Trends in private sector participation in the Indian water sector: A critical review A Water and Sanitation Programme publication

The study also analyses the direction in which the sector is heading with respect to private sector participation. Since most PPPs are at early stages of operation, this study focuses only on learnings from PPP design and transaction. This study does not seek to assess the operating or financial performance of PPPs.

The study covered 26 successful as well as failed attempts in both industrial and domestic water supply in urban areas since 1990. It covered all water PPPs that were in the public domain, except those which had been abandoned at the concept stage. Information gathered for these projects was based on primary and secondary data.

Primary information on these projects, and the sector as a whole, was collected on the basis of consultations with government and private sector stakeholders, directly or indirectly involved in the development of the projects. Information was also collected from PPP experts from the sector and from the academia. Seventeen consultations were undertaken that involved one-on-one interviews and roundtable discussions. Secondary information on the projects was collected from publicly available documents and relevant project case studies. The study found that:

The emerging trends in the Indian urban water supply PPP revealed an:

  • Increase in the number of PPP Projects Reaching Contract Award Stage
  • Shift in the Geographic Concentration of PPPs
  • Increased Focus on PPP Arrangements for Distribution Improvements
  • Reduced Reliance on Multilateral Funding Agencies for PPP Project Development
  • Shift in Private Operator Mix
  • Increased Share of Public Financing in PPP Projects
  • Comparison with International Experience

The following factors contributed to the success or failure of PPP projects in the urban water supply sector

Analysis of Failed Projects

  • Inconsistent and inadequate local stakeholder support
  • Weak financial capacity to implement water PPPs and lack of mechanisms to address tariffs
  • Limited awareness and technical capacity to undertake PPPs

Analysis of Successful Projects

  • Availability of public funding
  • Improved mechanisms to address tariff concerns
  • Increased attention to stakeholder support
  • Strong project ownership and expertise
  • Growth in domestic private sector interest

Emerging issues that had an impact on water sector PPPs

  • Current progress was still at a project level, rather than sector wide
  • Project preparation, structuring, and risk sharing remained weak
  • Cities lacked the capacity to design, implement, and monitor PPPs

Way forward and possible interventions

  • Create enablers to widen the current project-specific approach into a sector trend
  • Help cities follow well established and accepted principles to increase the chance of success of PPPs
  • Build cities’ implementation and monitoring capacity
  • Develop sector regulation as a long-term measure

The report ends by arguing that the recent trends indicate a growing interest in water PPPs, with more projects reaching the contracting stage, supported largely by increased availability of public funding for water PPPs. If the private sector is to play a significant role in addressing the investment and service backlogs in the sector, suitable interventions are necessary to scale up this momentum while ensuring projects that deliver the desired service outcomes on a sustainable basis.

A copy of the report can be accessed from this link

Path Alias

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