PROJECTS

Water Sector Restructuring, Oman

Integrated Water Resilience Planning

The problem

Oman is the 19^th most water-stressed country in the world. The government was spending $447 million on water services each year, but with falling oil prices and a budget deficit at 10% of GDP this was unsustainable.

How we helped

We helped implement a strategy to merge various providers into three regional water and wastewater utilities. We developed business plans for the utilities to enable them to finance $30 billion in new capital investment over 10 years, through sale of shares and debt financing. We calculated cost recovery tariffs, developed a new regime for economic regulation, and recommend a subsidy regime to prevent tariff shock while ensuring that the new companies were financeable. We carried out a Regulatory Impact Assessment to test that the economic gains from the reform outweighed the costs.

Impact

The government is implementing the recommended reforms. Our impact assessment estimates that they should create economic benefits for Oman, and reduce the fiscal cost of the sector while extending piped water and wastewater services to households.