Yemen Water for Urban Centers: Output-Based Service Provision by Private Operators

The main project objective is to expand the provision of safe drinking water supply and sanitation (WSS) services to urban and peri-urban households in three or four cities in Yemen

The grant agreement was signed on April 12, 2010.

August 2011: In light of the current political and security environment in Yemen, the World Bank has suspended disbursements under the Yemen portfolio effective July 28, 2011. The decision is consistent with Bank rules which allow such a suspension on the basis of an extraordinary situation that is directly impacting the Bank’s ability to implement its program.  In addition to IDA credits and grants, the suspension covers grants administered under trust funds, including those administered under the Global Partnership on Output-Based Aid (GPOBA).  GPOBA's portfolio in Yemen includes two subsidy schemes with $11.23 million in commitments, of which $10.7 million undisbursed balances.  The World Bank, and GPOBA, stand ready to re-engage rapidly and effectively once the situation on the ground stabilizes and is conducive for appropriate operational support and fiduciary oversight.

The project will pilot the provision of services through private operators who are willing to construct and operate the infrastructure for a number of years.  This model – if successful – may lead to rapid expansion of the coverage in urban (and peri-urban) areas of Yemen in parallel to utility-served areas. Moreover, it is expected that the competition for the right to serve a given area – through a minimum subsidy scheme - will demonstrate an efficient allocation of public subsidies and lead to an overall reduction of infrastructure costs in Yemen.

GPOBA will support the planning phase including details of the proposed concept's implementation  – e.g. bidding documents. GPOBA is also expected to contribute to at least a third of the subsidies required for each water supply and/or sanitation connection. The other two-thirds of subsidies are expected to be covered by the Government of Yemen through an IDA loan and contributions from the private operators. The operators will be required to partly finance the schemes and be paid on the basis of the number of connections made. The selection of the operators will be on the basis of the minimum subsidy required for each connection.

Richard Pollard [4]