Analysis of public–private partnerships for China's water service

Abstract

The private sector in China has been growing since economic reforms were launched in the late 1970s. The massive demand for new infrastructure and improved service levels have precipitated the growth of public-private partnership (PPPs) in the Chinese water urban sector. Although the number of water and wastewater infrastructure projects financed through PPPs had risen to over 130 by the 2004, with an investment commitment of over US$4$8 billion, PPPs still accounted for less than 2% of total investments in the water sector. An institutional analysis was conducted in 2005 to find out how conducive PPPs are for provision of water services in Longgang, a coastal town in the Zhejiang Province of China. Although the operational performance indicators were generally above average, subjective assessment of the internal environment uncovered several gaps, which could be addressed by adopting an appropriate mode of PPPs. A scan of the external environment revealed conditions that are largely conducive to the introduction of PPPs in Longgang Water Utility. This paper showed how an existing institutional analysis framework could be adapted for assessing the suitability of introducing PPPs in water utilities.

Beyond the Strategic Retreat? Explaining Urban Water Privatization’s Shallow Expansion in Low- and Middle-income Countries

“…The most important increases have occurred in China and India. China’s rapid embrace of urban water privatization started abruptly in 2002 and is typically explained as part and parcel of the country’s broader turn toward capitalist policy (Kayaga and Zhe 2007; Wang, Wu, and Zheng 2011; Perard 2011; Jiang and Zheng 2014). Yet more recently, Chinese privatization has become more parochial.…”

Mixed companies as local utilities

“…The documents that constitute the actual regulatory contracts of mixed firms are the shareholders' agreements (firmed between the partners and setting their rights and duties), the management contracts (firmed between the companies and the competent public authorities, setting the objectives to be attained) and the statutes (setting the internal rules of the companies). Hence, to benefit from the increased flexibility that an iPPP can provide to cope with uncertainty, local governments ought to craft an optimal regulatory framework for the mixed companies (Kayaga and Zhe, 2007). This 9 framework should encompass market access issues (the award criteria and methodology must lead to choosing the best bidder and not the most optimistic or generous) and contract monitoring issues (the public partner must have means to evaluate the observance of the contractual clauses by the private partner and effective power to issue rewards/sanctions when appropriate).…”