1 Jean-Pierre Rideau Deputy Director of the territorial planning and legislation water and raw materials Department for Water and Biodiversity Ministry

1

Jean-Pierre Rideau

Deputy Director of the territorial planning and

legislation water and raw materials

Department for Water and Biodiversity

Ministry of Ecology, Sustainable Development,

Transport and Housing

France

WWW.developpement-durable.gouv.fr

Ministère de l'Écologie, de l'Énergie,du Développement durable et de la Mer

Water services in France : PPPs, Funding and Water Pricing

22

public-private partnerships in France

CONTENTS

1. Historical involvement

of Public Private Partnerships

2. Public Private Partnership Contracts

3. Awarding delegation of public services

4. Building governance tools for public-

private partnerships

5. Funding and water pricing

33

Technical and financial risks

first water company in Paris (1778 – 1788)

Freedom of trading (1791)


Water supply To public fountains : being free To households : a commercial activity

The municipalities Ensure water supply at public fountains Should entrust households water supply to private companies

1800 - 1850

1. Historical involvement of public – private partnerships

44

public domain : inalienable goods

Municipalities allowed licences for the use of the public domain to develop water infrastructures (=> B. O. O. T.)


The licence defined specifications, price, and duration of the concession

1830 - 1884

After the 1st World War, a high monetary depreciation forced to change tariffs registered in concession contracts

Rather than increasing water prices, municipalities take part in the development of water infrastructure (=> Contracts Operation & Maintenance)


55

Linking An insufficient improvement of water supply (capital investment depending on the private sector)

And water-borne diseases

Municipalities are allowed to create local services to improve public health


(1884 Act)

Direct labour

1926 decrees enhance this trend of bringing services under control of local authorities


66


CONTENTS

1. Historical involvement of Public Private

Partnerships






77


500,000 km2

62,000,000 inhabitants35,000 communes (municipalities)Tap water : 4 billion m3/y.

Municipalities (or groupings) organise water and sanitation services

Water supply : 4500 PPP 70 % of inhabitants

Sanitation : 4000 PPP 55 % of inhabitants

2. Implementation of PPPs

88

Water => local resources

local authority governance

operator results obligationdrinking water standards

environmental standards financial / technical risks


A contractual freedom of local authorities

Governance by local authorities

« a local regulation by contracts without national regulator »


99


Administrative courts auditing of procedures and accounts

State environment and drinking water inspectorate (withdrawal and discharge permits)


A contractual freedom of local authorities

Governance by local authorities

« a local regulation by contracts without national regulator »

1010

Concession contract

Built, Own, Operate and Transfer (BOOT)

The provider manages, finances and renews infrastructures

On completion of the contract, all infrastructure are the municipality property

Water pricing (Price paid by the end users)


Contract operations and maintenance (ConOps) The service provider manages, maintains infrastructures The municipality carries out new equipments and renewal

Operations and maintenance + financing ConOps The service provider finances some specific infrastructure

(renewal, plant treatment, …)

Water and sewerage services in France :

8500 delegation contracts

ConOps = 98 %


Private Finance Initiative Contract BOOT

Payment by the public partner

1111


Act n° 93-122 Jan. 29th, 1993 : Awarding delegation of public services

Act n°2001-1168 Dec. 11th, 2001 : delegation is

« a contract trough which an institution of public law awards management of a public service, for which it is responsible, to a service provider, either public or private, the remuneration of which is substantially linked to the operating results of the service. »

Payment by the end users

Publics’ services concession (BOOT & ConOps)

PFI (Private Finance Initiative) Act n° 2004-559 June 17th, 2004 Payment by the public partner

1212

1990 – 2000 : new targets

a distinct improvement in governance

users information

contracts monitoring

financing renewal

public-private partnerships in France2. Implementation of PPPs

1313


CONTENTS


Partnerships






1414


1993 law in the prevention of corruption and transparency in economic life and public procedures

8 500 contracts

600 - 1000 come to an end each year8 to 11% : change of service provider after competition1% : delegation to municipal management 3% : municipal management to delegation

Averaged duration contracts after competition : 12 years


1995 law : max. 20 years for contracts banning « entrance fee » practice

Advertisement and competitive bidding

1515


Proposal for a directive on concessions (Amending directives 2004/17/EC and 2004/18/EC)

Definition of a concession : a reference to transfering the operating risk to the concession holder

The concession contract shall be limited on time

Obligation to publish a concession notice

Regulating minimum deadlines for the submission of bids

Verification of the suitability of tenderers (transparent, non-discriminatory and proportionnal selection criteria should refer to technical, financial and economic capacity of operators )

Publics’ services delegation

1616


CONTENTS


Partnerships






1717

Water supply networks

In 2008, the water supply network represents 1,000,000 km of pipelines

(in 1950, only 8% existed)

In 2008, 99% population is connected

(completion of water supply network)

0

200

400

600

800

1000

1940 1950 1960 1970 1980 1990 2000 2004

x 10

00 k

m

Maintaining, updating and upgrading equipments

Planning of renewal

1818

To Improve governance

Networks renewal schedule (for operators in charge of renewal)

Operator should update the networks maps

(Water Act, Dec. 2006)


4. Building governance tools for PPPs

1919

To Improve transparency The mayor is in charge of publishing an annual report on the price and performance of water and sanitation services The service provider submits an annual report on management of water and sanitation services including accounts and analysis of service quality

4. Building governance tools for PPPs public-private partnerships in France

To share a common understanding

To ensure a social consensus To maintain the funding capacity

2020

To Improve transparency Consultative committees for local public services (stakeholders appointed by the mayor)

Consultation of the committee before any change in public or private management The committee should examine annual reports and express a view for the local council

4. Building governance tools for PPPs public-private partnerships in France

To share a common understanding

To ensure a social consensus To maintain the funding capacity

2121


Local authority(municipality)

Operator(public or private)

Consumers

stakeholders

Administrative Courts : auditing of procedures and accountsState : control legally binding standards

Performance Indicators(Decree - May 2007)

=> A sunshine regulation

4. Building governance tools for PPPs

2222


CONTENTS


Partnerships






2323



Accounting instructions

Separate the water accounting from the general accounting of the municipality

(1967-1969 decrees)

Apply depreciation in accounting(1992 decrees)

“Water users pays for water use”

2424

WS accounting (incomes)

M€ (2004) PPP Municipal TOTAL

Water Pricing (1)5 452 4 443 9 895

Subsidies for operating and maintenance (2) 377 377

Total incomes = (1) + (2)5 452 4 820 10 272

Maintenance costs (3) 4 791 2 466 7 257

http://economie.oieau.fr/IMG/pdf/070921_EY_MEDAD_Recup_Couts_Rapport_final.pdf

Data VAT and water agencies fees

Savings for investments and loan repayments = (1) + (2) – (3) 3 015

2525

MillionMillion

Water agencies

1 450

Regions Municipalities

Users

(households and users likened as, industry, stock breeders,…)

Investments : 6 600

FromGeneral Budgets (taxes)

2008WS accounting (investments)

Environmental

taxes

600 100

Water services

Water pricing

Savings for investments and loan repayments

2626

Water pricing

Average cost (2008) 3.39 € /cm

Water bill : - a fixed part (subscription fee)

average subscription rate : 50 €/year

from 0 to 100 €/year – fixed by municipality – a decree has put a ceiling on fixed part

- a variable part depending on the volume of water used

Incentive pricing :

No fixed charge (except small communities)

No free supply (even for school, sport grounds, … except for putting out fire)

2727

Water pricing

To make access to safe water and sanitation

Stand surety for guarantee and security deposit are banned

Social funds to pay water for poors


Annual cost for household (2008) 400 €

0,8 % average income of households

2828

State taxes

(V.A.T.)

Wateragency

Sanitation authorities

SewerageWastewatertreatment

Drinking water authorities

Treatment plants pipes

42 %

6 %

17 %36 %

Water pricing


2929

Water services in France PPPs, Funding and Water Pricing

Спасибо за ваше внимание

Documents

1 Jean-Pierre Rideau Deputy Director of the territorial planning and legislation water and raw materials Department for Water and Biodiversity Ministry