Gov’t Alone Cannot Complete Water Projects

Gov’t Alone Cannot  Complete Water Projects
Gov’t Alone Cannot  Complete Water Projects

Water projects worth $52.5 billion are incomplete, and private sector investment is needed for their full execution, a deputy energy minister said.

The government is unable to complete these projects, and without the presence of private companies their completion will take many years, Rahim Meidani was quoted by IRNA as saying Thursday.

“The economic basis of the water sector is flawed,” Meidani said, adding if the water sector was an autonomous industry covering its own expenses, it would not have to rely on subsidies and aid to survive.

Recent activities of the water sector are predominantly in the form of guaranteed purchase.  Funding for guaranteed purchases in next year’s national budget has been increased six- fold. The budget plan will also, for the first time, allow for involvement of the private sector in rural water projects.

In addition to water development plans, Meidani also called for reform in water management and conservation. “Even after billions in water sector investments, resource and ecosystem revival is not possible without efficient management.”

As regards the water industry, this year’s national budget will require the government to conclude up to $10 billion in Build-Operate-Transfer (BOT) or buyback contracts with the private sector for construction and conservation projects.  The government will also be obliged to guarantee purchase of the water produced.

More than $1.2 billion worth of projects have been concluded; and a further $2.6 billion investment opportunities have been outlined, Hamid-Reza Janbaz, managing director of National Water and Wastewater Engineering Company said Thursday.

Access to resources from the National Development Fund of Iran (NDFI), banking facilities, and the existing cap on guaranteed water purchases were discussed during a meeting held between private investors and the authorities, including members of parliament, Janbaz said. “Suggestions from the session will be considered in next year’s budget,”

Foreign funding of water projects was hampered in recent years by the international sanctions imposed on Iran, Janbaz noted.

“Currently 53 Build-Own-Operate (BOO), 69 BOT, and 11 buyback agreements have been signed, taking the total value of investment to $1.2 billion.”  

Iran has received loans from the Islamic Development Bank (IDB), the World Bank, and the Economic Cooperation Organization’s Trade and Development Bank (ECO Bank) to implement water projects.

 The IDB allocated a $1.07 billion loan for water projects, in the past two years, with those in rural areas being given priority. It has allocated $248 million for wastewater networks in rural areas.

The World Bank allocated $650 million to wastewater projects in Tehran, Ahvaz, Shiraz, Anzali, Sari, and Babol.

In its latest effort to help efficiently manage water resources, the parliament passed a law last week, stipulating that one percent of oil, natural gas, and gas condensate export revenues to be allocated to manage water supply and demand.