Water Supply: Private Sector a Partial Solution

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By Frederick Philander WINDHOEK “Achieving the water-related Millennium Development Goals to halve the proportion of people without access to safe water or basic sanitation by 2015 will require substantial investment and improved technical and managerial performance by water utilities.” The Deputy minister of Agriculture, Water and Forestry, Paul Smit, said this when he officially opened a four-day seminar on Public Private Partnerships in the Southern African Water Sector earlier this week. More than 30 engineers from a number of African countries are attending the seminar, which ends on Friday, at the Polytechnic of Namibia. “In the 1990s, there was a widespread expectation that the private sector would have a critical role to play in improving access to water services because of its know-how, efficiency and investment capital. However, in recent years many private operators have been disengaging rather than increasing their involvement in the water sector in most developing countries,” Smit said. According to him, various factors are responsible for this situation, such as political opposition from civil society, contractual disputes between governments and private operators and unclear legal, policy and institutional frameworks. “Private operators perceive their involvement in the water sector as carrying increased risk and have become more cautious in entering any contractual arrangement, particularly if it involves any financial commitment. At the same time, new domestic private operators have emerged in some developing and transition economies, as well as innovative business models in rural areas. These developments suggest a new and different dynamic of public-private partnerships in the water sector may be emerging,” he told those present at the seminar. “It is my hope that restructuring of the water sector to encompass public private partnerships will improve the efficiency and effectiveness of urban and rural water services and provide safe and affordable water supply services to unserved, low-income areas.” According to Smit, private companies are expected to raise the necessary billions of dollars for investment, which the heavily indebted governments, cities and municipalities in developing countries neither can nor will provide. “In addition, commercialisation and private sector management are to boost efficiency and improve the sustainable use of the ever-scarcer resource of water, which in many cases is polluted, wasted and lost due to leaky pipelines,” he asserted. He further charged that in many cases privatisation alone has led to drastic water price hikes. “Basically, privatisation in the water sector is only a partial solution. Usually, private companies get involved only in areas where a profit can be made. So, they focus on the middle-classes, industry and drinking water supply. This is where they can certainly achieve improvements such as more efficient collection of charges, reduction of water losses, better water quality and expansion of supply infrastructure,” he said. Sectors such as the sprawling squatter settlements on city margins, rural areas and cost-intensive sewage disposal, which are unprofitable and thus unattractive for investors, are hardly reached, although this is where there is the most pressing and greatest need. “Due to this, most of the people in Africa will continue to depend on the public sector for their supply of drinking water and sanitation facilities. In many cases, the public sector is better than its reputation, as is shown by the efficient utilities working along commercial lines in some developing countries. But there is a need for reform here to correct the defects that are still affecting the work of many utilities and use the public sector’s potential for sustainable development in the water sector,” Smit concluded. The seminar runs until Friday.