Iraq's Top Reconstruction Project Failing, Audit Says (Update1)

By Tony Capaccio

April 30 (Bloomberg) -- Iraq's Nassriya Water Treatment Plant, the country's largest reconstruction project, is a failure so far because it isn't delivering sufficient water to enough people, a new audit says.

Inspectors in December and again in February found the U.S.-funded plant 200 miles (322 kilometers) south of Baghdad was operating at only 20 percent capacity, the Special Inspector General for Iraq Reconstruction said in a report released today.

``Potable water is only reaching a fraction of the Iraqi people for which it was designed and intended,'' Inspector General Stuart Bowen said. Two of the intended five cities, Ad Diwayah and Suq Al Shoyokh, weren't receiving water, he wrote.

The $277 million water treatment and distribution facility, built by a team of Houston-based Fluor Corp. and London-based Amec Plc, was completed in June 2007 and turned over to the Iraqi government for operation. Its failure isn't an example of waste as much as it is a tale of poor execution so far by the Iraqi government, Bowen wrote.

The government's failure to effectively manage the plant ``provides a detailed look at the challenges confronting the transfer of significant'' reconstruction projects for Iraqi operation as the U.S. role in reconstruction ends, Bowen said.

Project's Flaws

The project is failing because of a lack of reliable electricity from Iraq's national power grid, a leaky old water distribution system unable to withstand higher pressures and flows, and illegal taps in the water transmission line, the audit said.

The operation also has been hampered by ``unqualified and unmotivated Ministry of Municipalities and Public Works staff unwilling to consistently attend the contractor-provided training,'' Bowen wrote.

The plant was designed to operate 24 hours a day with capacity to pump 240,000 cubic meters of potable water a day.

``At the time of our visits, the plant was operating only one eight-hour shift a day, serving only 60 percent of the intended cities,'' Bowen wrote.

The Nassriya plant was funded from a U.S. pool of $20.9 billion for Iraq's reconstruction.

``The preservation of U.S. investment remains a key concern because the ultimate success of the reconstruction program depends on Iraq's capability to manage and sustain U.S.-funded projects,'' Bowen wrote.

Shifting Responsibility

The top U.S. military and diplomatic officials in Iraq, General David Petraeus and Ambassador Ryan Crocker, in congressional testimony this month said that, in addition to reducing its military presence, the U.S. will be turning over more responsibility to the Iraqis for infrastructure operations.

The water plant is the worst failure highlighted in Bowen's latest quarterly report -- his 17th -- on the expenditure of $46 billion Congress appropriated for Iraq reconstruction, security forces, economic aid and local projects approved by U.S. ground commanders.

Bowen, in an e-mail, said that the almost $20.9 billion spent on reconstruction projects ``has produced mixed results.''

``Many hard reconstruction projects have been successful, such as the Erbil Water Treatment Plant and the Ministry of Defense Building in Baghdad; but others have been fraught with challenges and shortfalls, such as the Baghdad Police College and the program to construct 150 Primary Healthcare Clinics across the country,'' he said.

``This report highlights that the inability to transfer completed projects and the lack of resources to sustain projects once transferred may provide the largest potential for waste in the reconstruction process,'' Bowen said. ``The Nassriya water treatment plant is the perfect example of this situation; it was a well-done project now operating at 20 percent under Iraqi control.''

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net .

Last Updated: April 30, 2008 14:02 EDT

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