Getting the Private Sector Involved in Water : What to Do in the Poorest of Countries?
Water has historically been hugely underpriced in most developing countries. Water systems are often poorly run. Regulatory frameworks are often lacking, incomplete, or internally inconsistent, and the relevant skills thinly spread. There is lit...
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| Format: | Viewpoint |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1997/01/695042/getting-private-sector-involved-water-poorest-countries http://hdl.handle.net/10986/11599 |
| Summary: | Water has historically been hugely
underpriced in most developing countries. Water systems are
often poorly run. Regulatory frameworks are often lacking,
incomplete, or internally inconsistent, and the relevant
skills thinly spread. There is little trust that the
government will maintain a favorable operating environment
and a tariff yielding a reasonable rate of return. It is
not a setting attractive to the private sector. While much
stands in the way of private provision of water services in
the poorer countries, the following four options,
individually or in combination, may speed transformation: 1)
taking a stepwise approach; 2) simplifying contracts; 3)
contracting out parts of the regulatory function; and 4)
increasing predictability in the use of discretion. There
is often a sharp difference between what private companies
see as a minimal return necessary to go into business in a
risky country and what governments view as an acceptable
level of profit. Governments should be realistic about the
profits that they should allow, recognizing the need of
their private partners to earn a reasonable return and to be
rewarded for the risks that they shoulder. |
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