CHAPTER 1
Partnerships for development Until recently, water service provision has been primarily the exclusive concern of governments and municipal authorities, often in accordance with standard philosophies and belief systems concerning a ‘free’ resource essential to human health and well-being. However, the increasing challenges in some settings towards government-delivered services, coupled with a new appreciation of water scarcity, water value (including also as resource development) and the shortage of financial resources, have led to a reappraisal of the roles of potential actors. The building of alliances and partnerships with a wider range of stakeholders has become an increasingly acceptable theme within development cooperation for water-related activities as well as in other areas of development. The commercial private sector From the programming perspective, one of the sector actors whose role gained importance in the last twenty years is the commercial private sector especially that of private water companies and service providers. The two last decades have seen a growing acceptance that the state is not the only owner and operator of water-related services, including sewerage and irrigation works. There is now wider consideration that the traditional water department or public utility mode of supply is only one of a range of options. The theme of public/private sector partnerships, with government assuming a facilitating and regulatory role instead of a provisioning role, and of privatisation of components of service delivery, is increasingly present in water policy today. This theme has gained some popularity due to the premise that involvement of the private commercial sector can overcome problems as budgetary shortages, poor management and lack of effective cost recovery. Governments have considered that a delegation of the management of public services to private companies could offer a potential solution to financial constraints and systemic problems of inefficiency. Among the shortcomings of publicly-owned and run utilities in many developing countries that gave a strong impulse to privatisation it was emphasised that, beyond the stage of implementing projects that are funded or supported, by donors, authorities have often not been able to commit adequate resources to future operation and maintenance. These bodies may, in addition, suffer from weak technical and managerial capacity required to run existing and new infrastructures effectively. Meanwhile, tariffs for service provision have often been set at financially unsustainable levels; there is extensive leakage from systems due to poor maintenance and upkeep; and existing tariffs are not always able to be collected. Service infrastructures consequently fall into disrepair due to a lack of resources required to implement a proper operation and maintenance strategy. Unless specifically mandated to do so (and supported by sufficient resources), water authorities often in urban areas - are also deficient in reaching poorer communities. The prospect of their being able to expand services is reduced where service management is economically and technically inefficient and cannot generate the required financial or water resource surplus. When trying to solve these series of shortcomings through the establishment of public-private partnerships, this approach led to a variety of results with sometimes limited success. This shows that the development of the water sector has no easy solutions. In the urban areas tariffs were sometimes set too high with the public budget covering anyways the differences, the rural areas continued not being served because often they are seen as unprofitable investments. The problems of governance were not solved above all in countries with limited free markets (as often happens in developing countries) in which the experience shows that the issue of privatisation has to be treated carefully. In the last years the role of the private sector of “introducing fresh capitals” for the development and the growth of the water sector was also increasingly taken over by the investment banks, such as the European Investment Bank, the African Development Bank, the Asian Development Bank, etc. Technically speaking there are many alternative options to full public ownership and operation of 28