Privatisation Results: Private Sector Participation in Water Services After 15 Years

Abstract

Privatisation of public infrastructure has been the mantra of many development agencies since the late 1980s. Water supply is no exception, and various forms of private sector participation (PSP) have been tried in the water and sanitation sector. This article examines the results of these experiments. It suggests that PSP has had mixed results and that in several important respects the private sector seems to be no more efficient in delivering services than the public sector. Despite growing evidence of failures and increasing public pressure against it, privatisation in water and sanitation is still alive, however. Increasingly, it is being repackaged in new forms such as that of public‐private partnership.

Singapore and Sydney: Regulation and Market-Making

“…Market failure is often attributed to the perceived clash of public interests with the profit motive of the private operators [30]. More profoundly, there is a perceived conflict between the right to water and the profit motive [31].…”

A systems approach to strategic infrastructure delivery

“…Robison and Hewison (2005) stress the importance of the market, fiscal discipline, trade, investment and financial liberalisation, deregulation, decentralisation, privatisation and a reduced role for the state within neo-liberal reform strategies. Discussions continue within the body of literature around the effectiveness of privatization at achieving the intended neo-liberal reforms under which the industry was privatized (Van Den Berg, 1997;Rees, 1998;Saal and Parker, 2000;Finger and Allouche, 2002;Thomas and Ford, 2005;Prasad, 2006;Sawkins, 2012;Maziotis et al, 2012). While quality and customer satisfaction coupled with cumulative investment (£9.3 billion in the six years before privatization and £17 billion during the six years following) is considered high compared with pre-privatization (Van Den Berg, 1997;Ofwat, 2011), efficiency levels are considered low while tariffs increased by 46% in the nine years following privatization, with operating profits more than doubling (+142%) in eight years (Lobina and Hall, 2001).…”

A Systematic Review: Costing and Financing of Water, Sanitation, and Hygiene (WASH) in Schools

“…For this reason, the private sector may be more interested in funding the power and gas sectors which have a higher return on investment and more frequent payback periods [12]. Private financers may also be more willing to finance communities with a greater potential for profitability, rather than ensuring access for poor [70] or underserved areas [12], causing most private financing to be concentrated in major cities [21,39]. In addition, private financers may also find other ways to cut costs, such as hiring fewer contractors, which may be detrimental to program efficacy on the local level [46].…”

“…Involving NGOs or the private sector may add support to local projects by bringing in skilled contractors, connecting local areas to companies that provide filtration or disinfection products [68], providing technical support or advice [39], and designing or building infrastructure with long-term benefits [36,39,68] such as drilling wells [39]. Private sector financing might also be useful for relieving governments of a budget deficit [70]. However, using this type of funding for WASH is highly controversial [70].…”