Greater use of specialist water utility engineers and water company contractors with wide Pacific experience could have benefited the program.
Examples of merged power and water utilities and private sector-run water utilities include the UNELCO Engie in Vanuatu and the American Samoa Power Authority (footnote 9). These types of viable utility options need to be considered during the appraisal of similar programs. The Koror– Airai Sanitation Project, approved in 2013, which includes a design, build, operate contract, is a positive step.
However, the change in the government resulted in changes in the sector reform choices undertaken and resulted in less commitment to the program. For similar policy-based loans, the lesson is to develop ownership indicators for programs ex-ante, which are sufficiently robust to ensure that government commitment is maintained irrespective of sector reform pathways.
Progress in program implementation was satisfactory after the PWSC was established. Regular meetings of the program steering committee (PSC), providing overall guidance and oversight functions, took place and the PWSC undertook both monitoring and monthly reporting. However, effective program implementation came to a stop after Presidential Executive Order No. 324 was issued, instructing the PWSC to halt all incorporation and start-up activities while its merger with the Palau Public Utilities Corporation (PPUC) was being examined. While the Asian Development Bank (ADB) and the Water and Sewer Task Force advised against a merger at the time, Congress and the President of Palau authorized the merger in June 2013, with the PPUC taking over as implementing agency. After the merger, no meetings of the PSC took place and the PPUC did not provide monthly progress reports. The PPUC also did not provide a program completion report at the end of the program. To avoid a repeat of this experience, ADB must include in the design of future similar programs mechanisms to ensure that agreed reforms can be implemented in a changing political environment. Such a design measure will also help ensure the implementation of reform programs as envisaged.
There were significant delays in the disbursement of the two tranches of this policy−based loan. The first tranche disbursement was delayed by 12 months due to Congress’ late action on an act creating the Palau Water and Sewer Corporation (PWSC) and the act authorizing the President of Palau to sign the loan agreements. The delay with the second tranche was a consequence of the first tranche delay but also reflected political changes, including parliamentary elections that brought a new government into power, and the subsequent government personnel changes that disrupted the reform agenda. To avoid delays, greater attention is required to identify potential risks and to build measures, possibly through additional time-bound policy actions, to mitigate such potential risks.