PSIRU FIVAS seminar on “Water as a Public Service”, Oslo, 8 October 2009 Public-Public Partnerships in Water: Opportunities

PSIRU FIVAS seminar on “Water as a Public Service”, Oslo, 8 October 2009 www.psiru.org

Public-Public Partnerships

in Water: Opportunities and

Challenges by

Emanuele [email protected]

Public Services International Research Unit (PSIRU)University of Greenwich, UK

www.psiru.org8 October 2009


Research questions

• What are Public-Public Partnerships (PUPs)?

• Can PUPs contribute to achieving the Millennium Development Goals?

• Could PUPs be a new priority area for Norwegian aid and Norwegian trade unions?


Trends in policy and water reform: PPPs vs. PUPs

• In the past 15-20 years policy focus was on promoting PPPs; public sector reform and PUPs overlooked despite their developmental potential

• Unsatisfactory results of PPPs and arguments explaining private failure in water sector:

High transaction costs Contract failure (Braadbaart, 2001) Dynamic interest-seeking Knowledge treated as a private good Lack of socio-political legitimacy

PSIRU FIVAS seminar on “Water as a Public Service”, Oslo, 8 October 2009 www.psiru.org Multinational utilities fail to make big

enough profits from developing countries

PSIRU FIVAS seminar on “Water as a Public Service”, Oslo, 8 October 2009 www.psiru.org Volatility of private investment in infrastructure

D


Public and private water operations, 2006

Public/private water operators: % of cities over 1m. Population (October 2006)

7%

14%

13%

14%

0%

13%

9%

14%

10%

93%

86%

87%

86%

100%

87%

91%

86%

90%

0% 50% 100%

East Asia

Europe & Central Asia

Latin America (LAC)

Middle East/North Africa (MENA)

South Asia

Sub-saharan Africa

Total excluding high income countries

High income countries

Total

Private Public


Public-Public Partnerships (PUPs) and Water Operator Partnerships (WOPs)

PUPs: peer relationships between public authorities or organisations, aimed at developing capacity to be effective and accountable public services, which exclude profit-seeking

WOPs include private sector partners but remain not-for-profit partnerships aimed at sharing expertise; public-public schemes expected to represent majority of WOPs


Objectives of PUPs

• Training and human resources

• Technical assistance

• Efficiency and institutions

• Finance

• Democratisation and participation


Characteristics of PUPs

• International and domestic PUPs (N-S, S-S)

• Solidarity as incentive (not profit)

• Collaboration and trust as key drivers (not competition)

• Inclusive partnership (knowledge is a public good, not a monopoly to exploit)


Developmental potential of PUPs

• Possibility of reinvesting 100% of resources into system

• Long term gain in capacity• Low transaction costs: 2% of project value• Low risk to municipality • Local involvement and control over objectives,

methods• Transparency and accountability• High number of potential partners (130 PUPs in

70 countries)• Multiplier effect of PUPs and potential for scaling

up

PSIRU FIVAS seminar on “Water as a Public Service”, Oslo, 8 October 2009 www.psiru.org Stockholm Vatten’s (SVAB) approach to

PUPs in Kaunas, Lithuania and Riga, Latvia

• Joint international effort to clean up the Baltic Sea, international and national funding

• SVAB’s support: institutional reform; organisational change; training across the board

• Results: positive across the board; investment plans realised within budget and timely; investment finance also tapped after end of PUPs on a non-sovereign basis


WB-funded PUP in Lilongwe, Malawi

• World Bank funded two long-running capacity-building projects in 1980s – Severn Trent RWA public sector partner

• Project successful - model for national approach to managing urban water systems (WB OED, 1997):

Improved access to waterEffective management support and training program Increased efficiency of operationsUnaccounted-for-water (UFW) down to 16%Reduced labour costs Improved response time


Coordinated PUPs in Alexandria, Egypt

• Amsterdam Waternet (1992 onwards): aimed at reducing UFW, improving management process, improving surface water quality and exchanging knowledge with Damietta and Beheira (low cost approach to enhance production capacity)

• USAID (1999-2004): support to institutional strengthening in run up to corporatisation, coupled with grants for infrastructure investment (and an element of conditionality)

Service coverage increased from 80% to 92% UFW reduced from 38% to 30%, bill collection up 58.7% to 81.4% Improved cost recovery (100% of OPEX, depreciation and debt

service, plus part of principal on loan) Staff reduced by attrition (4,500 to 4,000), with better pay and

incentives plus training and introduction of HRM principles Reorganisation of management units, management information

systems and management training programmes


PUPs: selected cases, domestic and international

• ONEP, Morocco: Training of African managers (JICA funded); PUPs in Chad, Guinea, Mali, Mauritania

• SANAA and support to rural water systems in Honduras (juntas de agua, patronatos, NGOs)

• Local Water Utilities Administration assisting Water Districts in the Philippines

• Dutch Oasen from Zuid-Holland and PDAM Pontianak, Indonesia

• FINNIDA in Hai Phong, Vietnam


Challenges

1) PUPs do not necessarily, by themselves, change local governance and decision making

2) PUPs might take time to develop critical level of capacity (depending on local context)

3) PUPs are often fragmented in scope, scale and under-resourced


Possible remedies

1) Be realistic: PUPs are not the silver bullet but can work in the context of broader development programmes and campaigning

2) Invest in PUPs for long term capacity (e.g. through TOT and systematic training)

3) Help public water operators get in touch, then do not leave them alone (e.g. adequate financial support)


Recent meeting with EU Commission

• Proposed initiative (not officially approved yet): €40m fund for PUPs in ACP countries

• Meeting attended by 20 public water operators from Europe, prepared to engage in PUPs and share their experience (positive and negative)

• Meeting shows higher profile of PUPs in development, commitment of (potential) partners, with follow up meeting used to identify complementary initiatives


Soft infrastructure to support scaling up

• Progressive public water operators require support to: a) prepare to access the proposed EU window for water PUPs in ACP countries;b) coordinate submissions to the proposed EU window for water PUPs in ACP countries, so as to maximise developmental impact;

c) identify opportunities for EU-funding supporting PUPs in non-ACP countries, understand the different processes for tapping funding and prepare accordingly.

• All this can be done with the support of a single “clearing house”, which could be initially limited to one FTE (one full time equivalent) and subsequently attract further external funding as a result of its demonstrational effect.


APE/TNI/PSI proposed initiative

• The proposed “clearing house” (ideally to achieve global scope, not only limited to EU-ACP PUPs) would:1) act as a depository of documents and information on funding opportunities; 2) provide training and technical assistance to public operators on accessing funding for PUPs; 3) host a matching database allowing progressive public water operators to set up PUPs with other counterparts according to respective requirements and potential contributions; 4) host a database with documentation on the positive and negative experiences with PUPs and twinnings.

• Can the proposed APE/TNI/PSI “clearing house” be funded by Norwegian aid?

Documents

PSIRU FIVAS seminar on “Water as a Public Service”, Oslo, 8 October 2009 Public-Public Partnerships in Water: Opportunities