINE: SECTOR REFORM TO INCLUDE PRIVATE SECTOR PARTICIPATION PAGE IV ACRONYMS AFD Agence Française de Développement CWMU Coastal Water Management Utility DG Director General EQA Environmental Quality Authority EWASH Emergency Water, Sanitation and Hygiene Group FCR Full Cost Recovery GEF Global Environment Fund GEF UNEP/ MAP Mediterranean Action Plan Strategic GEF UNEP/MAP Partnership for the Mediterranean Sea Large Marine MedPartnership Ecosystem GEKA Societe General des Eaux Khatib and Alami GEWP Gaza Emergency Water Program GWP-Med Global Water Partnership - Mediterranean ICA Israeli Civil Administration IWRM Integrated Water Resources Management IWSR Institutional Water Sector Review JCSPD Joint Council for Services, Planning and Development JWC Joint Water Committee JWU Jerusalem Water Undertaking Kreditanstalt für Wiederaufbau (German Development KfW Bank) LACS Local Aid Coordination Secretariat LEKA Lyonnaise des Eaux Khatib and Alami MDLF Municipal Development Lending Fund MIC Ministerial