In water, 97 utility contracts signed since 2003

Governments in 28 developing countries signed 97 contracts for water utilities in 2003–07, defying the perception of the late 1990s that private participation in water would come to a standstill. Those contracts involved sizable populations, as reported by the Private Participation in Infrastructure Project Database. Indeed, 52 covered service areas with a combined population of 36.9 million. The contracts in China covered the most people (19 million), followed by those in the Russian Federation (8.4 million) and Algeria (2.5 million). In addition, 38 contracts covered a combined 8.1 million connections.¹ The largest of these were the partial divestiture of Companhia de Saneamento de Minas Gerais (3 million) in Brazil, the Syabas concession (1.4 million) in Malaysia, the second concession of Maynilad (537,000) in the Philippines, the management contract for Societe des Eaux d’Assainissement d’Alger (525,000) in Algeria, the second lease of Senegalaise des Eaux (428,000) in Senegal, and the management contract for the Ghana Water Company (320,000) in Ghana.

Total investment commitments in the 97 contracts, however, amounted to just US$8.9 billion (in 2007 U.S. dollars). Only the Syabas concession involved large investment commitments (figure 1), reflecting private investors’ diminished appetite for investing in a sector in which reaching and sustaining cost-recovery levels in tariffs is socially and politically difficult. Indeed, investments were highly concentrated, with just three countries (China, Malaysia, and Russia) accounting for 65%. Transactions were also concentrated, though to a lesser degree, with three countries (China, Colombia, and Russia) signing 47% of the contracts. Another reason for the low investment levels is that about 40% of the contracts were management contracts and leases (figure 2), which involved small investment commitments or none at all. In addition, most of the concessions focused on rehabilitating existing assets (through rehabilitate-operate-transfer contracts) rather than expanding utility networks (through build-rehabilitate-operate-transfer contracts).

Note: BOT = build, operate, transfer. BROT = build, rehabilitate, operate, transfer. ROT = rehabilitate, operate, transfer. RLT = rehabilitate, lease or rent, transfer.

¹ There is no capacity data reported in the PPI database for the remaining seven contracts.