CouvRechercheQ_N2_GB_8 22/02/1211:54Page1 providing drinkingwaterandsanitationindevelopingcountries. donors, researchers,experts—perceivetheroleofprivatesectorfor demonstrates theevolutioninhowstakeholdersdevelopment— partnerships, questionstherelevanceofdelegationmodels.Italso This book,whichsummarizesfiveyearsofresearchatAFDonpublic-private innovating formsofpost-WashingtonConsensusparticipationinthesector. historical overviewsofthefirsturbannetworkstoidentification This collectiveworkstraddlestheboundarybetweenacademicresearchand gateways betweenthesevariousworks,whichspantheentirerangefrom strategic reflectionbythestakeholdersinthissector.Itsaimistodefine the bottons been thesubjectofagreatrangeanalyticalwork,coveringdisciplinary Manager, EducationalPublic-PrivatePartnershipProjects,CEFEB-AFD Project ManagerwithintheWaterandSanitationDivision,AFD Private sectorparticipationinthefieldofwaterandsanitationserviceshas by awiderangeofinternationalresearchersandexpertsmostlycoveredthe fields —economics,geography,politicalscience,history,sociology,etc.as to majordelegationcontractsinthesoutherncities. monographs, regionalanalyses,orworldwidedynamics.These investigations blanc period 1990-2000,whenstructuraladjustmentreformsopenedtheway well asstudiesintermsofspaceandscale,suchruralvs.urbanstudies, Sarah BOTTON Sarah A of Under thedirection anddiscussiondynamics perceptions Comparative countries in developing sector andtheprivate services Water ymeric BLANC a @ @ afd.fr afd.fr Aymeric BLANC and Sarah BOTTON/ Water services and the private sector in developing countries Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized in developing countries in developing and thepriv Water services services Water Comparative perceptions perceptions Comparative and discussiondynamics Aymeric BLANC and Sarah BOTTON BLANCandSarah Aymeric Under the direction of Under thedirection a te sector sector te RechercheB_N2_GB_BAT2 23/02/12 22:29 Page 1 Water services and the private sector in developing countries Comparative perceptions and discussion dynamics Under the direction of Aymeric BLANC and Sarah BOTTON * * Aymeric BLANC (Project Manager, AFD Water and Sanitation Division, [email protected]) and Sarah BOTTON (Manager, Educational Projects and Public-Private Partnerships, CEFEB-AFD, [email protected]). RechercheB_N2_GB_BAT2 23/02/12 22:29 Page 2 Recherches This collection was launched in 2010 by AFD’s Research Department. It presents research work initiated and piloted by AFD, and demonstrates the major role that AFD wishes to play in the scientific and public debates on development. All our publications can be found at http://recherche.afd.fr Previous publications in the collection: Le financement de l’enseignement supérieur en Méditerranée - Cas de l’Égypte, du Liban et de la Tunisie Financing Higher Education in the Mediterranean Region -The Case of Egypt, Lebanon and Tunisia Acknowledgements The authors and publishers would like to thank PPIAF* for its financial support for the translation into English. * PPIAF: Public-Private Infrastructure Advisory Facility. http://www.ppiaf.org [ Disclaimer ] The analyses and conclusions presented in this book are those of its authors. They do not necessarily reflect the official views of the Agence Française de Développement or its partner institutions. Director of Publications: Dov ZERAH Editorial Director: Robert PECCOUD Translation : Marinus KLUIJVER and Warren O’CONNELL Designed and produced by Ferrari/Corporate – Tel.: 33 (1) 42 96 05 50 – J. ROUY/Coquelicot Printed in France by STIN RechercheB_N2_GB_BAT2 23/02/12 22:29 Page 3 Preamble During the past twenty years, participation of the private sector in the field of essential services has been a topic of much discussion, allowing the expression of very different viewpoints and the multiplication of disciplinary approaches around this question. However, little work has been done on the continuum formed by the search for equilibrium between public services and the private sector, from the origin of the development of services to the latest strategic shifts occurring in such services [1]. In fact, the debate has exceedingly focused on the reform period of structural adjustments and on the great delegating contracts of the years 1990-2000, leaving little space for cross-cutting analyses covering different periods.This situation contributed not only to polarizing an ideological pro-/anti-privatization debate that was extremely harmful to the quality of sector-based reflections, but also to “searching for an optimal model " that accelerated when the “great illusion" (Stiglitz, 2003) gradually became apparent. In both cases, these dynamics led to losing sight of the true stakes to be decoded for embracing the sector-based reality as well as possible. On the occasion of completing five years of research by AFD teams into public-private partnerships (PPP), we considered it useful to compare the analyses bearing on various periods and geographic areas, and made by different players in this field. This made it possible to try and construct the gateways needed for understanding the complex phenomena that compose the organization of essential drinking water services in developing countries. We were also fortunate to benefit from support from PPIAF for the translation of this publication, which allowed us to build an additional bridge between French- and English-speaking sector stakeholders. Fully aware of the pitfalls of the ideological debate, and attentive to the changes in this sector made by its social and political actors, we propose here a collective work that straddles the border between academic research and strategic reflections. As Schneier- Madanes (2010) noted, “the research scientist working on water has a ‘hybrid' status between ‘intellectual' and ‘expert'". [1] We should, however, note a few exceptions: the recent collective work resulting from the reflections of the CNRS groupRés-Eau Ville (Schneier-Madanes, 2010) and the special issue of the Tiers-Monde magazine in 2010 on the reform of the public service networks in developing cities (Jaglin and Zérah, 2010) both have led us to collectively weigh the pros and cons of orthodox privatization, by placing them in the wider context of urban management and governance. Water services and the private sector in developing countries 3 RechercheB_N2_GB_BAT2 23/02/12 22:29 Page 4 Obviously, this work does not pretend to be exhaustive on the subject. However, through contributions of various disciplinary origins, it aims at illustrating a certain number of evolutionary changes that we consider as determinant for the practices and lines taken by the private players in the field. The final aim is to improve the under- standing of the multiple conditions for improving urban drinking water supply services in developing countries. 4 ©AFD /March 2012 RechercheB_N2_GB_BAT2 23/02/12 22:29 Page 5 Contents General introduction 9 References 25 Part 1 Major PPP contracts with international operators 27 1.1. Private water networks preceded the public ones B. DARDENNE 29 Introduction 29 1.1.1. The first European water networks 30 1.1.2. The first systems in developing countries 37 Conclusions 46 References 48 1.2. PPPs for drinking water services: Some lessons from the French experience for developing countries C. PEZON and L. BREUIL 51 Introduction 51 1.2.1. Failure of the concession model for generalizing access to drinking water: comparison of the French and Argentine experiences 52 1.2.2. The affermage success in France: Lessons for today's Sub-Saharan Africa 61 Conclusions 68 References 69 1.3. The affermage contract: A case study from Niger V. DUPONT 73 Introduction 73 1.3.1. A reform to fill an investment need 74 1.3.2. Adopting the affermage option for minimizing risk to the private sector 75 1.3.3. Remuneration of the lessee depends upon his performance 79 1.3.4. Balanced risk sharing 81 1.3.5. Satisfactory technical results 84 1.3.6. Improving, but still insufficient, performance and coverage rates 86 1.3.7. A sector in financial equilibrium for the moment 88 Conclusions 91 References 92 1.4. PPPs for urban water utilities in developing countries: Review of their performance over the past 15 years P. MARIN 95 Introduction 95 1.4.1. Water utility PPPs in developing countries 97 1.4.2. What has been the actual performance of water PPP projects? 102 1.4.3. Key Findings 113 1.4.4. Lessons for designing water utility PPPs better adapted to the developing world 118 Conclusions 124 References 127 Water services and the private sector in developing countries 5 RechercheB_N2_GB_BAT2 23/02/12 22:29 Page 6 Part 2 “Grafting" models from developed countries on to local contexts 129 2.1. Private sector participation in Senegal: a successful “home grown” strategy? S. TREMOLET 131 Introduction 131 2.1.1. The facts: The contractual arrangements worked and delivered 132 2.1.2. What happened during the life of the contract? 138 2.1.3. What were the main factors for success? 141 Conclusions 148 References 149 2.2. Énergie du Mali or the paradox of a “resounding failure" B. HIBOU, O. VALLÉE and A. BLANC 151 Introduction 151 2.2.1. The EDM experience: 10 years of PPP 152 2.2.2. The EDM partnership put to the test of the social equation in Mali 158 Conclusions 164 References 165 2.3. “Rejecting the graft" or the virtual reality of transferring the PPP model: the Buenos Aires (Argentina) and La Paz-El Alto (Bolivia) cases S. BOTTON, A. BRAILOWSKY and P.-L. MAYAUX 167 Introduction