Privatisation 1 Corinne Waelti, seecon international gmbh.

Privatisation

Privatisation

1

Corinne Waelti, seecon international gmbh

Privatisation

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Privatisation


Contents

1. Introduction

2. Implementation

3. Outcomes

4. Conclusion

5. References

3

Privatisation


How to Improve and Expand Public Sanitation and Water Services?

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1. Introduction

PrivatisationMixed (e.g. Public

Private Partnership)

Nationalisation

Problem:Unsatisfactory delivery of water and wastewater services

• No connection to the water or sanitation system• No constant supply• Poor drinking water quality• No proper wastewater treatment

Possible institutional frameworks

Privatisation


Problem

5

1. Introduction

Public as well as private operations cannot always guarantee water and sanitation services to all their residents.

Why is it difficult to achieve local sanitation and water supply?

•Water and sanitation services are critical to all consumers

•There is often a natural monopoly

•Investments are long-lived and irreversible which hinders investors

Privatisation is seen as one possible solution to these problems.

Privatisation


What is Privatisation?

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1. Introduction

Privatisation is the process of transferring ownership or responsibilities from the public sector (government) to the private sector (e.g. business or non-profit organisation).

Privatisation in the water and sanitation sector

The private sector has always been involved in the water and sanitation sector in some form (e.g. construction contracts in large urban supplies or informal provision of water in unserved areas).

However, a new role is currently being shaped due to globalisation, leading to increased importance of private actors.

Adapted from: INWRDAM (2010)

Privatisation


Different Privatisation Models

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2. Implementation

Adapted from: REES (2008)

Privatisation model Responsibility of private party

Service contract / Buying in Single function contract

Management contract Operation & maintenance (O&M)

Build-Operate-Transfer (BOT) /Build-Operate-Own (BOO)

Construction of infrastructure

Lease O&M; sometimes asset renewals

Concession Capital investment; O&M

Partial divestiture Joint venture with private sector

Full divestiture Capital investment; O&M; revenue collection T

ime s

cale

of

con

tract

Short-term

Long-term

Privatisation


The Implementation Process

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2. Implementation

Implementing a privatisation follows four steps:

Adapted from: THE WORLD BANK (2010)

The time requirement for these steps differs according to the arrangement proposed and the already existent laws supporting or hindering the privatisation.

Privatisation


• More efficient operation• Fewer profitable

opportunities are being missed

• Often undermines local & national government capacities

• Community is seen as recipient rather than contributor (profit is more important than people’s needs)

• Government does often not know how to monitor private parties, which may lead to a lack of accountability

May lead to conflicts with civil

society

Advantages and Disadvantages

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3. Outcomes

Independence from the local government and strong incentives for being profitable may lead to:

Adapted from: GREEN (2003) & THE WORLD BANK (2006)

Privatisation


Applicability

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4. Conclusion

• Success depends on the laws supporting the process and on the arrangement proposed

• Needs a serious private operator

• Not useful for projects which result in fast technological changes, as it would be difficult to determine long-term standards

Adapted from: APPP(2009)

Privatisation


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5. ReferencesAPPP (Editor) (2009): A Step by Step Guide to Public-Private Partnerships (PPPs). Croatia: Agency for Public Private Partnerships. URL: www.javnanabava.hr/userdocsimages/userfiles/file/Razne%20publikacije/Step%20by%20step%20guide%20to%20PPP.pdf [Accessed: 30.08.2012]

GREEN (Editor) (2003): Advocacy Guide to Private Sector Involvement in Water Services. London: WaterAid and Tearfund. URL: www.tearfund.org/webdocs/Website/Campaigning/Policy%20and%20research/Advocacy%20guide%20to%20private%20sector%20involvement%20in%20water%20services.pdf [Accessed: 02.09.2010]

INWRDAM (Editor) (2010): Public Private Partnership in Water and Sanitation Sector. Amman – Jordan: The Inter-Islamic Network on Water Resources Development and Management. URL: http://www.inwrdam.org/page/342 [Accessed: 31.08.2010]

REES (Editor) (2008): Regulation and Private Participation in the Water and Sanitation Sector. Stockholm: Global Water Partnership (GWP). URL: eagri.cz/public/eagri/file/30628/Regulation_and_Private_Participation_1_.pdf [Accessed: 02.09.2010]

THE WORLD BANK (Editor) (2006): Approaches to Private Participation in Water Services. A Toolkit. Washington, DC: The International Bank for Reconstruction and Development/ The World Bank. URL: rru.worldbank.org/Documents/Toolkits/Water/Water_Full.pdf [Accessed: 02.09.2010]

Privatisation 12

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Privatisation 1 Corinne Waelti, seecon international gmbh.

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