Strategic Moves - Regional Environmental Center for Central and ...

TABLE 16: Main options for private sector participation and the allocation of responsibilities
C H A P T E R 6
WAT E R A N D WA S T E U T I L I T I E S I N S E E — S TAT U S A N D R E F O R M
OPTIONS SERVICE MANAGEMENT LEASE BOT CONCESSION DIVESTITURE
CONTRACT CONTRACT
Asset Public Public Public Public and Public Public or
ownership private private and
public
Operations and Public and Private Private Private Private Private
maintenance private
Capital
investment
Private Public Public Public Private Private
Commercial
risk
Tariff collection
Public Public Shared Private Private Private
risk Public/private Public/private Private Public Private Private
Construction
risk
None None None/low High Low Very low
Duration 1-2 years 3-5 years 8-15 years 20-30 years 25-30 years Indefinite
(may be limited
by licence)
Source: A combination of tables from World Bank Toolkit for Private Participation in Water and Sanitation (adjusted).
TABLE 17: Pros and cons of PSP in water utilities
PROS CONS
Increased technical, operational and managerial
performance
Profit orientation outweighs efficiency gains
• Possibility for (full) cost recovery Negative impact on tariffs and affordability
• Improved access to capital
Increased operating efficiency Staff reduction negatively affects employees, their families and
the community
Reduced political influence Government/municipal concerns about loss of control and
power
The presence of independent, profit-motivated private Water management should be a public service per se, as water
providers influences government policy towards water
services and the way it is enforced
is a basic human need
Source: REC, 2009a
S T R AT E G I C M O V E S 141