The Palestinian Water Authority (PWA) as a regulator for the water sector in Gaza and the West Bank had initiated a strategy to build small-scale RO seawater desalination plants (600-1250 m(3)/d) using the donor community funds as a supporting source of potable water to be operated and managed by the private sector. It had been planned to distribute that water through water shops, tankers or direct connections to bulk users. In parallel a number of small scale private brackish water desalination plants along with a number of desalinated water vendors have been licensed to produce and distribute desalinated water usually by tankers and small reservoirs located at shops or streets. Different power costs, tariff and water quality between RO seawater and RO brackish water desalination plants is resulting in high competition in the local market. The competition is leading the seawater desalination plant operator to reduce operational hours, which in turns result into higher specific operational costs per cubic meter of water produced. The licensing procedures for brackish water RO plants neither clearly take in consideration product details of water quality nor the follow up and monitoring. This paper presents the regulatory actions and a monitoring plan to be taken by the Palestinian Water Authority on the strategy of licensing and operation of small-scale desalination plants for the benefit of consumers and operators.