Project to expand water/wastewater (W/WW) facilities and related institutional capabilities in selected urban centers in different geographic regions of Egypt. The National Organization for Potable Water and Sanitary Drainage (NOPWASD) will implement the project with assistance from U.S. firms. The project will fund construction of W/WW facilities, contingent upon substantive institutional and pricing reforms by the Government of Egypt (GOE). The project will provide TA and training to introduce reforms at central and local government levels in all areas critical to operation of a utility: accounting, inventory control, O&M, personnel policy, administration, and computerization. Required reforms and tariff increases will be defined for each city in individual action plans; the plans will specify steps needed to achieve cost recovery and autonomy for the local entities responsible for W/WW O&M. Specific reforms to be required of the GOE will include: decentralization of authority for tariff rate determination; restructuring of the administrative, financial, and personnel systems of the W/WW entities; and a comprehensive and consistent framework of laws and policies ensuring sustainability, including a rationalization of prices and the discontinuation of all subsidies to permit full recovery of recurrent O&M costs. Engineering design and environmental assessments for each site will be contracted for immediately upon obligation of the project, but funds will be released for construction only when the GOE has met the conditions outlined in each city's action plan. The project will then provide funds to construct/rehabilitate W/WW systems (including pipelines, pump stations, and treatment plants) at five secondary city sites (seven locations in all): Mansoura, Luxor, Sharm El Sheikh, Nuweiba, and the Aswan Group (Nasr City/Kom Ombo/Darawo City).