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Role of the private sector Private operators are being attracted to the utility sector in the Eurasian region, and various models of public-private partnership (PPP) are in operation. This approach is practiced primarily in Russia, Ukraine and Armenia. Over recent years, both the legal and institutional conditions necessary for the implementation of PPP projects have been established. The legislation of Kazakhstan is also geared to the development of PPP mechanisms, and the country plans to implement pilot PPP projects in the urban heat supply sector in 2013.
sion is either non-existent or very modest. However, there is a sound basis for private involvement due to the decentralization of utility management. Belarus: This country has a centralized national system that manages the utility sector. All responsibilities in the sector rest with the state authority. Privately owned companies are not welcome in the utility sector and, moreover, it would be impossible to attract them without radical institutional changes. Existing and emerging challenges
The most widely used forms of private sector participation in the utility sector in the region are lease contracts. In this model, a lessee assumes responsibility, not only for management, but also for the collection of payments for services. Authorities remain responsible for investments, which can be made, partially or fully, using lease payments. There are also cases where the private operator is also responsible for investments under lease contracts. In terms of PPP development, Eurasian countries can be divided into four groups: Armenia and Russia: The involvement of privately owned enterprises in the water and sanitation sector is common in these countries. Despite different forms of coop足eration between businesses and authorities, public private partnerships have generally been successful in these countries. Georgia, Kazakhstan and Ukraine: Recently, these countries have been doing a lot to try to attract privately owned enterprises to the utility sector. However, the involvement of private companies in this sector is still rare, with only a few examples. Kyrgyzstan, Moldova, Tajikistan and Uzbekistan: In these countries, the participation of private sector in basic services provi-
Despite significant efforts in the region to reform the frameworks for basic services and improve efficiency, there is a long way to go to solve the problem of universal access to quality basic services. Constraints include rising energy prices, inadequate financing, and substantial deterioration of infrastructure due to a lack of support by higher-tier governments. Increasing energy costs in the utilities sector mean that user tariffs are dedicat足 ed to covering these price rises, rather than to investment in repairs of worn-out utility infrastructure. The chronic shortage of financing of basic services is one of the crucial causes of their low efficiency. Tariffs and collection rates in some countries (especially in Central Asia) are too low, meaning that investments to improve efficiency cannot be made. Most of the revenue of basic service providers comes from user tariffs, with the remainder provided with the help of state transfers. Repayment financing from private sources is still very insignificant. In most cases, the condition of basic service infrastructure is worn out and 足fails to meet the requirements for sustainable, high quality basic service provision. This has