MIGA Insures Wastewater Treatment Plant in Jordan
Residents of metropolitan Amman-Zarqa are set to receive an upgraded wastewater treatment system with the construction of a new wastewater plant at the current As-Samra facility in Jordan. The capacity of the original plant, which began operations in 1985, to handle sewage has been increasingly taxed by the region’s rapid population growth, posing threats to the area’s water supply.
The new plant is being made possible in part by MIGA, which is providing political risk coverage to a joint investment by Infilco Degrémont Inc. of the United States and Suez Environnement S.A. of France. MIGA provided $2.33 million in coverage for the equity and $7.5 million for a performance bond posted by the investors. The guaranteed percentage is 90 percent for the equity and 27 percent for the performance bond. The guarantee is for a period of up to 15 years against the risk of breach of contract.
The project involves the design, construction, procurement, operation, maintenance, and financing of a new wastewater treatment plant in As-Samra under a 25-year build-operate-transfer (BOT) agreement—the first time this concept has been used in Jordan.
“This project marks many firsts,” says Justin Kouakou, an underwriter in MIGA. “It is not only Jordan’s first BOT project, but also the first public-private partnership in the financing and management of a public infrastructure project in the country.
In addition, the As-Samra project is the first wastewater treatment facility in the Middle East to have used a combination of private, local government, and donor financing. Institutions involved in financing the project include the US Agency for International Development, the government of Jordan, the As-Samra Plant Consortium, and a bank consortium.
Jordan is one of the ten most water-deprived countries in the world. The country’s annual water demand currently exceeds 1 billion m3, having nearly doubled since the mid-1990s.
The lack of water is widely expected to be one of the most serious challenges to Jordan’s economic growth as the population continues to grow,” says Yukiko Omura, MIGA’s Executive Vice President. “Conservation and reuse of water is an essential element of the country’s water strategy.
The MIGA-supported plant will treat wastewater from the Amman and Zarqa areas (with a combined population of approximately 2.3 million people), replacing an existing overloaded and inadequate waste stabilization pond treatment system. The plant will have the capacity to handle average flows of 267,000 m3 of water daily, which is expected to satisfy local demand from 2015 to 2025.
The reuse of treated wastewater is expected to have the additional benefit of freeing up drinking water by decreasing agricultural and industrial use of potable water. Aside from the economic benefits, the treatment plant will also prevent environmental degradation caused by mixing poorly treated wastewater with clean water.
“We are pleased to offer our political risk insurance to help Jordan address its critical need for water in an environmentally sustainable way,” Omura adds.