Case Studies in Private Sector Participation: Water Supply Services
Abstract
Description
The private sector has had limited involvement in reticulated water and wastewater services in the Pacific, mostly through design–build–operate–maintain arrangements.
Water and wastewater services in Pacific island countries (PICs) include three broad activities: water treatment, water distribution, and wastewater treatment. In most Pacific urban areas, these functions are the responsibility of public sector departments or state-owned enterprises. Water and wastewater services typically require large capital and maintenance expenditure throughout the life of the assets. In the Pacific, capital expenditure is often funded through donor grants and loans, but maintenance expenditure is rarely sufficient to support the useful life of the assets. Water utilities suffer from high rates of nonrevenue water, both from leakage and from low collection rates. Very few water utilities collect enough revenue from users to recover their costs and provide a commercial return.
A survey of public–private partnerships (PPPs) in eight PICs, conducted in 2015 and facilitated by the Pacific Region Infrastructure Facility, identified a total of eight contracts. The most common form of private sector involvement has been through design–build–operate–maintain (DBOM) arrangements, which combine the design and construction responsibilities for new assets with their ongoing operation and maintenance. All four of the DBOM contracts in place were developed with the support of the Asian Development Bank.