Oil Revenues to Directly Aid Water Projects

Oil Revenues to Directly Aid Water Projects
Oil Revenues to Directly Aid Water Projects

The parliament has passed a law stipulating that one percent of oil, natural gas, and gas condensate export revenues should be allocated to manage water supply and demand.

Among the objectives of the new law are: transfer of water from the sea to the central regions, water desalination, infrastructure to produce water and electricity concurrently, management and transfer of shared water with bordering countries, separating potable and nonpotable water, improving the distribution networks to prevent waste, construction of dams in bordering regions, water imports from neighboring countries, purchase of water saved through conservation, and guaranteeing water purchase and supply by the private sector.

 “The government has allocated more than 262 million dollars to semi-finished projects in the key water sector, while the real need is more than $7 billion,” Ali Asghar Ghane, deputy director of the national water and wastewater management company for planning and development, said in October.

Several provinces, namely Tehran, Isfahan, and Kerman, desperately suffer from water shortage, and funding by the government have not been adequate to tackle the problem.

Iran has received loans from the Islamic Development Bank (IDB), the World Bank, and the ECO Bank to implement water projects. The World Bank allocated $650 million to wastewater projects in Tehran, Ahvaz, Shiraz, Anzali, Sari, and Babol.  The IDB allocated a $1.07 billion loan for water projects, in the past two years, with those in rural areas given priority.

As a result of years of drought, the country has been forced to become over-reliant on its groundwater reserves without allowing them the time to replenish naturally. This overuse has drained the reserves and even permanently damaged underground water tables rendering many sources completely dry or unusable.

The new law is the latest effort of the state to help efficiently manage water resources, by allocating a small portion of the substantial oil export revenues to this end.

Private Sector to Invest

The private sector is to be awarded 27 projects worth approximately 12 billion dollars, Mohammad Parvaresh, CEO of Water and Wastewater Company of Tehran announced.

The projects will include wastewater treatment modules, piping expanding, wastewater networks, construction of water supply lines, and construction of recreational centers in Tehran the official stated, on the sidelines of the Tenth International Water and Wastewater Exhibition in Tehran, Mizan News Agency reported.

He added that "substantial investments have been made in the water sector and the private sector must also be engaged" in updating utilities. Relying solely on the government for carrying out and completing projects is simply no more sustainable.

In Tehran there are 15 to 18 billion dollars worth of investment opportunities, and arrangements should be made to attract private sector investors to a larger degree. It is therefore, necessary to reform outdated rules and regulations to win the trust of private companies.