The outcome of the TA is that MOI and NDWSS will implement a tested urban water sector institutional reform program.

ADB-funded projects in Timor-Leste have validated the need to improve operations and maintenance (O&M) of water systems and to increase institutional capacity to manage urban water supply systems. These needs are vital to adequate service delivery, which cannot be compensated for through infrastructure investment alone. A different operational mode with an effective O&M strategy is required for Timor-Leste to meet its water sector development goals. Previous TAs have focused on changing the National Directorate for Water Supply and Sanitation (DNSAS) management structure without addressing the constraints posed by the existing regulatory and institutional framework. Within the current framework, DNSAS does not have the mandate to implement the proposed management structures and procedural changes. The TA will be linked to the proposed ADB-funded District Capitals Water Supply Project that will rehabilitate the urban water supply systems of Pante Macasar and Manatuto, and introduce the use of public-private partnerships (PPPs) for service provision, in the form of management contracts for the O&M of the rehabilitated systems for a period of two years. The TA will help to achieve and sustain the expected impact and outcome of the proposed project. Particularly, it will provide water sector officials at the national level and in Manatuto and Pante Macasar with the capacity and institutional reforms needed to effectively manage, operate, and maintain urban water supply systems, including catchment area management. Lessons learned from the TA will inform the national roll-out of a new urban water sector management system for Timor-Leste, which can serve as model for the reform of other infrastructure sectors.