Private Sector Participation and Regulatory Reform in Urban Water Supply: The Middle East and North African Experience

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Private Sector Participation and Regulatory
Reform in Urban Water SupplyThe Middle East and
North African Experience

• Edouard Perard, Sciences-Po
• edouard.perard_at_sciences-po.org
• OECD Experts Meeting on Access to Drinking Water
  and Sanitation in Africa
• Paris, December 1st, 2006
• Understanding Privatisation Policy Political
  Economy and Welfare Effects
• A European Project Supported within the Sixth
  Framework Programme
• http//www.privatizationbarometer.net/upp

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Introduction The scope of private sector
participationin water supply in the world
Source Edouard Perard The Future of
Public-Private Partnerships in Water Supply,
Yale University Water-Health-Environment Seminar,
February 2006. Based on data updated from Pinsent
Masons 2006, PSIRU, literature review and direct
interviews.
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The increase of private sector participationin
water supply in urban areas
Source Based on IWE, Cranfield PPP Database,
Franceys 2003.
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The importance of urban issuesin the Middle East
and North African region
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The scope of private sector participationin
water supply in the Middle East and North
African region
Source E. Perard, based on data from PSIRU,
Pinsent Masons 2006, Institutional communication
of water operators, Press releases.
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Forms of private sector participationin water
services in the Middle East and North African
region
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Promising regulatory reforms in the water sector
in Algeria

• The management of water supply and sanitation has
  been rationalized and centralized with the
  creation in 2001 of two independent water supply
  and sanitation agencies.
• Municipalities have the possibility to delegate
  water supply to financially independent public
  operators régie publique (2005).
• Private sector participation was legalized as
  early as 1995.
• The first management contract was awarded in 2005
  for the water supply of Algiers.
• The tariff structure has been reformed. Tariffs
  are now progressive, set locally, with cost
  recovery objectives. Water metering practices
  have increased.

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Decentralization trend and concession contracts
in Morocco

• The major water producer and distributor, the
  National Office of Potable Water (ONEP) is
  legally and financially independent and does not
  longer receive subsidies.
• Recent decentralization trend
• The water law of 1995 creates River Basin
  Organizations. Legally and financially
  independent, their mission is to finance local
  water investments through users fees redevance
  and lending.
• Since 2002, municipalities have the full
  responsibility of water supply and sanitation
  services. They can operate directly or under a
  "regie publique" contract or delegate to ONEP or
  delegate to the private sector.
• The first concession, for Casablanca, was awarded
  in 1997 to Lydec.
• Tariffs are progressive and set locally. The
  effective pricing of water is emphasized in the
  water law of 1995.

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Recent regulatory reforms in Egypt

• Since 2004, all drinking water and sanitation
  entities of the country have been regrouped under
  one single Holding Company.
• In practice, water supply administration in Egypt
  is highly centralized.
• Operation and maintenance costs of water services
  are mainly funded by public sources.
• Revenues cover only 40 of costs because of
  subsidies, high levels of leakage, and non-paying
  state customers.
• Cost recovery problems and low tariffs discourage
  financial investors and private sector
  participation.

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Successful public management in Tunisia

• In Tunisia, the water and sanitation sector is
  totally public and is managed by
  two independent government agencies.
• Impressive performance
• Very low rate of unaccounted for water 18.2 in
  2004.
• Tunisian cities have usually continuous water
  supply.
• The bill collection rate is very high over 99.
• However, water management in Tunisia is highly
  centralized and very much politicized.
• Problems of low tariffs set nationally and of
  high level of cross subsidies among customers
  90 of users pay water below the real economic
  cost.
• Moderate private sector participation has been
  recently introduced in sanitation through service
  contracts and a BOT contract in Tunis.

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• Edouard Perard, Sciences-Po
• edouard.perard_at_sciences-po.org
• Understanding Privatisation Policy Political
  Economy and Welfare Effects
• A European Project Supported within the Sixth
  Framework Programme
• http//www.privatizationbarometer.net/upp