STRATEGIC AssESSMENT: The 2019 Project Pipeline for Jordan Public Disclosure Authorized AND INVESTMENT OPPORTUNITIES 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 Copyright Statement: The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 8400-750-978, fax 4470- Wissam Harake 750-978, http://www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 2422-522-202, e-mail [email protected]. 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 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