New Cairo Wastewater Treatment Plant (Egypt)

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The New Cairo Wastewater Treatment Plant study explains the process of a wastewater plant development in Egypt from the initial problem identification to the operation. The document also assesses the impact of the infrastructure on the city and its residents. The project was Egypt's first successful Public-Private Partnership (PPP) project. A drinking water shortage was identified as a pressing issue in Egypt's environmental sustainability, particularly in very densely populated areas as New Cairo. The city was created in the southeastern part of Cairo in 2000 in a former desert area, to ease problems deriving from an overcrowded capital. The existing wastewater treatment infrastructure in the area did not produce water with adequate levels of quality to enable the water to be used to irrigate agricultural and urban green areas, forcing freshwater to be used instead. The New Urban Communities Authority (NUCA) decided to develop a new infrastructure using Public-Private Partnership framework to reuse urban wastewater for the purposes mentioned, thereby reducing freshwater use. In addition, the project would reduce the water pollutants entering the River Nile. The project was awarded to an SPV formed by Aqualia and Orascom Construction Industries. In the project the private firm was responsible for the design, finance, construction, operation & management, and transfer of the asset to the public administration. The study provides details about finance, payment method, technical details of the plant, governance system, and risk transfer between the public and private parts in the project. Additionally an analysis of the project in terms city strategy and alignment with United Nations Sustainable Development Goals (SDG) is provided. The study concludes with an assessment of how closely the project followed PPP methodology standards.
Cita bibliográfica: Salvador, Jordi; Trillas, Francesc; Ricart, Joan Enric; Rodríguez Planas, Miquel; Ricart, Joan Enric, "New Cairo Wastewater Treatment Plant (Egypt): Case Studies PPP for Cities", IESE, ST-425-E, 11/2016
Fecha: 16/11/2016
Autor / es: Salvador, Jordi; Trillas, Francesc; Ricart, Joan Enric; Rodríguez Planas, Miquel; Ricart, Joan Enric
Tipo de documento: Estudio y monografía
Editor/es: PPSRC - Public-Private Sector Research Center
Departamento: Economía
Idiomas: Inglés

Objetivo pedagógico The study is designed to understand how two agents with opposed interest, can cooperate in benefit of each of the parts. While the private firm is pursuing profit maximization, public sector is willing to provide a public service with a certain level a quality at the minimum cost. Creating the proper incentives for each of the agents through a PPP contract can align interest of the two parts. Topics such as moral hazard, asymmetric information, or contract incompleteness are raised to find the optimal contract structure to develop a project. The study is focused to be used in programs focused on public policy, finance, and Smart Cities. Besides these topics , the study also allows to understand how an infrastructure like a wastewater plant can be part of a Smart City strategy and how it can help to reach UNSDG.