Successful public utilities are exception. Many water and sanitation utilities around the world are locked in a vicious cycle of declined performance and deteriorated assets which are generally the consequence of misdirected and ineffective policies, poor governance, and the monopolistic nature of the sector. 

Jerusalem Water Undertaking (JWU) is a regional water utility in Palestine established in 1966 that serves at present a significant part of Ramallah and Al Bireh Governorate, and other communities north of Jerusalem. It is financially and administratively independent and is governed by its own board of directors. And there is a medium to long term vision that the JWU service area will extend over the entire two governorates of Jerusalem and Ramallah & Al Bireh.  Recently, in 2011, it was decided by the Council of Ministers to upgrade JWU by widening its mandate to sanitation services. The integration of water and sanitation services has led to a need to reconfigure JWU. This transition coincides with implementation of a comprehensive reform plan for the Water Supply and Sanitation (WSS) Sector in Palestine, whereby JWU would play a crucial role in.

The purpose of this study is to assess the governance of JWU and design a successful utility reform of JWU by combining measures, with utility-focused steps, to improve the institutional environment and its interaction with the utility and to strengthen its internal functioning to enable it to efficiently expand its mandate to sanitation services and increase its scale and its geographical coverage. This work can be considered as a real start in JWU reform process triggered by the new mandate of JWU and a leadership at the utility level to contribute to the public sector reform agendas in a best-fit approach.

The research will make use of the governance assessment tool and the utility analytical framework developed by the World Bank. This analytical framework is grounded on the principles of New Public Management (NPM) which is a direction in public sector reform that focuses on outputs. The analytical framework combines two principal perspectives. The first deals with the “external environment”, describing the institutional, economic, and social context in which the service provider operates. The second deals with the “internal functioning of the utility”, mostly oriented toward decision-making processes and management practices, and encompasses issues such as financing, strategic planning, management information systems, human resource management, etcetera. For this, the framework uses various indicators proposed for assessing the dimensions of well-run utility: (i) external autonomy; (ii) external accountability; (iii) internal accountability for results; (iv) market orientation; (v) customer orientation; and (vi) corporate culture.

The results of this research were drawn from a mixture of various sources, which included a desk review of literature including extensive review of public water utilities case studies, field research of the case study JWU, analyzing operational experience from professionals in the sector, and extensive participation in meetings with the relevant stakeholders in the sector.

The diagnostic findings reveal that JWU has the capacity to initiate and absorb change related to the aggregation in terms of scope and scale which would involve taking over municipal wastewater departments nearby and the other smaller service providers, often underperforming and with significant infrastructure investments. The findings also indicated that the political economy is favorable with good prospects for the continuation of the present momentum of the JWU-donor-stakeholders collaboration towards reform. And in the core of the findings is that JWU has the characteristics of well-performing utility for the success of the process. However, some reform actions are required for further strengthening JWU in preparation to the aggregation process.