[Almost not] Flushed with success

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How the Ajman Sewerage project stalled when residents refused to pay connection fees.

Building a sewerage network is never a quick job. With many kilometers of trenches to dig and pipes to install it is a laborious task. But the construction of Ajman's system has been a particularly drawn out and controversial affair.

More than 10 years in the making, the project, which at one point was nearly abandoned, has now entered the final stretch, and the project company's general manger Olivier Crasson, speaking at the recent Utilities Expansion and Investment Congress in Dubai, said he hoped lessons would be learnt from the Emirate's experiences.

A growth story

Ajman's population has undergone a dramatic explosion, rising from 80000 in 1992 to more than 250000 today. In light of the boom in residential developments, in 1995, the government recognised the need for a modern sewage collection system and decided to enlist the expertise of the private sector.

A lengthy tendering process followed at the end of which, in 2001, a concession agreement was signed with several private companies to build and operate the network.

"With this project we were to replace around 15000 septic tanks and every property owner was going to be invited to be connected to our sewerage system," Crasson told delegates.

The project was to be financed through government and shareholder equity, bank loans and, most crucially, through the payment in advance of connection fees by the owners of the properties that were to be hooked up to the wastewater collection system.

In 2002, a sewer law was passed to give the project a legal footing. The concession company was also incorporated and the engineering, procurement and construction (EPC) and operations and maintenance contracts were signed.

Then, in 2003, construction kicked off with completion pencilled in for two and a half years later.

Stumbling block

The next year, however, the project was suspended. There were insufficient funds to pay the contractor to continue the construction work and tools had to be downed. The reason: the property owners were refusing to pay the connection fees two years in advances of being plumbed in.

The planners went back to the drawing board and during 2005-2006 the project was restructured and resurrected with an amended sewer law, a new 25-year BOOT (build, own, operate, transfer) concession agreement, new shareholders and lenders.

"The project had a near death experience," said Crasson. "It was stopped four years ago and it took a long time to restructure. But the shareholders, government and banks then agreed they would finish the construction phase."

In 2006, the Ajman Sewerage Private Company was incorporated with Belgium's Besix taking a 50% stake. Veolia Water and the Ajman government each own a 20% shareholding with the remainder belonging to Black & Veatch.

The EPC contract was awarded to Besix and Black & Veatch, while the operations and maintenance contract was split 67:33 between Veolia Water and Besix. ING and Ambac were brought in as the new joint financing partner.

Progress at last

With the project back on track progress has been swift. At the end of May, the network was around 75% complete with some 40000 customers already being serviced. The first flows were collected in September 2007.

The treatment works is 96% complete and is operating with almost 25% of the plant design flow. The larger pumping stations have been finished and there are just a few smaller ones still to complete.

"The next few months will be very important because we are going to switch from construction phase to steady state operations and I think by December we will be getting there," Crasson predicted.

The sewerage system will comprise 240 km of gravity sewers that will collect wastewater from registered properties and convey it to collection points. Some 22 pumping stations will then send the wastewater from collection points to the treatment plant.

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