Public-Private Partnerships in the Water Sector

From WaterWiki

Public-Private Partnerships (PPP) (= involvement of the Private Sector, particularly investment partners, in Water related projects and development activities) is a relatively new approach. UNDP/RBEC, in cooperation with BDP/EEG-LEF (Local Entrepreneurship facility), is engaged in pilot activities with first partners.

The issue of involving private investors (including Private and Develppment banks) in water-related projects in EECCAA countries is also discussed in the framework of the EAP Task Force (mandated to implement the Environmental Action Programme in the framework of the "Environment for Europe initiative".

Privatization & Involvement of private utilities

Issues

The "Privatization" and "Water as Public Good" Debate

On the CSO advocacy front, Public Services International has looked at evidence to support the case for public sector water undertakings and campaigns worldwide to resist privatization of water services.
Friends of the Earth, World Development Movement, and Public Citizen are just a few of many international CSOs making the case for water as a public good, and presenting successful efforts in developing countries. Some of these campaigns and experiences are catalogued on the PSI site.
(Source: Bharati Sadasivam, Policy Advisor, UNDP/BRSP - Civil Society Organizations Division)

Transboundary Water Management as a Regional Public Good

Cooperative transboundary management of the Nile River Basin is an important public good in itself, as well as a source of regional public goods.

See also article on Globalization and the Water Sector

Controversy over the World Bank's PPIAF - Public-Private Infrastructure Advisory Facility: Over 130 groups from 48 countries will today (15 May 2007) call on donor governments and agencies to abandon support for the Public-Private Infrastructure Advisory Facility (PPIAF), a highly controversial element of the World Bank’s water privatization agenda.; The call comes a week ahead of a crucial meeting of the 13 donors to PPIAF. In an open letter, campaigners argue that aid spent on PPIAF’s water projects could and should be better spent. Earlier this year, the Norwegian government stated that it will not support PPIAF in the future as it no longer believes it is increasing access to water for the poor.; More... (Source: Abdullah Alshankiti [[email protected]], contribution on 'mena-water' e-list 16 May 2007)

Specific Issues for the Region

Low investment climate in EECCA region

Question of Water Pricing:
- Currently too low Tariffs, not covering even Maintainance & Operation (M&O);
- In South Africa, first 30 L / capita / day are free of charge --> idea of a progressive tariff structure.

But WHO calculated that the social return in investment into the water sector is 13:1 (if externalities are internalized). (see also HDR 2006)

Need for small local banks (for investments in rural areas) -> through NGOs?

Soviet Legacy: Over-sized systems, heavy metal, huge losses

Subsidizing should go to output (connection), not the input (pipes)

Needed Water Sector reform is not only about tariffs

"Blending funds" (combining loans and grants); criteria needs to be adjusted that this works (Vanessa Celosse)

Questions & Discussions:

Progressive Tariffs? -> In S. Africa for example, the first 30 L of Drinking Water per household are free of charge, ensuring safe access to (minimal) DW for everybody.

Partnerships with private companies can be used to also change companies' understanding and attitude towards environmental issues (e.g. Coca Cola cooperation in Danube Regional Project: Public Awareness Building on the example of empty CC-bottles NOT to be thrown into the Danube...)

National and Local private sector involvement

"Local private sector ("the other private sector") is already delivering services to between 20 to 50% of the poor in urban areas throughout the world. This reality cannot be ignored" (source: Carlos Linares's response to draft "Poverty Reduction and Water Management")

Resources

Reports and papers

Privatisation in Deep Water?

See Abstract in the Report (not copy-paste-able..)

- INEF Report 84/2006 on "Water Governance and Options for Development" (Annabelle Houdret & Miriam Shabafrouz)

Background papers and materials of the OECD Global Forum on Sustainable Development on "Public-Private Partnerships in Water Supply and Sanitation – Recent Trends and New Opportunities" (Paris, 29-30 Nov 2006)

Policy Principles for Private Sector Participation in Sustainable Water Supply and Sanitation Services

This set of Policy Principles is designed to support all stakeholders in their efforts to promote efficient, effective and equitable access to safe drinking water and sanitation.

Implementation Guidelines for Private-Sector Participation in Sustainable Urban Water Supply and Sanitation Services

This publication is intended to assist stakeholders in the water sector in designing and implementing concrete private-sector participation (PSP) projects by providing detailed actionable proposals.It focuses on four key challenges that have proven to be critical for successful and sustainable water supply and sanitation service delivery and which shape the trust of customers and investors in water and sanitation service providers.

Fact Sheet on Policy Principles and Implementation Guidelines

Reports by Mukhtarov F.G., 2006.

Private Sector Participation in Water Supply And Sanitation of the Secondary Towns of Azerbaijan

This is the thesis I submitted for my Master Degree and it is a theoretical as well as a practical analysis of the prospects for water sector privatization in Azerbaijan.

Privatization of Social Policy of Water Supply in South Caucasus

This publication is the thorough analysis of the prospects of Private Sector Participation in the Water Supply Sector of three South Caucasian countries (Azerbaijan, Armenia, and Georgia) with a a focus on Azerbaijan.See AlsoPublic-Private Partnerships in the Water Sector<Report>Private Sector Participation in Water Supply And Sanitation of the Secondary Towns of Azerbaijan</Report><Report>Policy Principles for Private Sector Participation in Sustainable Water Supply and Sanitation Services</Report><Report>Implementation Guidelines for Private-Sector Participation in Sustainable Urban Water Supply and Sanitation Services</Report>

UN's "Unleashing Entrepreneurship" Initiative

Unleashing Entrepreneurship – Making Business Work for the Poor

The Commission on the Private Sector & Development, co-chaired by Prime Minister Paul Martin of Canada and Ernesto Zedillo, Mexico's former president, was convened by Secretary-General Kofi Annan in July 2003 in an effort to identify and address the legal, financial and structural obstacles blocking the expansion of the indigenous private sector in developing nations - especially in the poorest regions and communities in those countries.

Financing the Water Sector

See also separate Article on Financing the Water Sector

Involving Private (and Development) Banks

"Bankability" of projects

What does Bankability mean?

KFW EUWI WG meeting.ppt

(Strategic Approach of KfW Development Bank in WSS Sector)

Case Studies of Bankable Water and Sewerage Utilities

This report (prepared by ARD Inc for review by USAID) provides interesting lessons from case studies of eight municipal water and sewerage utilities that have successfully made the transformation from unbankable to bankable conditions.

UNDP Partnerships in the region

UNDP Partnership with SNS Bank

Other UNDP PPP projects with banks

Banking the Unbanked in Fiji: The ANZ Bank and UNDP Partnership

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Description

UNDP’s engagement with the private sector in the Pacific is aimed at forging sustainable partnerships for achieving the Millennium Development Goals. The 2004 release of the report "Unleashing Entrepreneurship – Making Business Work for the Poor" by the Commission on the Private Sector and Development has provided both impetus and direction to further energize UNDP’s role in facilitating partnerships with the private sector that have clear pro-poor outcomes.

The UNDP and ANZ Bank Partnership for Banking the Unbanked in the Pacific is a tangible example of a substantive partnership aimed at pooling the respective strengths of each partner to devise viable and innovative banking services to the approximately 6 million people, living in both urban but largely rural communities, who have no access to financial services.

The atached paper focuses on the experiences of the Fiji Rural Banking service which was launched in October 2004.

Chapters fo the Report: Role of Private Sector and UNDP in Fiji Rural Banking System, Outcome, (Early) Lessons, Way Forward ...

Lessons Learned

a. Creative Thinking:
It required both partners to think out of the box. ANZ Bank to come up with a solution to what is widely considered an unviable market. UNDP needed to find a mechanism to partner with a commercial partner without jeopardizing its mandated neutrality. The partnership solidified quickly as both ANZ Bank and UNDP shared the same objectives and recognized each others strengths. Both partners recognize the importance of continual monitoring and learning to stay ahead of potential glitches as well as to identify new opportunities.

b. The Right People:
Having the right people to drive the partnership is seen as critical. The rural banking manager of ANZ Bank, supported by senior management, understood the longer term strategy of stimulating the growth of the rural economy. The UNDP project manager understood the commercial realities of the private sector and was able to find mutually acceptable solutions to marry hard financial imperatives with that of social capital formation.

c. The Importance of Financial Literacy:
Providing a banking service to a population who are under-exposed to modern financial instruments and services is like giving books to people without teaching them how to read. This aspect of the partnership was recognized by ANZ Bank as critical to its decision to bank the rural communities. The financial literacy training programme, designed and supported by UNDP, is being implemented with the National Microfinance Unit, respective Provincial Councils and other NGO partners. It is a 4-hour village-based training in the local vernacular covering the following topics:
Understanding your financial situation; Understand how you earn and spend; Setting goals and priorities; Planning a household budget; Why and how to save; How can Microfinance and banks help you; Preparing a savings plan;

The financial literacy training is generic in nature and is progressively being extended to all the 1,200 rural villages and settlements in the country – many of which are accessible only by bamboo rafts and horseback. It is also the first time that such training has been carried out in the rural areas. The cost of such public education, especially to rural and remote communities, is relative high. Development agencies can play a key role by supporting financial literacy training.

d. People Focused:
Participatory needs assessment and wide consultation was a critical element in designing both a responsive banking and financial literacy training programme. This process cannot be compromised. The overwhelming response and participation by rural communities in the banking service and financial training is a direct result of attentive listening to the people.

e. MFIs and Banks working towards an Inclusive Financial Sector:
From the outset, the rural banking service was seen as a threat by Microfinance organizations that looked at the bank as undermining their client base. The bank saw advantages in working with MFIs and UNDP is actively identifying linkages between MFIs and the bank. Despite these efforts, MFIs continue to work in isolation and, in some communities, have created confusion amongst the people as well as denying them the right to choose their financial intermediary. Much of this posture stems from a protective attitude and the absence a long-term vision aimed at building an inclusive financial sector where poor and low income people can enjoy permanent and unsubsidized access to all forms of financial services. Greater efforts at creating sustainable partnerships between MFIs and banks are needed and development agencies can play a role here.

UNDP/BFV-SG (Societe Generale) Partnership in Madagascar

on-going

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CSR - Corporate Social Responsibility

What is CSR?

Concrete UNDP Partnerships and projects

UNDP Partnership with Coke

The UN Global Compact =

HOW TO GUIDE on Facilitating Global Compact Local Networks - If you would like to find out more about the Global Compact, in particular GC national chapters, role and interests of UNDP in facilitating GC local initiatives.

(Donor-) Initiatives, Events, Links

UNEP-FI: UNEP FI Expert Workshop on Water & Finance (Quarter One 2006, Davos, Switzerland) - Coordinated by UNEP FI’s Water & Finance Project to begin its work on a set of water-related risk management guidelines for financial institutions and policy makers. The guidelines are meant to serve as a basis to build capacities in the financial sector and at policy level into what and how water-related risks should be assessed, thus encouraging new sources of long-term sustainable investments in the sector.; Workshop ("Founders Workshop") planned at the Stockholm World Water Week 2007 (see UNEP-FI for details)

For further information, please contact: [email protected]

Swiss Public-Private Partnerships for Water Supply and Sanitation: Initiative launched by the Swiss State Secretariat for Economic Affairs (seco), the Swiss Agency for Development and Cooperation (SDC) and the re-insurer Swiss Re; focus on Public-Private Partnerships. The Swiss Public-Private Partnerships for Water Supply and Sanitation initiative has issued a set of hands-on instruments, among which the Policy Principles and Implementation Guidelines, which are designed to support decision-makers and practitioners engaging in water sector restructuring and Public-Private Partnerships PPP in achieving high governance standards throughout preparation, planning and operations. (For further information, also visit: http://www.partnershipsforwater.net)

OECD Global Forum on Sustainable Development: Public-Private Partnerships in Water Supply and Sanitation – Recent Trends and New Opportunities”, Paris, 29-30 Nov 2006; Background papers, presentations, proceedings (to be published in due time), list ofparticipants, etc.

External (non-UNDP) examples of PPP

International Development Enterprises UK (IDE-UK) has launched its new website in Nov 05: http://www.ide-uk.org. IDE-UK uses an enterprise-based strategy to tackle poverty among poor farmers in Africa and Asia. Through developing and promoting simple, low-cost technology IDE-UK enables poor farmers to access and control water thereby increasing crop production and profit. IDE- UK establishes sustainable private-sector supply chains, working with small and medium enterprises, and specializes in market creation. It also support farmers to access local and regional markets, and become active market participants.

Public private partnerships (PPP) for water supply and sanitation are demanding ventures. A set of hands-on instruments, policy principles and implementation guidelines could support decision-makers and practitioners with PPP processes. The website http://www.partnershipsforwater.net makes such instruments available for everybody with access to internet. The instruments are the result of a Swiss initiative that included extensive involvement of experts and stakeholders from the public and private sector as well as from civil society.

Documents and References

Small-Scale Private Service Providers of Water Supply and Electricity

This document summarizes the key findings and conclusions of a literature review ofsmall-scale private service providers of water supply and electricity (SPSPs) conductedover a six-month period in 2003.

Financing and Provision of Basic Infrastructure: Synthesis, Commentary and Policy Implications of Water and Electricity Service Case Studies

The paper highlights the policy lessons and conclusions from nine case studies commissioned by the Commonwealth Foundation to independent scholars.

(Commonwealth Foundation, Jul 2003)

External References and Toolkits

The World bank's Toolkits for Private Participation in Water and Sanitation -

123.pdf

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