Other possibilities for PPPs
According to François Munger (2008) the most common public–private partnership arrangements in the water sector in developing countries take the following forms:
- Management contracts, where the private firms look after the management, operation and maintenance of the entire water system or part of it (for example, the distribution network) for a limited period of time (approximately five years) in exchange for a performance-related fee.
- Lease contracts, where the private firms maintain and operate the water supply system, at their own risk, deriving revenue from the water tariff, for a fixed period (six to ten years). Investment is financed and carried out by the public sector.
- Concessions, where the private firms provide a service at a given standard for a fixed time (20 to 30 years). The private firms operate, manage, and make the investments, carrying the commercial risks. For example, in countries where hand pumps are common, a private company may take on the role of supplying pump mechanics and spares to keep hand pumps operational.
- Build–own–operate–transfer contracts, as mentioned earlier, are where private firms construct new water treatment plants and run them for a number of years before handing them over to the public sector.
As you can see, there are several different models of PPP.
Can you recall an example of a build–own–operate–transfer PPP?
The Lehulu PPP is an example of such a model.