Water privatization
Encyclopedia
Water privatization is a short-hand for private sector participation in the provision of water services
and sanitation
, although sometimes it refers to privatization
and sale of water resources
themselves (see water trading
). As water services are seen as such a key public service
, water privatization is often controversial. Globally, about 70 million people or about 2% of the urban population is served by privately owned utilities. Another estimated 200 million people or 6% is served by utilities that are privately managed, but publicly owned, in about 40 countries. In addition, an unknown number of people is served by private small-scale water providers in developing countries.
Proponents of private sector participation argue that it has led to improvements in the efficiency and service quality of utilities. It is argued that it has increased investment and has contributed to expand access. They cite Manila
, Guayaquil in Ecuador
, Bukarest, several cities in Colombia
and Morocco
, as well as Côte d’Ivoire and Senegal as success stories. Critics however, content that private sector participation led to tariff increases and has turned a public good into a private good. They quote the aborted privatizations in Cochamamba, Bolivia, and Dar es-Salaam, Tanzania
, as well as the still privately managed water systems in Jakarta
and Berlin as failures. Water privatization in Buenos Aires, Argentina
and in England is cited by both supporters and opponents, each emphasizing different aspects of these cases. Statistical studies comparing public and private utilities show little difference in performance between them.
and the International Monetary Fund
played an important role in this process through the conditionality of their lending. However, some water privatizations failed, most notably in 2000 in Cochabamba, Bolivia, paving the way for a new pragmatism and a reduced emphasis on privatization.
In England and Wales, the emergence of the first private water companies dates back to the 17th century. In 1820 six private water companies operated in London. However, the market share of private water companies in London declined from 40% in 1860 to 10% in 1900. In the 1980s their share all over England and Wales was about 25%. The tide turned completely in 1989 when the conservative government of Margaret Thatcher
privatized all public water and sewer companies in England and Wales. In Scotland local governments dominated by the Labour party kept water systems in public hands.
The water sector in France has always been characterized by a coexistence of public and private management, with their respective shares fluctuating over time. The two largest private companies are Veolia Environnement, formerly the Compagnie Générale des Eaux
and then Vivendi Environnement, and Suez Environnement
, formerly Lyonnaise des Eaux and then Ondeo. The Compagnie Générale des Eaux was founded in 1853 and Lyonnaise des Eaux in 1880. In the late 19th century municipal governments, dissatisfied with high tariffs and the lack of expansion of networks to poor neighborhoods, did not renew private concessions and created instead municipally-owned utilities. The share of private water operators declined to 17% in 1936. The share of the private sector gradually increased to 32% in 1954, 50% in 1975 and 80% in 2000 using a new model: Instead of the concession contracts, which gave the responsibility to finance investments to the private company, the new lease contracts (affermages) made the private operator only responsible for operation and maintenance, while major investments became a responsibility of the municipalities. The French water companies also escaped the nationalizations after the war and later under President Francois Mitterrand
, because the central government did not want to interfer with the autonomy of municipalities and was unwilling to finance heavy investments. The water supply of Paris was privatized in 1984 when a conservative mayor awarded two lease contracts, each covering one half of the city. In 2010 a socialist mayor remunicipalized the water system of the French capital.
In Spain, private water companies maintained their position, budging the global trend during the late 19th and early 20th century. The largest private water company in Spain is Aguas de Barcelona. Initially created by French and Belgian investors, it was sold to Spanish investors in 1920, only to gradually come back under French control in the early 21st century.
In Germany, a British private water company had set up the first piped water system and treatment plant in Berlin in 1852, but the city, dissatisfied with the lack of investment in particular in sewerage, cancelled the contract in 1873. In 1887 Gelsenwasser was created, which remains an important regional water supplier in the Ruhr
district. The German water sector has always been dominated by municipally-owned utilities. Despite this, the water system of Berlin was partially privatized in 1999 for fiscal reasons.
In the United States, 60% of piped water systems were privately owned in 1850. This share declined to 30% in 1924. In 2000, 73 million Americans (24%) received water services from a privately owned water utility or a municipal utility operating under a public-private partnership.
European and local private water companies expanded in Latin America, Africa and Asia in the second half of the 19th century, all while their importance declined in Europe. In Uruguay water supply was privately managed from 1867 to 1950; in Buenos Aires, Argentina, for a brief period from 1887 to 1891 and again from 1993 to 2006; in Cairo and Alexandria, Egypt, from 1867 to 1956; in Beirut, Lebanon, from the 19th century until 1951; in Shanghai, China, from 1875 to 1949; in Casablanca, Morocco, from 1914 to 1962 and then again after 1997; in Senegal until 1971 and then again after 1996; and in Cote d'Ivoire from colonial times until today without interruption.
In Central and Eastern Europe, private companies expanded during the late 1990s, especially in Bulgaria, the Czech Republic, Hungary and Romania.
, Colombia
and Cuba
increasing efficiency and improving service quality were important motives for water privatization. Proponents argue that public utilities may be poorly managed. This can take the form of low bill collection, high water losses (non-revenue water
) of more than 50% and intermittent water supply, sometimes lasting only for a few hours a day or a few days per week.
and the International Monetary Fund
(IMF), often plays a role, as it was the case in Bolivia
and in several African countries. This may take the form of structural adjustment programs. Other aid agencies have also supported water privatization. These include the Inter-American Development Bank
(e.g., in Ecuador, Colombia and Honduras), the Asian Development Bank
(e.g., in China), the European Bank for Reconstruction and Development
in Eastern Europe, German development cooperation through KfW
(e.g., in Albania, Armenia, Jordan and Peru), French development cooperation (e.g., in Senegal) and British development cooperation (e.g., in Tanzania and Guyana). In the UK, the World Development Movement campaigned against the support of water privatization through aid from the UK.
As of 2011, about 270 million people received water from private companies in more than 40 countries, including about 160 million in developed countries and 110 million in developing countries. 84 percent of contracts awarded mostly in the 1990s were still active. 24 countries, such as Argentina, Bolivia and a number of small countries like Guyana or the Central African Republic, had reverted to public management. In England and Wales the entire population is served by private water companies. In Chile, the Czech Republic, Armenia and four African countries - Cote d’Ivoire, Ghana, Gabon and Senegal – private companies serve the entire urban population. In France private providers dominate, while in Spain and Hungary they serve almost half the population. In the United States, Mexico, Colombia, Brazil, China, India, Malaysia, Morocco, South Africa, Germany, Poland and Russia some cities are served by private companies. In the Philippines, Indonesia, Bulgaria, Estonia, Algeria and Cuba private water companies serve the capital city.
List of countries with formal private sector participation in urban water supply with number and type of contracts
A World Bank report lists the following examples of successful public-private partnerships in developing countries: the full privatization in Chile
; the mixed companies in Colombia
; the concessions in Guayaquil in Ecuador, Brazil
, Argentina
, Eastern Manila in the Philippines
, Morocco
and Gabun; and the lease contracts in Côte d'Ivoire, Senegal
and Yerevan in Armenia
.
In many countries, such as in Japan, Canada, Egypt, Pakistan or Scandinavia, there are no private water companies. Nicaragua, the Netherlands and Uruguay have even passed laws banning water privatization. In Italy, in June 2011 a law favoring water privatization was repealed by an overwhelming majority of Italians through a referendum.
.
The three most common forms of PPPs, in the order of increasing responsibilities for the private partner, are:
Concessions are the most common form of PPPs in water supply and sanitation. They are followed by leases, also called affermages, that are most commonly used in France and in Francophone West Africa. Management contracts are used in Saudi Arabia, Algeria and Armenia, among others. Mixed-ownership companies are most common in Spain, Colombia and Mexico.
A concession for the construction of a new plant is called a Build-Operate-Transfer
(BOT) contract. Under a BOT contract the private operator signs an agreement with a utility that purchases treated water or wastewater treatment services.
has financed parallel investments, while a concession was awarded by the government after direct negotiations.
Globally, regulation of private water companies is being carried out by the following types of public entities or, sometimes, a combination of them.
Water privatization in Manila began in 1997 with the award of two concession contracts for the Eastern and Western halves of Metro Manila
. The concessions represent the largest population served by private operators in the developing world. As of 2010, the concession in Eastern Manila is highly successful and has led to significant improvements in access, service quality and efficiency. : the population served more than doubled from 3 in 1997 to 6.1 million in 2009, the share of customers with continuous water supply increased from 26% to more than 98% and non-revenue water
declined from 63% to 16%. The concession in Western Manila failed when the company Maynilad went bankrupt in 2003. It was sold to new investors in 2007 and performance has improved since then. The share of the population with access to piped water in Western Manila increased from 67% in 1997 to 86% in 2006 and the share of customers that enjoys 24-hour water supply increased from 32% in 2007 to 71% in early 2011.
Water privatization in Argentina began in 1992 under the government of Carlos Menem
as part of one of the world's largest privatization programs. Concessions were signed in 28% of the country's municipalities covering 60% of the population, including in 1993 for the metropolitan area of Buenos Aires
. After the 2001 economic crisis
, under the government of Néstor Kirchner
, almost all concessions were terminated, including in Buenos Aires in 2006. The impact of the concession remains controversial. The government and critics argue that the concessionaire failed to achieve the targets set under the concession contract in terms of expansion of access, investment and service quality. Proponents concede that targets were not reached, but argue that a freeze in tariffs at the time of the devaluation of the Peso during the Argentinian economic crisis in 2001 violated the contract and thus made it impossible to achieve the original targets. According to the Argentinian economist Sebastian Galiani, the public company OSN had invested only US$25m per year between 1983 and 1993, while the private concessionaire Aguas Argentinas increased investments to around US$200m per year between 1993 and 2000. According to the private concessionnaire Suez, during the 13 year-duration of its concession it extended access to water to 2 million people and access to sanitation to 1 million people, despite the economic crisis. In July 2010 the International Center for the Settlement of Investment Disputes (ICSID) ruled that the Argentinian government unfairly refused to allow the private concessionaires to raise tariffs during the period after the devaluation of the Argentine peso in 2001 and that the private companies are entitled to damages. The private companies announced that they would seek US$1.2bn in damages.
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In the mid-1990s the government of Bolivia
, under pressure from the World Bank
, decided to privatize water supply in the country’s third largest city, Cochabamba
. In the previous years, despite funds made available by the World Bank to support the public utility of Cochabamba, access to piped water in the city had decreased to 40%, water losses had remained high at 40% and water was supplied only 4 hours a day. Those not connected to the network paid ten times as much for their water to private vendors as those who were. This contrasted with the Bolivia's second largest city, Santa Cruz
, where a utility run as a cooperative had managed to increase access and improve service quality with the support of the World Bank. In Santa Cruz privatization had never been considered.
In 1997 a first bid for a water concession in Cochabamba had been declared void at the request of the mayor of Cochabamba, Manfred Reyes Villa
. He wanted the construction of a large dam, the Misicuni dam, and a pipeline from the dam to the city to be included in the concession. The World Bank had opposed the dam as unnecessarily expensive and subsequently ended its involvement related to water supply in the city. Despite this, in the view of the public the World Bank remains inseparably linked to the Cochabamba privatization.
The government proceeded to bid out the concession, this time including the Misicuni dam. Only a single company submitted a bid, Aguas del Tunari, a consortium led by Bechtel
. The government accepted the bid and signed the concession. The consortium was guaranteed a minimum 15% annual return. In parallel, a law was passed that appeared to give a monopoly
to Aguas del Tunari over all water resources, including water used for irrigation, communal water systems and even rainwater collected on roofs. Upon taking control the company raised water tariffs by 35%.
Demonstrations and a general strike erupted in January 2000 in protest against the tariff increase and the perceived privatization of water resources. The government arrested the leader of the protesters, Oscar Olivera
. But the protests spread to the entire country and the government declared a state of emergency in April. Protests still continued and several people were killed. In the midst of the turmoil the employees of Aguas del Tunari fled from Cochabamba. The government finally released Oscar Olivera and signed an agreement with him stating that the concession would be ended. The government then told Aguas del Tunari that by leaving Cochabamba they had abandoned the concession and parliament revoked Law 2029. The Cochabamba protests became a worldwide symbol of struggle against neoliberalism
and the Cochabamba privatization is probably, both among activists against globalization
and the general public, by far the best known example of water privatization.
The company, insisting that it had been forced out, filed a $40 million lawsuit in the International Centre for Settlement of Investment Disputes
. The proceedings, which were held behind closed doors, ended in 2006 with a settlement under which Bechtel dropped its claim. With financing from the Inter-American Development Bank
the city expanded its piped water system in the aftermath of the riots. Nevertheless, under public management half of the 600,000 people of Cochabamba remain without piped water and those with it continue to receive intermittent service. Oscar Olivera
the leading figure in the protests admitted, "I would have to say we were not ready to build new alternatives."
Between 1996 and 2007, public-private partnerships for water and sewer services in more than 40 Colombian cities were entered into, serving more than 20% of the country's urban population. Most of the contracts were awarded in municipalities with highly deteriorated infrastructure, such as Barranquilla
and Cartagena
. The central government financed most investments through grants, thus reducing the need to increase tariffs. Water privatization in Colombia was largely homegrown, adapting models used elsewhere to the particular circumstances and culture of Colombia. A model introduced from Spain, the mixed company with a majority stake by the municipality and a minority stake by a private operator, was particularly successful. Foreign water companies won some of the early contracts, but quickly sold a majority of their shares to Colombian operators. There was a significant increase in access under private contracts. For example, in Cartagena water supply coverage increased from 74 percent to almost universal coverage, while sewer coverage went up from 62 percent to 79 percent between 1996 and 2006. Half a million people gained access and 60 percent of the new connections benefited families in the poorest income quintile. To achieve universal coverage, the operator made extensive use of community bulk-supply schemes that provide safe water to the many illegal settlements that were expanding on the city’s periphery. However, there are no conclusive evidence showing that access increased more rapidly under private contracts than in the case of publicly managed utilities. In Cartagena, tariffs declined substantially, indicating that the operator passed on efficiency gains to consumers.
techniques. The results also depend on the choice of the indicator used to measure impact: One common indicator is the increase in access to water supply and sewerage. Other indicators are changes in tariffs, investments, water-borne diseases or indicators for service quality (e.g. continuity of supply or drinking water quality) and efficiency (e.g. water losses or labor productivity).
analyzes how access, quality of service, operational efficiency and tariffs have evolved under 65 public-private partnerships for urban water utilities in developing countries. The study estimates that "PPP projects have provided access to piped water for more than 24 million people in developing countries since 1990". Interestingly and unlike it was expected by proponents of privatization, private operators contributed little in terms of financing, which was provided to a large extent by tariff revenues and development aid.
A study that compared changes under PPPs to changes that occurred in publicly managed utilities during the same period in Argentina, Bolivia and Brazil found that access to water supply and sanitation increased both for utilities under private and under public management to the same extent. The study concludes that "private sector participation, per se, may not have been responsible for those improvements".
Others however, have argued that privatization process is often associated with increase in tariffs - which reduces the accessibility of the resource for poor households.. As a result of privatization, water-cut offs are a common occurrence - with those unable to afford the price rises having to seek less sanitised sources.
, found that between 1991-1997 in Argentina child mortality fell 8 percent more in cities that had privatized their water and sewer services compared to those that remained under public or cooperative management. The effect was largest in poorest areas (26 percent difference in reduction). The main reason was a greater expansion of access to water in cities with privatized utilities. This increase was concentrated in poorer areas that did not receive services before private sector participation was introduced.
However, the data on the health dimensions of privatization is mixed, with others arguing that there is no compelling evidence to privatize water utilities based on the rationale of health outcomes
A study of household water expenditures in cities under private and public management in the U.S., however, concludes that "whether water systems are owned by private firms or governments may, on average, simply not matter much."
An earlier World Bank paper reviews six empirical studies on the impact of private management on the efficiency of water utilities in Africa, Asia, Argentina and Brazil. It concluded that some studies did find evidence for higher cost-efficiency by private operators and for improvements as a result of privatizations, but overall evidence suggests that "there is no statistically significant difference between the efficiency performance of public and private operators in this sector." A 2008 literature review by the Asian Development Bank shows that of 20 studies reviewed, only three show concrete evidence on technical efficiency improvements or cost reductions under private management.
Domestic water operators have a strong presence in Brazil, Colombia, China, Malaysia, and the Philippines.
Public water companies also sometimes participate in bids for private water contracts. For example, the Moroccan state-owned water utility ONEP has won a bid in Cameroon and the Dutch publicly owned water firm Vitens has won a management contract in Ghana
.
Countries which had private sector participation in water supply in the past:
Multimedia
Water supply
Water supply is the provision of water by public utilities, commercial organisations, community endeavours or by individuals, usually via a system of pumps and pipes...
and sanitation
Sanitation
Sanitation is the hygienic means of promoting health through prevention of human contact with the hazards of wastes. Hazards can be either physical, microbiological, biological or chemical agents of disease. Wastes that can cause health problems are human and animal feces, solid wastes, domestic...
, although sometimes it refers to privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
and sale of water resources
Water resources
Water resources are sources of water that are useful or potentially useful. Uses of water include agricultural, industrial, household, recreational and environmental activities. Virtually all of these human uses require fresh water....
themselves (see water trading
Water trading
Water trading is the process of buying and selling of water access entitlements, also often called water rights. The terms of the trade can be either permanent or temporary, depending on the legal status of the water rights. Some of the western states of the United States, Chile, South Africa,...
). As water services are seen as such a key public service
Public services
Public services is a term usually used to mean services provided by government to its citizens, either directly or by financing private provision of services. The term is associated with a social consensus that certain services should be available to all, regardless of income...
, water privatization is often controversial. Globally, about 70 million people or about 2% of the urban population is served by privately owned utilities. Another estimated 200 million people or 6% is served by utilities that are privately managed, but publicly owned, in about 40 countries. In addition, an unknown number of people is served by private small-scale water providers in developing countries.
Proponents of private sector participation argue that it has led to improvements in the efficiency and service quality of utilities. It is argued that it has increased investment and has contributed to expand access. They cite Manila
Water privatization in the Philippines
Water privatization in Metro Manila began in 1997 with the high-profile award of two concession contracts for the Eastern and Western halves of Metro Manila. The concessions represent the largest population served by private operators in the developing world...
, Guayaquil in Ecuador
Water privatization in Ecuador
Water privatization in Guayaquil began with the signing of a concession agreement in Guayaquil, the largest city and economic capital of Ecuador. There has been no other case of water privatization in the country. In Guayaquil, the service was transferred to the private company under a concession...
, Bukarest, several cities in Colombia
Water privatization in Colombia
Private sector participation in providing water supply and sanitation services in Colombia has been more stable and successful than in some other Latin American countries such as Argentina or Bolivia...
and Morocco
Water privatization in Morocco
Water privatization in Morocco goes back to the times of the French Protectorate when most water supply systems were run under a private concession. After independence the private utility was nationalized, but in the mid-1990s the Moroccan government privatized water and sewer services again,...
, as well as Côte d’Ivoire and Senegal as success stories. Critics however, content that private sector participation led to tariff increases and has turned a public good into a private good. They quote the aborted privatizations in Cochamamba, Bolivia, and Dar es-Salaam, Tanzania
Water privatization in Tanzania
Water privatization in Dar es Salaam began with the award of a 10-year lease contract signed in 2003 for Dar es Salaam, the largest city and former capital of Tanzania. It was signed between the government of Tanzania and City Water, a consortium consisting of the British firm Biwater, Gauff...
, as well as the still privately managed water systems in Jakarta
Water privatization in Indonesia
Water privatization in Jakarta was undertaken when the government of then President Suharto granted two 25-year concession contracts in 1998 without competitive bidding...
and Berlin as failures. Water privatization in Buenos Aires, Argentina
Water privatization in Argentina
The privatization of water and sanitation services in Argentina between 1991 and 1999 under the government of Carlos Menem was part of one of the worlds largest privatization programs. Water and sanitation concessions with the private sector were signed in 28% of the country's municipalities...
and in England is cited by both supporters and opponents, each emphasizing different aspects of these cases. Statistical studies comparing public and private utilities show little difference in performance between them.
History
Privately owned water utilities were common in Europe, the United States and Latin America in the mid- and late 19th century. Their importance gradually faded away until the early 20th century as proved unable to expand access and publicly owned utilities became stronger. In France they regained strength after the Second World War under a new form of partnership where the public sector retained most of the responsibility for financing infrastructure. A second global dawn of private water utilities came in the early 1990s in the aftermath of the Thatcher privatizations in England, the fall of communism and the ensuing global emphasis on free market policies. The World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
and the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
played an important role in this process through the conditionality of their lending. However, some water privatizations failed, most notably in 2000 in Cochabamba, Bolivia, paving the way for a new pragmatism and a reduced emphasis on privatization.
In England and Wales, the emergence of the first private water companies dates back to the 17th century. In 1820 six private water companies operated in London. However, the market share of private water companies in London declined from 40% in 1860 to 10% in 1900. In the 1980s their share all over England and Wales was about 25%. The tide turned completely in 1989 when the conservative government of Margaret Thatcher
Margaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...
privatized all public water and sewer companies in England and Wales. In Scotland local governments dominated by the Labour party kept water systems in public hands.
The water sector in France has always been characterized by a coexistence of public and private management, with their respective shares fluctuating over time. The two largest private companies are Veolia Environnement, formerly the Compagnie Générale des Eaux
Compagnie Générale des Eaux
Compagnie Générale des Eaux was a French multinational company which gave birth to three world's leaders in their respective fields: VINCI, Veolia Environnement and Vivendi....
and then Vivendi Environnement, and Suez Environnement
Suez Environnement
Suez Environnement S.A. is a French-based utility company which operates largely in the water treatment and waste management sectors. Formerly an operating division of Suez, the company was spun out as a stand-alone entity as part of the merger to form GDF Suez on 22 July 2008. GDF Suez remains...
, formerly Lyonnaise des Eaux and then Ondeo. The Compagnie Générale des Eaux was founded in 1853 and Lyonnaise des Eaux in 1880. In the late 19th century municipal governments, dissatisfied with high tariffs and the lack of expansion of networks to poor neighborhoods, did not renew private concessions and created instead municipally-owned utilities. The share of private water operators declined to 17% in 1936. The share of the private sector gradually increased to 32% in 1954, 50% in 1975 and 80% in 2000 using a new model: Instead of the concession contracts, which gave the responsibility to finance investments to the private company, the new lease contracts (affermages) made the private operator only responsible for operation and maintenance, while major investments became a responsibility of the municipalities. The French water companies also escaped the nationalizations after the war and later under President Francois Mitterrand
François Mitterrand
François Maurice Adrien Marie Mitterrand was the 21st President of the French Republic and ex officio Co-Prince of Andorra, serving from 1981 until 1995. He is the longest-serving President of France and, as leader of the Socialist Party, the only figure from the left so far elected President...
, because the central government did not want to interfer with the autonomy of municipalities and was unwilling to finance heavy investments. The water supply of Paris was privatized in 1984 when a conservative mayor awarded two lease contracts, each covering one half of the city. In 2010 a socialist mayor remunicipalized the water system of the French capital.
In Spain, private water companies maintained their position, budging the global trend during the late 19th and early 20th century. The largest private water company in Spain is Aguas de Barcelona. Initially created by French and Belgian investors, it was sold to Spanish investors in 1920, only to gradually come back under French control in the early 21st century.
In Germany, a British private water company had set up the first piped water system and treatment plant in Berlin in 1852, but the city, dissatisfied with the lack of investment in particular in sewerage, cancelled the contract in 1873. In 1887 Gelsenwasser was created, which remains an important regional water supplier in the Ruhr
Ruhr
The Ruhr is a medium-size river in western Germany , a right tributary of the Rhine.-Description:The source of the Ruhr is near the town of Winterberg in the mountainous Sauerland region, at an elevation of approximately 2,200 feet...
district. The German water sector has always been dominated by municipally-owned utilities. Despite this, the water system of Berlin was partially privatized in 1999 for fiscal reasons.
In the United States, 60% of piped water systems were privately owned in 1850. This share declined to 30% in 1924. In 2000, 73 million Americans (24%) received water services from a privately owned water utility or a municipal utility operating under a public-private partnership.
European and local private water companies expanded in Latin America, Africa and Asia in the second half of the 19th century, all while their importance declined in Europe. In Uruguay water supply was privately managed from 1867 to 1950; in Buenos Aires, Argentina, for a brief period from 1887 to 1891 and again from 1993 to 2006; in Cairo and Alexandria, Egypt, from 1867 to 1956; in Beirut, Lebanon, from the 19th century until 1951; in Shanghai, China, from 1875 to 1949; in Casablanca, Morocco, from 1914 to 1962 and then again after 1997; in Senegal until 1971 and then again after 1996; and in Cote d'Ivoire from colonial times until today without interruption.
In Central and Eastern Europe, private companies expanded during the late 1990s, especially in Bulgaria, the Czech Republic, Hungary and Romania.
Motives
The motives for water privatization vary from one case to the other, and they often determine the choice of the mode of privatization: Management and lease contracts are used to increase efficiency and improve service quality, while asset sales and concessions primarily aim to reduce the fiscal burden or to expand access. Ideological motives and external influences also play a role. Often several of the above motives are combined.Increasing efficiency and improving service quality
In Algeria, Saudi ArabiaWater supply and sanitation in Saudi Arabia
Water supply and sanitation in Saudi Arabia is characterized by significant investments in seawater desalination, water distribution, sewerage and wastewater treatment leading to a substantial increase in access to drinking water and sanitation over the past decades...
, Colombia
Water privatization in Colombia
Private sector participation in providing water supply and sanitation services in Colombia has been more stable and successful than in some other Latin American countries such as Argentina or Bolivia...
and Cuba
Water privatization in Cuba
Water privatization in Cuba began in 2000 when the socialist government of Cuba signed a 25-year concession contract with a private company to manage the water and sewer system in 12 of the 15 municipalities that make up the country's capital Havana. The company, called Aguas de la Habana, is...
increasing efficiency and improving service quality were important motives for water privatization. Proponents argue that public utilities may be poorly managed. This can take the form of low bill collection, high water losses (non-revenue water
Non-revenue water
Non revenue water is water that has been produced and is “lost” before it reaches the customer. Losses can be real losses or apparent losses . High levels of NRW are detrimental to the financial viability of water utilities, as well to the quality of water itself...
) of more than 50% and intermittent water supply, sometimes lasting only for a few hours a day or a few days per week.
External influences
External influences, such as from the World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
and the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF), often plays a role, as it was the case in Bolivia
Water privatization in Bolivia
The privatization of water supply and sanitation in Bolivia took place during the second mandate of Bolivian President Hugo Banzer in the form of two major private concessions: One in La Paz/El Alto to Aguas de Illimani S.A...
and in several African countries. This may take the form of structural adjustment programs. Other aid agencies have also supported water privatization. These include the Inter-American Development Bank
Inter-American Development Bank
The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean...
(e.g., in Ecuador, Colombia and Honduras), the Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
(e.g., in China), the European Bank for Reconstruction and Development
European Bank for Reconstruction and Development
Founded in 1991, the European Bank for Reconstruction and Development uses the tools of investment to help build market economies and democracies in 30 countries from central Europe to central Asia. Its mission was to support the formerly communist countries in the process of establishing their...
in Eastern Europe, German development cooperation through KfW
KFW
KFW may refer to:*Keith Fullerton Whitman , an American musician*KfW or Kreditanstalt für Wiederaufbau, a German public-sector financial institution...
(e.g., in Albania, Armenia, Jordan and Peru), French development cooperation (e.g., in Senegal) and British development cooperation (e.g., in Tanzania and Guyana). In the UK, the World Development Movement campaigned against the support of water privatization through aid from the UK.
Fiscal motives
In some cases, where access is already universal and service quality is good, fiscal motives dominate, as it was the case in Berlin, Germany, and in Chile. In Berlin the state government sold a 49.9% share of its water utility in 1999 for 1.69bn Euros in exchange for a guaranteed profit for the private shareholders amounting to the interest rate on 10-year government bonds plus 2 percent, as specified in a contract that was kept confidential until the state government was forced by a referendum to make it public. As a result, tariffs increased (15% in 2004 alone) and the state government's revenues from the company declined compared to the situation before privatization (168m Euro profit for the state in 1997 compared to a 10m Euro loss in 2003). In Chile, where no wastewater treatment plants existed prior to privatization, the government's desire to finance their construction off-budget drove privatization in 1998.Prevalence of public-private partnerships
List of countries with formal private sector participation in urban water supply with number and type of contracts
| Country | Cities | Type and number of contracts | Start date |
|---|---|---|---|
| France | 13,500 organizing entities (municipalities or associations of municipalities) | Concessions and leases (hundreds) | 19th century |
| England Water privatization in England Water privatisation was undertaken in 1989 by the government of Margaret Thatcher which partly privatised the ten previously public regional water authorities in England and Wales through the sale of assets... |
Entire country | Full privatization (26) | 1989 |
| United States | Mostly small cities in more than 20 states | Private from the beginning | 19th century |
| Côte d'Ivoire | All urban areas | Lease (1) | 1960 in Abidjan, 1973 country-wide |
| Gabon | All urban areas | Concession (1) | 1997 |
| Mozambique | Maputo Maputo Maputo, also known as Lourenço Marques, is the capital and largest city of Mozambique. It is known as the City of Acacias in reference to acacia trees commonly found along its avenues and the Pearl of the Indian Ocean. It was famous for the inscription "This is Portugal" on the walkway of its... and other cities |
Lease (1) and management contract (1) | 1999 |
| Senegal | All urban areas | Lease (1) | 1996 |
| South Africa | Mbombela and Dolphin Coast | Concessions (2) | 1992 |
| Malaysia | Selangor Selangor Selangor also known by its Arabic honorific, Darul Ehsan, or "Abode of Sincerity") is one of the 13 states of Malaysia. It is on the west coast of Peninsular Malaysia and is bordered by Perak to the north, Pahang to the east, Negeri Sembilan to the south and the Strait of Malacca to the west... and Penang Penang Penang is a state in Malaysia and the name of its constituent island, located on the northwest coast of Peninsular Malaysia by the Strait of Malacca. It is bordered by Kedah in the north and east, and Perak in the south. Penang is the second smallest Malaysian state in area after Perlis, and the... |
Concession (1) and full privatization (1) | 1992 |
| Indonesia Water privatization in Indonesia Water privatization in Jakarta was undertaken when the government of then President Suharto granted two 25-year concession contracts in 1998 without competitive bidding... |
Jakarta Jakarta Jakarta is the capital and largest city of Indonesia. Officially known as the Special Capital Territory of Jakarta, it is located on the northwest coast of Java, has an area of , and a population of 9,580,000. Jakarta is the country's economic, cultural and political centre... |
Concessions (2) | 1998 |
| Philippines Water privatization in the Philippines Water privatization in Metro Manila began in 1997 with the high-profile award of two concession contracts for the Eastern and Western halves of Metro Manila. The concessions represent the largest population served by private operators in the developing world... |
Manila Metro Manila Metropolitan Manila , the National Capital Region , or simply Metro Manila, is the metropolitan region encompassing the City of Manila and its surrounding areas in the Philippines... |
Concessions (2) | 1996 |
| Armenia Water privatization in Armenia Water privatization in Armenia – or, more accurately, the participation of private companies in the provision of water supply under contract with the government of Armenia – has been prepared since the mid-1990s. The first management contract for water supply in Armenia, covering the capital... |
Yerevan Yerevan Yerevan is the capital and largest city of Armenia and one of the world's oldest continuously-inhabited cities. Situated along the Hrazdan River, Yerevan is the administrative, cultural, and industrial center of the country... and others |
Lease (1) and management contracts (2) | 2000 |
| Brazil Water privatization in Brazil Water privatization in Brazil has been initiated in 1996. In 2008 private companies provided 7 million Brazilians - 4% of the urban population - in 10 of the country’s 26 states with drinking water... |
65 cities in 10 states | Concessions | 1995 |
| Chile Water privatization in Chile The privatization of water in Chile was undertaken from 1998 to 2005 under the democratically elected governments of Eduardo Frei and Ricardo Lagos. Chile is the only country in Latin America that privatized its entire urban water supply and sanitation sector... |
All urban areas | Full privatizations and concession (1) | 1998 |
| Colombia Water privatization in Colombia Private sector participation in providing water supply and sanitation services in Colombia has been more stable and successful than in some other Latin American countries such as Argentina or Bolivia... |
Barranquilla Barranquilla Barranquilla is an industrial port city and municipality located in northern Colombia, near the Caribbean Sea. The capital of the Atlántico Department, it is the largest industrial city and port in the Colombian Caribbean region with a population of 1,148,506 as of 2005, which makes it Colombia's... , Cartagena, Colombia Cartagena, Colombia Cartagena de Indias , is a large Caribbean beach resort city on the northern coast of Colombia in the Caribbean Coast Region and capital of Bolívar Department... and more than 40 other cities and towns |
Mixed-ownership companies and concessions | 1996 |
| Ecuador | Guayaquil Guayaquil Guayaquil , officially Santiago de Guayaquil , is the largest and the most populous city in Ecuador,with about 2.3 million inhabitants in the city and nearly 3.1 million in the metropolitan area, as well as that nation's main port... |
Concession (1) | 2001 |
| Morocco Water privatization in Morocco Water privatization in Morocco goes back to the times of the French Protectorate when most water supply systems were run under a private concession. After independence the private utility was nationalized, but in the mid-1990s the Moroccan government privatized water and sewer services again,... |
Casablanca Casablanca Casablanca is a city in western Morocco, located on the Atlantic Ocean. It is the capital of the Grand Casablanca region.Casablanca is Morocco's largest city as well as its chief port. It is also the biggest city in the Maghreb. The 2004 census recorded a population of 2,949,805 in the prefecture... , Rabat Rabat Rabat , is the capital and third largest city of the Kingdom of Morocco with a population of approximately 650,000... , Tangiers and Tetouan Tétouan Tetouan is a city in northern Morocco. The Berber name means literally "the eyes" and figuratively "the water springs". Tetouan is one of the two major ports of Morocco on the Mediterranean Sea. It lies a few miles south of the Strait of Gibraltar, and about 40 mi E.S.E. of Tangier... |
Concessions (3) | 1997 |
| Honduras Water privatization in Honduras Water privatization in Honduras has been limited to the city of San Pedro Sula which has signed a 30-year concession contract with a private operator. Two other cities, Puerto Cortes and Choloma, have introduced an interesting management model that cannot be characterized as either private or... |
San Pedro Sula San Pedro Sula San Pedro Sula is a city in Honduras. It is located in the northwest corner of the country, in the Valle de Sula , about 60 km south of Puerto Cortés on the Caribbean. With an estimated population of 638,259 people in the main municipality, and 802,598 in its metro area , it is the second... |
Concession (1) | 2000 |
| Ghana Water privatization in Ghana Water privatization in Ghana has been discussed since the early 1990s as a reaction to poor service quality and low efficiency of the existing urban water utility Ghana Water and Sewerage Corporation , renamed Ghana Water Company Ltd. in 1999... |
All urban areas | Management contract (1) | 2000 |
| Saudi Arabia | Riyadh Riyadh Riyadh is the capital and largest city of Saudi Arabia. It is also the capital of Riyadh Province, and belongs to the historical regions of Najd and Al-Yamama. It is situated in the center of the Arabian Peninsula on a large plateau, and is home to 5,254,560 people, and the urban center of a... , Jeddah Jeddah Jeddah, Jiddah, Jidda, or Jedda is a city located on the coast of the Red Sea and is the major urban center of western Saudi Arabia. It is the largest city in Makkah Province, the largest sea port on the Red Sea, and the second largest city in Saudi Arabia after the capital city, Riyadh. The... , Mecca Mecca Mecca is a city in the Hijaz and the capital of Makkah province in Saudi Arabia. The city is located inland from Jeddah in a narrow valley at a height of above sea level... and Taif |
Management contracts (3) | 2008 |
| Algeria | Algiers Algiers ' is the capital and largest city of Algeria. According to the 1998 census, the population of the city proper was 1,519,570 and that of the urban agglomeration was 2,135,630. In 2009, the population was about 3,500,000... , Constantine Constantine, Algeria Constantine is the capital of Constantine Province in north-eastern Algeria. It was the capital of the same-named French département until 1962. Slightly inland, it is about 80 kilometres from the Mediterranean coast, on the banks of Rhumel river... and Oran Oran Oran is a major city on the northwestern Mediterranean coast of Algeria, and the second largest city of the country.It is the capital of the Oran Province . The city has a population of 759,645 , while the metropolitan area has a population of approximately 1,500,000, making it the second largest... |
Management contracts (3) | 2005 |
| Cuba Water privatization in Cuba Water privatization in Cuba began in 2000 when the socialist government of Cuba signed a 25-year concession contract with a private company to manage the water and sewer system in 12 of the 15 municipalities that make up the country's capital Havana. The company, called Aguas de la Habana, is... |
Havana Havana Havana is the capital city, province, major port, and leading commercial centre of Cuba. The city proper has a population of 2.1 million inhabitants, and it spans a total of — making it the largest city in the Caribbean region, and the most populous... |
Concession (1) | 2000 |
| China | Shenzhen Shenzhen Shenzhen is a major city in the south of Southern China's Guangdong Province, situated immediately north of Hong Kong. The area became China's first—and one of the most successful—Special Economic Zones... , Fuzhou Fuzhou Fuzhou is the capital and one of the largest cities in Fujian Province, People's Republic of China. Along with the many counties of Ningde, those of Fuzhou are considered to constitute the Mindong linguistic and cultural area.... , Lanzhou Lanzhou Lanzhou is the capital and largest city of Gansu Province in Northwest China. A prefecture-level city, it is a key regional transportation hub, allowing areas further west to maintain railroad connections to the eastern half of the country.... , Wuhu City and 23 others |
Concessions (22), full privatizations (3) and management contracts (2) | 2001 |
| Spain | Barcelona Barcelona Barcelona is the second largest city in Spain after Madrid, and the capital of Catalonia, with a population of 1,621,537 within its administrative limits on a land area of... and more than 1,000 other municipalities |
Mixed-ownership companies and concessions | 1867 |
| Romania | Bucharest Bucharest Bucharest is the capital municipality, cultural, industrial, and financial centre of Romania. It is the largest city in Romania, located in the southeast of the country, at , and lies on the banks of the Dâmbovița River.... , Timisoara Timisoara Timișoara is the capital city of Timiș County, in western Romania. One of the largest Romanian cities, with an estimated population of 311,586 inhabitants , and considered the informal capital city of the historical region of Banat, Timișoara is the main social, economic and cultural center in the... , Ploesti and Otopeni Otopeni Otopeni is a town in Ilfov County, Romania, some north of Bucharest along the road to Ploieşti. It has 10,215 inhabitants, of which 99.0% are Romanians. One village, Odăile, is administered by the town.... |
Concessions (3) and Lease (1) | 2000 |
| Bulgaria | Sofia Sofia Sofia is the capital and largest city of Bulgaria and the 12th largest city in the European Union with a population of 1.27 million people. It is located in western Bulgaria, at the foot of Mount Vitosha and approximately at the centre of the Balkan Peninsula.Prehistoric settlements were excavated... |
Concession (1) | 2000 |
| Poland | Gdansk Gdansk Gdańsk is a Polish city on the Baltic coast, at the centre of the country's fourth-largest metropolitan area.The city lies on the southern edge of Gdańsk Bay , in a conurbation with the city of Gdynia, spa town of Sopot, and suburban communities, which together form a metropolitan area called the... , Bielsko-Biala Bielsko-Biala -Economy and Industry:Nowadays Bielsko-Biała is one of the best-developed parts of Poland. It was ranked 2nd best city for business in that country by Forbes. About 5% of people are unemployed . Bielsko-Biała is famous for its textile, machine-building, and especially automotive industry... , Tarnowskie Gory Tarnowskie Góry Tarnowskie Góry is a town in Silesia in southern Poland, near Katowice. Borders on the Upper Silesian Metropolitan Union - metropolis with the population of 2 millions. Located in the Silesian Highlands.... & Miasteczko Slaskie Miasteczko Slaskie Miasteczko Śląskie is a small town in Silesia in southern Poland, near Katowice. Borders on the Upper Silesian Metropolitan Union - metropolis with the population of 2 millions. Located in the Silesian Highlands.... , Dabrowa Gornicza Dabrowa Górnicza Dąbrowa Górnicza is a city in Zagłębie Dąbrowskie in southern Poland, nearby Katowice. The north-east district of the Upper Silesian Metropolitan Union - metropolis with the population of almost 3 millions... , Glogow Glogów Głogów is a town in southwestern Poland. It is the county seat of Głogów County, in Lower Silesian Voivodeship , and was previously in Legnica Voivodeship . It is also the administrative seat of Gmina Głogów, although it is not part of its territory... , Woźniki Wozniki Woźniki is a town in Lubliniec County, Silesian Voivodeship, Poland, with 4,420 inhabitants .It is situated in the historic Upper Silesia region, close to the border with Lesser Poland. According to legend, a Silesian fortress on the nearby Grojec mountain was devastated during the Mongol... , Drobin Drobin Drobin is a town in Płock County, Masovian Voivodeship, Poland, with 3,016 inhabitants .... and Toszek Toszek Toszek is a town in Poland, in Gliwice County, Silesian Voivodeship, with 4,000 inhabitants.- History :The beginning of the settlement and fortified keep is dated in the 9th and 10th centuries when the area was ruled by the Piasts, Mieszko I of Poland and later Bolesław I the Brave.The fortified... |
Full privatizations (4), concession (1), leases (2) and management contract (1) | 1992 |
| Estonia | Tallinn Tallinn Tallinn is the capital and largest city of Estonia. It occupies an area of with a population of 414,940. It is situated on the northern coast of the country, on the banks of the Gulf of Finland, south of Helsinki, east of Stockholm and west of Saint Petersburg. Tallinn's Old Town is in the list... |
Concession (1) | 2001 |
| Czech Republic | Prague Prague Prague is the capital and largest city of the Czech Republic. Situated in the north-west of the country on the Vltava river, the city is home to about 1.3 million people, while its metropolitan area is estimated to have a population of over 2.3 million... and 23 other cities |
Concessions (24) | 1993 (reform) and 2001 (Prague) |
| Hungary | Budapest Budapest Budapest is the capital of Hungary. As the largest city of Hungary, it is the country's principal political, cultural, commercial, industrial, and transportation centre. In 2011, Budapest had 1,733,685 inhabitants, down from its 1989 peak of 2,113,645 due to suburbanization. The Budapest Commuter... , Szeged Szeged ' is the third largest city of Hungary, the largest city and regional centre of the Southern Great Plain and the county town of Csongrád county. The University of Szeged is one of the most distinguished universities in Hungary.... , Debrecen Debrecen Debrecen , is the second largest city in Hungary after Budapest. Debrecen is the regional centre of the Northern Great Plain region and the seat of Hajdú-Bihar county.- Name :... and five other cities and towns |
Concessions (8) | 1994 |
| Germany | Berlin Berlin Berlin is the capital city of Germany and is one of the 16 states of Germany. With a population of 3.45 million people, Berlin is Germany's largest city. It is the second most populous city proper and the seventh most populous urban area in the European Union... |
Mixed-ownership company (1) | 1999 |
| Mexico | Cancun Cancún Cancún is a city of international tourism development certified by the UNWTO . Located on the northeast coast of Quintana Roo in southern Mexico, more than 1,700 km from Mexico City, the Project began operations in 1974 as Integrally Planned Center, a pioneer of FONATUR Cancún is a city of... , Saltillo Saltillo Saltillo is the capital city of the northeastern Mexican state of Coahuila and the municipal seat of the municipality of the same name. The city is located about 400 km south of the U.S. state of Texas, and 90 km west of Monterrey, Nuevo León.... and Aguascalientes Aguascalientes Aguascalientes is one of the 31 states which, with the Federal District, comprise the 32 Federal Entities of Mexico. It is divided in 11 municipalities and its capital city is Aguascalientes.... |
Mixed-ownership company (1) and concessions (2) | 1993 |
A World Bank report lists the following examples of successful public-private partnerships in developing countries: the full privatization in Chile
Water privatization in Chile
The privatization of water in Chile was undertaken from 1998 to 2005 under the democratically elected governments of Eduardo Frei and Ricardo Lagos. Chile is the only country in Latin America that privatized its entire urban water supply and sanitation sector...
; the mixed companies in Colombia
Water privatization in Colombia
Private sector participation in providing water supply and sanitation services in Colombia has been more stable and successful than in some other Latin American countries such as Argentina or Bolivia...
; the concessions in Guayaquil in Ecuador, Brazil
Water privatization in Brazil
Water privatization in Brazil has been initiated in 1996. In 2008 private companies provided 7 million Brazilians - 4% of the urban population - in 10 of the country’s 26 states with drinking water...
, Argentina
Water privatization in Argentina
The privatization of water and sanitation services in Argentina between 1991 and 1999 under the government of Carlos Menem was part of one of the worlds largest privatization programs. Water and sanitation concessions with the private sector were signed in 28% of the country's municipalities...
, Eastern Manila in the Philippines
Water privatization in the Philippines
Water privatization in Metro Manila began in 1997 with the high-profile award of two concession contracts for the Eastern and Western halves of Metro Manila. The concessions represent the largest population served by private operators in the developing world...
, Morocco
Water privatization in Morocco
Water privatization in Morocco goes back to the times of the French Protectorate when most water supply systems were run under a private concession. After independence the private utility was nationalized, but in the mid-1990s the Moroccan government privatized water and sewer services again,...
and Gabun; and the lease contracts in Côte d'Ivoire, Senegal
Water supply and sanitation in Senegal
Water supply and sanitation in Senegal is characterized by a relatively high level of access compared to the average of Sub-Saharan Africa. One of the interesting features is a public-private partnership that has been operating in Senegal since 1996, with Senegalaise des Eaux , a subsidiary of...
and Yerevan in Armenia
Water privatization in Armenia
Water privatization in Armenia – or, more accurately, the participation of private companies in the provision of water supply under contract with the government of Armenia – has been prepared since the mid-1990s. The first management contract for water supply in Armenia, covering the capital...
.
In many countries, such as in Japan, Canada, Egypt, Pakistan or Scandinavia, there are no private water companies. Nicaragua, the Netherlands and Uruguay have even passed laws banning water privatization. In Italy, in June 2011 a law favoring water privatization was repealed by an overwhelming majority of Italians through a referendum.
Small-scale operators:The other private sector
Beyond water privatization, which involves contractual relationships between a government and formally established large companies, there is also "the other private sector" in water supply consisting of small-scale, often informal local operators who exist in most developing countries and sometimes provide a large share of the population of a city with water. For example, a study of six Latin American countries showed that small-scale private providers provide water to 25% of the population with water in seven cities. Many small-scale water operators provide water through tanker trucks or animal-drawn carts. Others operate water distribution networks fed by wells, as it is the case in Asunción, Paraguay, and in Sanaa, Yemen. Small-scale operators can be owned by individual entrepreneurs or can take the form of cooperatives, as it is the case in Honduras. Small-scale operators do not always comply with technical norms and the quality of the water they provide or their tariffs are often not regulated. They typically lack capital to further expand their network. However, in a few pilot cases - such as in Kenya, Uganda, Cambodia and Vietnam - international aid agencies have provided grants to them to increase access, often in the form of output-based aidOutput-based aid
Output-based aid refers to development aid strategies that link the delivery of public services in developing countries to targeted performance-related subsidies...
.
Forms of privatization
Broadly speaking, there are two forms of private sector participation in water supply and sanitation. In a full privatization, assets are permanently sold to a private investor. In a public-private partnership, ownership of assets remains public and only certain functions are delegated to a private company for a specific period. Full privatization of water supply and sanitation is an exception today, being limited to England, Chile and some cities in the United States. Public-private partnerships (PPPs) are the most common form of private sector participation in water supply and sanitation today.The three most common forms of PPPs, in the order of increasing responsibilities for the private partner, are:
- a management contractManagement contractA management contract is an arrangement under which operational control of an enterprise is vested by contract in a separate enterprise which performs the necessary managerial functions in return for a fee. Management contracts involve not just selling a method of doing things but involves...
, under which the private operator is only responsible for running the system, in exchange for a fee that is to some extent performance-related. Investment is financed and carried out by the public sector. The duration is typically 4–7 years. - a lease contract, under which assets are leased to the private operator who receives a share of revenues. He thus typically bears a higher commercial risk than under a management contract. Investment is fully or mostly financed and carried out by the public sector. The duration is typically 10–15 years.
- a mixed-ownership company in which a private investor takes a minority share in a water company with full management responsibility vested in the private partner.
- a concessionConcession (contract)A concession is a business operated under a contract or license associated with a degree of exclusivity in business within a certain geographical area. For example, sports arenas or public parks may have concession stands. Many department stores contain numerous concessions operated by other...
, under which the private operator is responsible for running the entire system. Investment is mostly or fully financed and carried out by the private operator. The duration is typically 20–30 years.
Concessions are the most common form of PPPs in water supply and sanitation. They are followed by leases, also called affermages, that are most commonly used in France and in Francophone West Africa. Management contracts are used in Saudi Arabia, Algeria and Armenia, among others. Mixed-ownership companies are most common in Spain, Colombia and Mexico.
A concession for the construction of a new plant is called a Build-Operate-Transfer
Build-Operate-Transfer
Build-own-operate-transfer or build-operate-transfer is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract...
(BOT) contract. Under a BOT contract the private operator signs an agreement with a utility that purchases treated water or wastewater treatment services.
Selecting private operators
Private companies are typically selected through international competitive bidding and need to have demonstrated previous experience. Selection is either done through a combination of price and quality, or solely based on price. In the case of a management contract, the price is the management fee (fixed fee plus performance-based fee); in the case of a lease it is the lease fee per unit of water sold; in a concession it is the water tariff; and in an asset sale it is the price paid for the company. In some cases - such as in Casablanca in 1997 and in Jakarta in 1998 - private companies have been selected through direct negotiations without competitive bidding. In other cases - such as in Cartagena (Colombia) in 1995, Cochabamba (Bolivia) in 1999 and Guayaquil (Ecuador) in 2000 - only a single bid was submitted. If development aid agencies are involved in directly financing private sector participation, they systematically require competitive bidding. However, in some cases - such as in Timisoara, Romania - the European Bank for Reconstruction and DevelopmentEuropean Bank for Reconstruction and Development
Founded in 1991, the European Bank for Reconstruction and Development uses the tools of investment to help build market economies and democracies in 30 countries from central Europe to central Asia. Its mission was to support the formerly communist countries in the process of establishing their...
has financed parallel investments, while a concession was awarded by the government after direct negotiations.
Forms of regulation
Being monopolies, all water utilities - public or private - need to be regulated concerning tariff approvals, service quality, environmental compliance and other aspects. The awareness for the need to regulate typically increases substantially when profit-oriented private operators become involved: Monitoring the performance of both the private and the public partner, applying sanctions in case of non-compliance and dispute resolution become particularly important. The regulatory tasks depend on the form of private sector participation: Under a management contract the monitoring of the achievement of performance standards, on which the remuneration of the private company depends, is typically carried out by an independent consulting firm. Under a concession contract or in the case of an asset sale, tariff regulation through a regulatory agency or the government is a key regulatory function. Water concessions are frequently renegotiated, often resulting in better terms for the private company. For example, renegotiations of concessions in Buenos Aires and Manila resulted in investment requirements being reduced, tariffs being increased and tariffs being indexed to the exchange rate to the US dollar. The quality and strength of regulation is an important factor that influences whether water privatization fails or succeeds. The tasks, form and capacity of the public entities charged with regulation vary greatly between countries.Globally, regulation of private water companies is being carried out by the following types of public entities or, sometimes, a combination of them.
| Type of entity charged with the regulation of private water providers | Examples |
|---|---|
| Municipality or an association of smaller municipalities | France and Spain |
| Specialized body at the city level set up to regulate a single contract | Guayaquil, Ecuador; San Pedro Sula, Honduras; Jakarta, Indonesia (with some control by the national government in the latter case); Manila, Philippines; formerly in Buenos Aires, Argentina |
| Specialized regulatory agency at the supra-municipal sub-national level | Public Utilities Commissions Public Utilities Commission A Utilities commission, Utility Regulatory Commission , Public Utilities Commission or Public Service Commission is a governing body that regulates the rates and services of a public utility... in U.S. states; some Brazilian states |
| Specialized regulatory agency set up permanently under law at the country level | OFWAT in England; Water Superintendency SISS in Chile; Water Regulatory Commission CRA in Colombia |
| Specialized unit in a Ministry set up temporarily by decree | Ministry of Water in Jordan |
| Ministerial department | Ministry of Interior in Morocco |
Examples of privatization
The best-known examples of water privatization in the late 20th century are those undertaken in England under Margaret Thatcher, the Manila and Buenos Aires concessions as well as the failed privatization in Cochabamba, Bolivia, which became a symbol of the struggle against globalization. Less well known, but just as relevant, are water privatizations in other countries, such as in Colombia.England and Wales
In England and Wales, water tariffs and profits increased substantially after privatization in 1989, but investments also increased and service quality increased. Tariffs increased by 46% in inflation-adjusted terms during the first nine years after privatization. Operating profits have more than doubled (+142%) in the first eight years. On the other hand, privatization increased investments: In the six years after privatization the companies invested £17 billion, compared to £9.3 billion in the six years before privatization. It also brought about compliance with stringent drinking water standards and led to a higher quality of river water. According to data from OFWAT, the economic regulator of water and sewer companies in England and Wales, from the early 1990s until 2010, network pressure has improved substantially, supply interruptions have become less frequent, the responsiveness to complaints has improved and leakage has been reduced.Manila, the Philippines
Metro Manila
Metropolitan Manila , the National Capital Region , or simply Metro Manila, is the metropolitan region encompassing the City of Manila and its surrounding areas in the Philippines...
. The concessions represent the largest population served by private operators in the developing world. As of 2010, the concession in Eastern Manila is highly successful and has led to significant improvements in access, service quality and efficiency. : the population served more than doubled from 3 in 1997 to 6.1 million in 2009, the share of customers with continuous water supply increased from 26% to more than 98% and non-revenue water
Non-revenue water
Non revenue water is water that has been produced and is “lost” before it reaches the customer. Losses can be real losses or apparent losses . High levels of NRW are detrimental to the financial viability of water utilities, as well to the quality of water itself...
declined from 63% to 16%. The concession in Western Manila failed when the company Maynilad went bankrupt in 2003. It was sold to new investors in 2007 and performance has improved since then. The share of the population with access to piped water in Western Manila increased from 67% in 1997 to 86% in 2006 and the share of customers that enjoys 24-hour water supply increased from 32% in 2007 to 71% in early 2011.
Argentina
Carlos Menem
Carlos Saúl Menem is an Argentine politician who was President of Argentina from 1989 to 1999. He is currently an Argentine National Senator for La Rioja Province.-Early life:...
as part of one of the world's largest privatization programs. Concessions were signed in 28% of the country's municipalities covering 60% of the population, including in 1993 for the metropolitan area of Buenos Aires
Greater Buenos Aires
Greater Buenos Aires is the generic denomination to refer to the megalopolis comprising the autonomous city of Buenos Aires and the conurbation around it, over the province of Buenos Aires—namely the adjacent 24 partidos or municipalities—which nonetheless do not constitute a single administrative...
. After the 2001 economic crisis
Argentine economic crisis (1999-2002)
The Argentine economic crisis was a financial situation, tied to poilitical unrest, that affected Argentina's economy during the late 1990s and early 2000s...
, under the government of Néstor Kirchner
Néstor Kirchner
Néstor Carlos Kirchner was an Argentine politician who served as the 54th President of Argentina from 25 May 2003 until 10 December 2007. Previously, he was Governor of Santa Cruz Province since 10 December 1991. He briefly served as Secretary General of the Union of South American Nations ...
, almost all concessions were terminated, including in Buenos Aires in 2006. The impact of the concession remains controversial. The government and critics argue that the concessionaire failed to achieve the targets set under the concession contract in terms of expansion of access, investment and service quality. Proponents concede that targets were not reached, but argue that a freeze in tariffs at the time of the devaluation of the Peso during the Argentinian economic crisis in 2001 violated the contract and thus made it impossible to achieve the original targets. According to the Argentinian economist Sebastian Galiani, the public company OSN had invested only US$25m per year between 1983 and 1993, while the private concessionaire Aguas Argentinas increased investments to around US$200m per year between 1993 and 2000. According to the private concessionnaire Suez, during the 13 year-duration of its concession it extended access to water to 2 million people and access to sanitation to 1 million people, despite the economic crisis. In July 2010 the International Center for the Settlement of Investment Disputes (ICSID) ruled that the Argentinian government unfairly refused to allow the private concessionaires to raise tariffs during the period after the devaluation of the Argentine peso in 2001 and that the private companies are entitled to damages. The private companies announced that they would seek US$1.2bn in damages.
Cochabamba, Bolivia
Bolivia
Bolivia officially known as Plurinational State of Bolivia , is a landlocked country in central South America. It is the poorest country in South America...
, under pressure from the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, decided to privatize water supply in the country’s third largest city, Cochabamba
Cochabamba
Cochabamba is a city in central Bolivia, located in a valley bearing the same name in the Andes mountain range. It is the capital of the Cochabamba Department and is the fourth largest city in Bolivia with an urban population of 608,276 and a metropolitan population of more than 1,000,000 people...
. In the previous years, despite funds made available by the World Bank to support the public utility of Cochabamba, access to piped water in the city had decreased to 40%, water losses had remained high at 40% and water was supplied only 4 hours a day. Those not connected to the network paid ten times as much for their water to private vendors as those who were. This contrasted with the Bolivia's second largest city, Santa Cruz
Santa Cruz de la Sierra
Santa Cruz de la Sierra, commonly known as Santa Cruz, is the capital of the Santa Cruz department in eastern Bolivia and the largest city in the country...
, where a utility run as a cooperative had managed to increase access and improve service quality with the support of the World Bank. In Santa Cruz privatization had never been considered.
In 1997 a first bid for a water concession in Cochabamba had been declared void at the request of the mayor of Cochabamba, Manfred Reyes Villa
Manfred Reyes Villa
Manfred Reyes Villa is a Bolivian politician, who was mayor of Cochabamba four times and ran unsuccessfully for the presidency in 2002 and 2009 against Gonzalo Sánchez de Lozada and Evo Morales Ayma. He founded and led the Nueva Fuerza Republicana political party...
. He wanted the construction of a large dam, the Misicuni dam, and a pipeline from the dam to the city to be included in the concession. The World Bank had opposed the dam as unnecessarily expensive and subsequently ended its involvement related to water supply in the city. Despite this, in the view of the public the World Bank remains inseparably linked to the Cochabamba privatization.
The government proceeded to bid out the concession, this time including the Misicuni dam. Only a single company submitted a bid, Aguas del Tunari, a consortium led by Bechtel
Bechtel
Bechtel Corporation is the largest engineering company in the United States, ranking as the 5th-largest privately owned company in the U.S...
. The government accepted the bid and signed the concession. The consortium was guaranteed a minimum 15% annual return. In parallel, a law was passed that appeared to give a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
to Aguas del Tunari over all water resources, including water used for irrigation, communal water systems and even rainwater collected on roofs. Upon taking control the company raised water tariffs by 35%.
Demonstrations and a general strike erupted in January 2000 in protest against the tariff increase and the perceived privatization of water resources. The government arrested the leader of the protesters, Oscar Olivera
Oscar Olivera
Oscar Olivera Foronda was one of the main leaders of the protesters against the water privatization in Bolivia. The result of these protests was an event known as the Cochabamba Water Wars. Now he is one the main leaders of the protests in the Bolivian gas conflict.Oscar Olivera was awarded the...
. But the protests spread to the entire country and the government declared a state of emergency in April. Protests still continued and several people were killed. In the midst of the turmoil the employees of Aguas del Tunari fled from Cochabamba. The government finally released Oscar Olivera and signed an agreement with him stating that the concession would be ended. The government then told Aguas del Tunari that by leaving Cochabamba they had abandoned the concession and parliament revoked Law 2029. The Cochabamba protests became a worldwide symbol of struggle against neoliberalism
Neoliberalism
Neoliberalism is a market-driven approach to economic and social policy based on neoclassical theories of economics that emphasizes the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the...
and the Cochabamba privatization is probably, both among activists against globalization
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
and the general public, by far the best known example of water privatization.
The company, insisting that it had been forced out, filed a $40 million lawsuit in the International Centre for Settlement of Investment Disputes
International Centre for Settlement of Investment Disputes
The International Centre for Settlement of Investment Disputes , an institution of the World Bank Group based in Washington, D.C., was established in 1966 pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States...
. The proceedings, which were held behind closed doors, ended in 2006 with a settlement under which Bechtel dropped its claim. With financing from the Inter-American Development Bank
Inter-American Development Bank
The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean...
the city expanded its piped water system in the aftermath of the riots. Nevertheless, under public management half of the 600,000 people of Cochabamba remain without piped water and those with it continue to receive intermittent service. Oscar Olivera
Oscar Olivera
Oscar Olivera Foronda was one of the main leaders of the protesters against the water privatization in Bolivia. The result of these protests was an event known as the Cochabamba Water Wars. Now he is one the main leaders of the protests in the Bolivian gas conflict.Oscar Olivera was awarded the...
the leading figure in the protests admitted, "I would have to say we were not ready to build new alternatives."
Colombia
Barranquilla
Barranquilla is an industrial port city and municipality located in northern Colombia, near the Caribbean Sea. The capital of the Atlántico Department, it is the largest industrial city and port in the Colombian Caribbean region with a population of 1,148,506 as of 2005, which makes it Colombia's...
and Cartagena
Cartagena, Colombia
Cartagena de Indias , is a large Caribbean beach resort city on the northern coast of Colombia in the Caribbean Coast Region and capital of Bolívar Department...
. The central government financed most investments through grants, thus reducing the need to increase tariffs. Water privatization in Colombia was largely homegrown, adapting models used elsewhere to the particular circumstances and culture of Colombia. A model introduced from Spain, the mixed company with a majority stake by the municipality and a minority stake by a private operator, was particularly successful. Foreign water companies won some of the early contracts, but quickly sold a majority of their shares to Colombian operators. There was a significant increase in access under private contracts. For example, in Cartagena water supply coverage increased from 74 percent to almost universal coverage, while sewer coverage went up from 62 percent to 79 percent between 1996 and 2006. Half a million people gained access and 60 percent of the new connections benefited families in the poorest income quintile. To achieve universal coverage, the operator made extensive use of community bulk-supply schemes that provide safe water to the many illegal settlements that were expanding on the city’s periphery. However, there are no conclusive evidence showing that access increased more rapidly under private contracts than in the case of publicly managed utilities. In Cartagena, tariffs declined substantially, indicating that the operator passed on efficiency gains to consumers.
Impact of privatization
The evidence concerning the impact of water privatization is mixed. Often proponents and opponents of water privatization emphasize those examples, studies, methods and indicators that support their respective point of view. As with any empirical study, results are influenced by the methods used. For example, some studies simply compare the situation before privatization to the situation after privatization. More sophisticated studies try to compare the changes in privately managed utilities to those of publicly managed utilities that operate under similar conditions during the same period. The second group of studies often use econometricEconometrics
Econometrics has been defined as "the application of mathematics and statistical methods to economic data" and described as the branch of economics "that aims to give empirical content to economic relations." More precisely, it is "the quantitative analysis of actual economic phenomena based on...
techniques. The results also depend on the choice of the indicator used to measure impact: One common indicator is the increase in access to water supply and sewerage. Other indicators are changes in tariffs, investments, water-borne diseases or indicators for service quality (e.g. continuity of supply or drinking water quality) and efficiency (e.g. water losses or labor productivity).
Impact on access
A before-after comparative study by the World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
analyzes how access, quality of service, operational efficiency and tariffs have evolved under 65 public-private partnerships for urban water utilities in developing countries. The study estimates that "PPP projects have provided access to piped water for more than 24 million people in developing countries since 1990". Interestingly and unlike it was expected by proponents of privatization, private operators contributed little in terms of financing, which was provided to a large extent by tariff revenues and development aid.
A study that compared changes under PPPs to changes that occurred in publicly managed utilities during the same period in Argentina, Bolivia and Brazil found that access to water supply and sanitation increased both for utilities under private and under public management to the same extent. The study concludes that "private sector participation, per se, may not have been responsible for those improvements".
Others however, have argued that privatization process is often associated with increase in tariffs - which reduces the accessibility of the resource for poor households.. As a result of privatization, water-cut offs are a common occurrence - with those unable to afford the price rises having to seek less sanitised sources.
Impact on health
A study of water privatization's impact on health, as measured by child mortalityChild mortality
Child mortality, also known as under-5 mortality, refers to the death of infants and children under the age of five. In 2010, 7.6 million children under five died , down from 8.1 million in 2009, 8.8 million in 2008, and 12.4 million in 1990. About half of child deaths occur in Africa....
, found that between 1991-1997 in Argentina child mortality fell 8 percent more in cities that had privatized their water and sewer services compared to those that remained under public or cooperative management. The effect was largest in poorest areas (26 percent difference in reduction). The main reason was a greater expansion of access to water in cities with privatized utilities. This increase was concentrated in poorer areas that did not receive services before private sector participation was introduced.
However, the data on the health dimensions of privatization is mixed, with others arguing that there is no compelling evidence to privatize water utilities based on the rationale of health outcomes
Impact on tariffs
In almost all cases, water tariffs increased in the long run under privatization. In some cases, such as in Buenos Aires and in Manila, tariffs first declined, but then increased above their initial level. In other cases, such as in Cochabamba or in Guyana, tariffs were increased at the time of privatization. In some cases in Sub-Saharan Africa, where much of the investments are funded through development aid, tariffs did not increase over a long period. For example, in real terms tariffs remained stable in Senegal, while in Gabun they declined by 50% in five years (2001–2006) and by 30% in ten years in Côte d'Ivoire (1990 to 2000). These exceptions notwithstanding, tariff increases are the rule over the long term. However, initial tariffs have been well below cost recovery levels in almost all cases, sometimes covering only a fraction of the cost of service provision. Tariff increases would thus have been necessary under public management as well, if the government wanted to reduce subsidies. The magnitude of tariff increases is influenced by the profit margin of private operators, but also to a large extent by the efficiency of utilities in terms of water losses and labor productivity.A study of household water expenditures in cities under private and public management in the U.S., however, concludes that "whether water systems are owned by private firms or governments may, on average, simply not matter much."
Impact on efficiency
A World Bank study argues that the most consistent improvement made by public-private partnerships in water supply was in operational efficiency. Private operators thus made a strong indirect contribution to financing by improving efficiency, making it possible for utilities to finance investments internally instead of having to rely on more debt.An earlier World Bank paper reviews six empirical studies on the impact of private management on the efficiency of water utilities in Africa, Asia, Argentina and Brazil. It concluded that some studies did find evidence for higher cost-efficiency by private operators and for improvements as a result of privatizations, but overall evidence suggests that "there is no statistically significant difference between the efficiency performance of public and private operators in this sector." A 2008 literature review by the Asian Development Bank shows that of 20 studies reviewed, only three show concrete evidence on technical efficiency improvements or cost reductions under private management.
Profitability
An empirical study of 34 concession in nine Latin American countries during the 1990s, including 10 water concessions in 5 countries (3 in Argentina, 1 in Bolivia, 1 in Brazil, 3 in Chile and 2 in Colombia), has estimated the profitability of concessions compared to the cost of capital of private companies. According to the study, contrary to public perception, the financial returns of private infrastructure concessions have been modest. The average annual return on capital employed was 7 percent. For a number of concessions the returns have been below the cost of capital. On average telecomunications and energy concessions have fared much better than water concessions. Seven out of 10 water concessions had negative rates of return and two concessions had returns that were lower than the cost of capital of the private companies.Private water operators
Private water operators come in very different forms from multinational corporations to small enterprises. According to Masons Water Yearbook 2004/5, 545m people (9% of the world population) were served by private operators. The largest private water companies are:- the French firm Suez, serving 117 million people in 2004 with its US subsidiary United WaterUnited WaterUnited Water Resources, founded as Hackensack Water Company in 1869, has grown into one of the United States's largest water services companies. It is headquartered in Harrington Park, New Jersey. The company owns and operates water and wastewater utilities and also has contracts to operate...
and its Spanish subsidiary Aguas de Barcelona; - the French firm Veolia Environnement (VivendiVivendiVivendi SA is a French international media conglomerate with activities in music, television and film, publishing, telecommunications, the Internet, and video games. It is headquartered in Paris.- History :...
), serving 108 million in 2004; - the British firm Thames WaterThames WaterThames Water Utilities Ltd, known as Thames Water, is the private utility company responsible for the public water supply and waste water treatment in large parts of Greater London, the Thames Valley, Surrey, Gloucestershire, Wiltshire, Kent, and some other areas of in the United Kingdom...
, indirectly owned by Macquarie GroupMacquarie GroupMacquarie Group Limited is a global investment banking and diversified financial services group, providing banking, financial, advisory, investment and funds management services to institutional, corporate and retail clients and counterparties around the world...
, an Australian investment bank; - the French firm SAURSaurThe Dog king is a Scandinavian tradition which appears in several Scandinavian sources: Chronicon Lethrense, Annals of Lund, Gesta Danorum , Heimskringla , Hversu Noregr byggðist and probably also in Skáldatal.The Chronicon Lethrense and Annals of Lund tell that on the death of the 6th century...
, serving 33 million in 2004; - the British firm United UtilitiesUnited UtilitiesUnited Utilities Group PLC is the UK's largest listed water business. The Group owns and manages the regulated water and waste water network in the north west England, through it subsidiary United Utilities Water PLC , which is responsible for the vast majority of the group's assets and...
, serving 22 million in 2004; and - the US firm American WaterAmerican Water (company)thumb|right|350px|The Iowa American Water Company plant in [[Davenport, Iowa]] on the banks of the [[Mississippi River]]American Water is a public utility company operating in the United States and Canada...
.
Domestic water operators have a strong presence in Brazil, Colombia, China, Malaysia, and the Philippines.
Public water companies also sometimes participate in bids for private water contracts. For example, the Moroccan state-owned water utility ONEP has won a bid in Cameroon and the Dutch publicly owned water firm Vitens has won a management contract in Ghana
Water supply and sanitation in Ghana
The water supply and sanitation sector in Ghana faces severe problems, partly due to a neglect of the sector until the 1990s. Tariffs were kept at a low level which was far from reflecting the real cost of the service. Economic efficiency still remains below the regional average, resulting in a...
.
See also
Countries with private sector participation in water supply as of 2011:- Water privatization in AlgeriaWater privatization in AlgeriaWater privatization in Algeria has been carried out in the country’s four largest cities – Algiers, Annaba, Constantine and Oran – in 2005-08 through management contracts. Under a management contract a private company operates a water system for a defined period on behalf of a public authority and...
- Water privatization in ArmeniaWater privatization in ArmeniaWater privatization in Armenia – or, more accurately, the participation of private companies in the provision of water supply under contract with the government of Armenia – has been prepared since the mid-1990s. The first management contract for water supply in Armenia, covering the capital...
- Water privatization in BrazilWater privatization in BrazilWater privatization in Brazil has been initiated in 1996. In 2008 private companies provided 7 million Brazilians - 4% of the urban population - in 10 of the country’s 26 states with drinking water...
- Water privatization in ChileWater privatization in ChileThe privatization of water in Chile was undertaken from 1998 to 2005 under the democratically elected governments of Eduardo Frei and Ricardo Lagos. Chile is the only country in Latin America that privatized its entire urban water supply and sanitation sector...
- Water privatization in ColombiaWater privatization in ColombiaPrivate sector participation in providing water supply and sanitation services in Colombia has been more stable and successful than in some other Latin American countries such as Argentina or Bolivia...
- Water privatization in CubaWater privatization in CubaWater privatization in Cuba began in 2000 when the socialist government of Cuba signed a 25-year concession contract with a private company to manage the water and sewer system in 12 of the 15 municipalities that make up the country's capital Havana. The company, called Aguas de la Habana, is...
- Water privatization in EcuadorWater privatization in EcuadorWater privatization in Guayaquil began with the signing of a concession agreement in Guayaquil, the largest city and economic capital of Ecuador. There has been no other case of water privatization in the country. In Guayaquil, the service was transferred to the private company under a concession...
- Water privatisation in England
- Water privatization in GhanaWater privatization in GhanaWater privatization in Ghana has been discussed since the early 1990s as a reaction to poor service quality and low efficiency of the existing urban water utility Ghana Water and Sewerage Corporation , renamed Ghana Water Company Ltd. in 1999...
- Water privatization in HondurasWater privatization in HondurasWater privatization in Honduras has been limited to the city of San Pedro Sula which has signed a 30-year concession contract with a private operator. Two other cities, Puerto Cortes and Choloma, have introduced an interesting management model that cannot be characterized as either private or...
- Water privatization in IndonesiaWater privatization in IndonesiaWater privatization in Jakarta was undertaken when the government of then President Suharto granted two 25-year concession contracts in 1998 without competitive bidding...
- Water privatization in MoroccoWater privatization in MoroccoWater privatization in Morocco goes back to the times of the French Protectorate when most water supply systems were run under a private concession. After independence the private utility was nationalized, but in the mid-1990s the Moroccan government privatized water and sewer services again,...
- Water privatization in the PhilippinesWater privatization in the PhilippinesWater privatization in Metro Manila began in 1997 with the high-profile award of two concession contracts for the Eastern and Western halves of Metro Manila. The concessions represent the largest population served by private operators in the developing world...
- Water privatisation in South AfricaWater privatisation in South AfricaWater privatisation in South Africa is a contentious issue, given the history of denial of access to water and persisting poverty . Water privatization has taken many different forms in South Africa...
Countries which had private sector participation in water supply in the past:
- Water privatization in ArgentinaWater privatization in ArgentinaThe privatization of water and sanitation services in Argentina between 1991 and 1999 under the government of Carlos Menem was part of one of the worlds largest privatization programs. Water and sanitation concessions with the private sector were signed in 28% of the country's municipalities...
- Water privatization in BoliviaWater privatization in BoliviaThe privatization of water supply and sanitation in Bolivia took place during the second mandate of Bolivian President Hugo Banzer in the form of two major private concessions: One in La Paz/El Alto to Aguas de Illimani S.A...
- Water privatization in GuineaWater privatization in GuineaUrban water supply in Guinea was privatized from 1989 until 2003 during the Presidency of Lansana Conte. His government initiated water privatization for two reasons: First, the World Bank had made private sector participation in urban water supply a condition for a new credit, after the public...
- Water privatization in TanzaniaWater privatization in TanzaniaWater privatization in Dar es Salaam began with the award of a 10-year lease contract signed in 2003 for Dar es Salaam, the largest city and former capital of Tanzania. It was signed between the government of Tanzania and City Water, a consortium consisting of the British firm Biwater, Gauff...
Further reading
- Balanyá, Belén, Brid Brennan, Olivier Hoedeman, Satoko Kishimoto and Philipp Terhorst (eds): Reclaiming Public Water: Achievements, Struggles and Visions from Around the World, Transnational InstituteTransnational InstituteTransnational Institute is an international think tank for progressive politics. It was established in 1973 in Amsterdam and serves as a network for scholars and activists...
and Corporate Europe ObservatoryCorporate Europe ObservatoryCorporate Europe Observatory , is a non-profit research and campaign group working to expose and challenge the privileged access and influence enjoyed by corporations and their lobby groups in EU policy making...
, January 2005. ISBN 90-71007-10-3 - Segerfeldt, Fredrik:Water for sale: how business and the market can resolve the world’s water crisis, Presentation at the Amigo Society, Brussels, 30 May 2006.
- Sjölander Holland, Ann-Christin:The Water Business: Corporations versus People, Zed Books, 2005, ISBN 1-84277-564-2
- Kleemeier, Elizabeth L. Private Operators and Rural Water Supplies : A Desk Review of Experience The World Bank, Nov. 2010.
- Marin, Philippe Public-Private Partnerships for Urban Water Utilities: A Review of Experiences in Developing Countries The World Bank, Feb. 2009, ISBN 978-0-8213-7956-1.
External links
- Corporate Accountability InternationalCorporate Accountability InternationalCorporate Accountability International is a non-profit organization, founded in 1977. Their campaign headquarters are in Boston, Massachusetts and they have offices in Oakland, California, Seattle, Washington, and Bogotá, Colombia...
:Thirsty for Change:The World Bank's Broken Water Policy - Food & Water Watch:Water Privatization
- The Remunicipalisation Tracker
- Water Justice Project
- World BankWorld BankThe World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
:Public-Private Partnerships - The World Bank's work and publications on water resources
Multimedia
- Flow: For Love of WaterFlow: For Love of WaterFlow: For Love of Water is a 2008 documentary film directed by Irena Salina produced by Steven Starr and co-produced by Gill Holland and Yvette Tomlinson . The film features interviews with water and community activists Maude Barlow, Peter Gleick; and, scientists Ashok Gadgil, Rajendra Singh, and...
, a 2008 documentary film - Dirty aid, dirty water video on the global water crisis and privatisation of water services
- Blue Gold: World Water Wars, 2008 documentary
- Thirst, 2004 documentary directed and produced by Alan Snitow and Deborah Kaufman