Public-Public Partnerships in water

Water operators need to be efficient, accountable, honest public institutions providing a universal service. Many water services however lack the institutional strength, the human resources, the technical expertise and equipment, or the financial or managerial capacity to provide these services. They need support to develop these capacities.

The vast majority of water operators in the world are in the public sector – 90 per cent of all major cities are served by such bodies. This means that the largest pool of experience and expertise, and the great majority of examples of good practice and sound institutions, are to be found in existing public sector water operators. Because they are public sector, however, they do not have any natural commercial incentive to provide international support. Their incentive stems from solidarity, not profit. Since 1990, however, the policies of donors and development banks have focused on the private companies and their incentives. The vast resources of the public sector have been overlooked, even blocked by pro-private policies.

Out of sight of these global policy-makers, however, a growing number of public sector water companies have been engaged, in a great variety of ways, in helping others develop the capacity to be effective and accountable public services. These supportive arrangements are now called ‘public-public partnerships’ (PUPs). A public-public partnership (PUP) is simply a collaboration between two or more public authorities or organisations, based on solidarity, to improve the capacity and effectiveness of one partner in providing public water or sanitation services. They have been described as: ‘a peer relationship forged around common values and objectives, which exclude profit-seeking’.

PUPs avoid the risks which are typically encountered in public-private partnerships: Transaction costs, contract failure, renegotiation, the complexities of regulation, commercial opportunism, monopoly pricing, commercial secrecy, currency risk, and lack of public legitimacy.

PUPS IN PRACTICE

PUPs are not merely an abstract concept. Over 70 countries have implemented PUPs in the water sector, compared with only 44 countries who have introduced private participation in water (according to the Public-Private Infrastructure Advisory Facility). These PUPs cover a period of over 20 years, and been used in all regions of the world. The earliest date to the 1980s, when the Yokohama Waterworks Bureau first started partnerships to help train staff in other Asian countries.

In general the objectives of PUPs are to improve the capacity of the assisted partner. In practice, there are a range of specific objectives involved in PUPs. These can be divided into five broad categories:
- Training and developing human resources
- Technical support on a wide range of issues
- Improving efficiency and building institutional capacity
- Financing water services
- Improving participation.

Two broad categories of PUPs can be identified: International PUPs, where the partners are in different countries; and intra-national PUPs, where they are in the same country. Section 3 gives examples of both types of PUPs in countries around the world.

DONOR INITIATIVES AND PUPS

Donors and international agencies have begun to recognise the potential impact of PUPs. The role of these initiatives depends on the political dynamics. The most significant so far are the ‘WOPs’ initiative which emerged from a UN advisory board, and a €40 million budget line created by the EU for non-profit water partnerships in Africa and elsewhere .

WATER OPERATOR PARTNERSHIPS (WOPS)

The Water Operator Partnerships (WOPs) is an initiative emanating from the UN Secretary General’s Advisory Board on Water and Sanitation (UNSGAB). The WOPs were originally conceived from the Public-Public Partnership concept, also known as twinning. The participation of private operators in the WOPs system was a political compromise within UNSGAB, but the private companies exert much more influence on the regional and global initiatives than public sector operators through their sophisticated lobbying machinery and budgets. This influence is clear in the structure of initiatives by the Asian Development Bank (ADB) ‘Waterlinks’ projects, USAID, the government of the Netherlands, and the regional WOPS in Latin America, which are dominated by ‘WOPs’ involving private partners. The Waterlinks approach actually emphasises that the benefits of WOPS include: ‘Opportunities to expand potential commercial interests’. A new International Steering Committee for UN Habitat’s Global WOPs Alliance (GWOPA) was set up in January 2009, with a diverse membership including a majority of public operators, regional WOPs networks, private operators, unions, NGOs, and development banks, which may be able to limit the commercial exploitation of the WOPs concept.

EU FUNDING FOR PUPS IN AFRICA, CARIBBEAN AND PACIFIC (ACP)

In 2010 the EU took an innovative initiative to make funding available specifically for not-for-profit partnerships for water in Africa and elsewhere. The EU earmarked €40 million of the ACP-EU Water Facility to support water partnership projects. These are not-for-profit partnerships intended to: ‘develop capacity in the ACP water & sanitation sector, leading to better water and sanitation governance and management, and to the sustainable development and maintenance of infrastructure’.

This represents a unique opportunity for water utilities, local authorities and other water organisations in ACP countries to develop their long-term capacity for the benefit of the served communities, without facing the risks of commercial ventures. Water utilities and other potential partners from EU countries may engage in EU-funded water partnerships to contribute to sustainable development and the achievement of the Millennium Development Goals (MDGs) in ACP countries. By the end of 2010 it was clear that the initiative had been very popular: far more proposals had been received than could be funded.

PUPS IN PRACTICE

PUPS IN ASIA (JAPAN, CAMBODIA, PAKISTAN, CHINA, INDIA)

Japan has a strong history of public-public partnerships, which were used extensively in developing the sewerage systems in Japan itself from the 1960s. Since the 1980s, Yokohama, Osaka and other municipalities have run training courses in sanitation for public authorities in other Asian countries, mainly financed by the Japanese aid agency JICA.

Cambodia’s Phnom Penh Water Supply Authority (PPWSA) runs a training centre for managers and staff from provincial water utilities to learn from the experiences of Phnom Penh. PPWSA has provided advisory services to the Siem Reap Water Utility, the Binh Duong Water Supply Sewerage Environment Company (BIWASE), utilities in Vietnam aand a sister-city twinning with Iloilo City (Philippines) on sanitation and hygiene promotion activities.

The Orangi pilot project (OPP), in Karachi, Pakistan, was created by community organisation planning and developing a sewerage network throughout the area, constructed by paving the lanes over sewers built using local labour and micro finance, following natural drainage channels. The municipal authority built large mains sewers in the settlements to support the development. Although the project is best known for its community base, it has from the outset described itself as ‘working with government’ and expanding the model through ‘collaboration with state agencies’.

Although the development banks publicise wastewater treatment PPPs in China with the multinational companies Suez and Veolia, the great majority – over 80 per cent – of wastewater treatment plants in China have been developed by municipalities through public-public partnerships with local public sector companies. (Bradbaart et al., 2009)

In India, the Tamil Nadu Water Supply and Drainage Board (TWAD) has developed a new architecture of democratic change management in water and sanitation services, through a statewide collaborative PUP with water authorities and communities throughout the state. The approach has been adopted nationally by the government of India, and developed through further PUPs with public water authorities in other states in India, including Maharashtra and Jharkhand.

PUPS IN LATIN AMERICA: HONDURAS, BRAZIL, COSTA RICA, ARGENTINA, URUGUAY

In Honduras, where most rural water systems are administered through community-based bodies, or NGOs, capacity-building through training and technical assistance is given at the development stage by technicians employed by the national water corporation SANAA. (Walker and Velásquez, 1999)

In Brazil, in the 1970s and 1980s, the federal agency PLANASA provided public funding to support the investments of state water companies and their efforts to meet the challenges of growing urbanisation. More recent PUPs include: Ibiporã’s municipal water operator SAMAE has joined ten other municipal undertakings to establish a consortium for the creation of a laboratory for water analysis, and has entered a PUP with Parana State’s technical assistance agency EMATER and a municipality for the extension of water supply services in rural areas.

Costa Rica’s state owned water supply and sanitation operator AyA (Instituto Costarricense de Acueductos y Alcantarillados) also acts as a source of support and capacity for community-run rural services (ASADAS). AyA provides financial and technical support for ASADAS and, after due process, takes over those struggling to deliver services.

In Argentina, after the termination of the Azurix-led concession in Greater Buenos Aires, the provincial government created a new public sector company, Aguas Bonaerense SA (ABSA), with strong public participation at many levels. ABSA is co-owned and operated by a workers cooperative ‘5 de setiembre S.A.’, which is also providing technical assistance to a number of smaller Argentinian water systems[1], and supporting the Peruvian city of Huancayo through a partnership aiming to reduce costs, increase maintenance and investment, to orientate service delivery to the needs of the population, and develop institutional reform to democratise the utility and make it accountable to the public.

The public water company of Uruguay, OSE, has formed a partnership providing technical expertise and support for management improvement in ESSAP, the water authority in Paraguay; OSE has also provided technical support for the design of a water supply system in the area of Lago Nokoué, Benin.

PUPS FROM EUROPE: SWEDEN, FINLAND, NETHERLANDS, FRANCE, SPAIN

The Baltic Sea PUPs took place in the early 1990s. Established public water authorities such as Stockholm Vatten or Helsinki Water partnered cities in the Estonia, Latvia and Lithuania, which had just left the Soviet Union. The PUPs were focused on building the capacity of municipal public sector water operators to manage financial and operational aspects, and were often linked to capital investment projects for e.g. wastewater treatment plants. Reviews and evaluations of these processes have been consistently enthusiastic.

Dutch water companies have engaged in a number of international partnerships. The water service of Amsterdam, Waternet, has been engaged in international partnerships since 1991. It has created an international division, Wereldwaternet. In Egypt, has been working since 1991 with water services in Alexandria, Damietta and the provinces of Beheira and Gharbeya. Waternet has also been involved in a twinning partnership with Surinam since 1996, working on the improvement and expansion of the general drinking water service, distribution networks, reducing unaccounted water, setting up a management information system and ensuring supply to rural areas.

SIAAP, the sewerage authority for Paris, has been involved in a partnership to help the city of Hue, Vietnam, renovate and plan the future design of its sewerage system. It has also formed a similar partnership in Morocco. Eaux de Paris, the public water authority for Paris, has been involved in a training partnership with the engineering school of Sfax, in Tunisia. It has also signed a partnership agreement with the water and sanitation operator of Moscow, Mosvodokanal.

CPASE (Consorcio Provincial de Aguas de Sevilla), the water operator for the province of Sevilla, Spain, is engaged in a number of PUPs, including: Ciudad Sandino, Nicaragua for the development of capacity and establishment of a municipal water company with public participation; the municipal water undertaking of Gibara, Cuba for the reduction of UFW, training of workers the supply of information technology and equipment; Cuyultitán, El Salvador for the establishment of a public water operator and the construction of infrastructure.

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* David Hall, Director of the Public Services International Research Unit (PSIRU) in the Business School, University of Greenwich, UK.
* This note is based on the PSIRU paper ‘PUPs in water’ by David Hall, Emanuele Lobina, Violeta Corral (PSIRU), Olivier Hoedeman, Philip Terhorst, Martin Pigeon, Satoko Kishimoto (TNI) March 2009.
* This article is part of a special issue on water and water privatisation in Africa produced as a joint initiative of the Transnational Institute, Ritimo and Pambazuka News. This special issue is being published in English and in French.
* Please send comments to editor[at]pambazuka[dot]org or comment online at Pambazuka News.

FURTHER READING AND RESOURCES

[1] Public-public partnerships in Water. PSIRU March 2009 by David Hall, Emanuele Lobina, Violeta Corral, Olivier Hoedeman, Philip Terhorst, Martin Pigeon, Satoko Kishimoto. http://www.psiru.org/reports/2009-03-W-PUPS.doc