Getting the Private Sector Involved in Water : What to Do in the Poorest of Countries?

Getting the Private Sector Involved in Water : What to Do in the Poorest of Countries?

Water has historically been hugely underpriced in most developing countries. Water systems are often poorly run. Regulatory frameworks are often lacking, incomplete, or internally inconsistent, and the relevant skills thinly spread. There is lit...

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Bibliographic Details
Main Author:	Brook Cowen, Penelope J.
Format:	Viewpoint
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	POVERTY WATER PRIVATE SECTOR PROFITS CONCESSIONS RISK CONTRACTS INFORMATION DEVELOPING COUNTRIES GOVERNMENT REGULATION PRICE POLICY MANAGEMENT CONTRACTS PREDICTABILITY ADMINISTRATIVE CAPACITY COLLECTION SYSTEMS COST RECOVERY CUBIC METER INFORMATION PROBLEMS INVESTMENT REQUIREMENTS MONOPOLY POWER PERFECT INFORMATION PERFORMANCE INDICATORS PHYSICAL LEAKS PIPED WATER POTABLE WATER PRIVATE COMPANIES PRIVATE PARTICIPATION PRIVATE PARTICIPATION IN WATER PRODUCTIVITY PUBLIC WATER REGULATORY AGENCIES REGULATORY CAPACITY REGULATORY FRAMEWORKS SANITATION SERVICES SEWERAGE SERVICES TOWNS WATER COMPANY WATER SECTOR WATER SERVICES WATER SYSTEM WATER SYSTEMS WATER TARIFFS WATER UTILITIES
Online Access:	http://documents.worldbank.org/curated/en/1997/01/695042/getting-private-sector-involved-water-poorest-countries http://hdl.handle.net/10986/11599

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Summary:	Water has historically been hugely underpriced in most developing countries. Water systems are often poorly run. Regulatory frameworks are often lacking, incomplete, or internally inconsistent, and the relevant skills thinly spread. There is little trust that the government will maintain a favorable operating environment and a tariff yielding a reasonable rate of return. It is not a setting attractive to the private sector. While much stands in the way of private provision of water services in the poorer countries, the following four options, individually or in combination, may speed transformation: 1) taking a stepwise approach; 2) simplifying contracts; 3) contracting out parts of the regulatory function; and 4) increasing predictability in the use of discretion. There is often a sharp difference between what private companies see as a minimal return necessary to go into business in a risky country and what governments view as an acceptable level of profit. Governments should be realistic about the profits that they should allow, recognizing the need of their private partners to earn a reasonable return and to be rewarded for the risks that they shoulder.