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PRIVATE SECTOR INVOLVEMENT IN WATER SECTOR O & M

PRIVATE SECTOR INVOLVEMENT IN WATER SECTOR O & M. By John Petzer. 11 May 2010. INDUSTRY ROLE PLAYERS. SAICA CESA IMIESA SAFCEC SAICE. IDENTIFIED VARIOUS ROLES. Short term service provider Long term service provider Regulatory and contractual function. SHORT TERM.

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PRIVATE SECTOR INVOLVEMENT IN WATER SECTOR O & M

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  1. PRIVATE SECTOR INVOLVEMENT IN WATER SECTOR O & M By John Petzer 11 May 2010

  2. INDUSTRY ROLE PLAYERS • SAICA • CESA • IMIESA • SAFCEC • SAICE

  3. IDENTIFIED VARIOUS ROLES • Short term service provider • Long term service provider • Regulatory and contractual function

  4. SHORT TERM • Capacity of available resources • Probably no single organisation has sufficient capacity • Private sector almost definitely has a role to provide stop gap

  5. SHORT TERM (cont) Various possible models • 1. OPTIONS FOR URBAN CENTRES • O & M contracts / Management Contracts • – Short term – 3-5 years • Technical /Institutional/Financial Assistance Contracts • – Normally minimum 5 years (e.g. M-A-P Water) • 2. OPTIONS FOR RURAL WATER SERVICES • Appointment of Support Services Agents • – 3-5 years (e.g. CHDM & ANDM) • Technical/Institutional/Financial Assistance • Mechanical & Electrical Maintenance Contracts

  6. LONG TERM • More cost effective • More difficult to establish • More contractually complex

  7. LONG TERM (cont) Various possible models • 1. OPTIONS FOR URBAN CENTRES • LeaseContracts (Affermage) • – 10–15 years (e.g. Stutterheim, Richards Bay) • Concession / BOT contracts • – 25-30 years with private funding • – Infrastructure O & M • 2. OPTIONS FOR RURAL WATER SERVICES • Water Services Franchising • – New approach utilising local small business entities • O & M using Local CBO’s or SMME’s

  8. RISKS OF PRIVATE SECTOR • Cost – typically 5 – 10% profit, may be more efficient BUT depends where risk is allocated • Infrastructure run down – depends on control • Quality not achieved – depends on control • Cherry picking e.g. only do large bulk, leave reticulation to WSA

  9. BENEFITS OF PRIVATE SECTOR • Competitive bidding – lowest cost (cost effective) • Access to best practise and skills • Private sector manages performance and risk • WSA’s manage regulation and control

  10. REGULATORY AND CONTRACTUAL ADVICE • Contract preparation and management • Risk advice • Expertise in drawing up contracts • Researching contract types; controls etc • Define performance parameters • Contract management • Business consulting • Provide financial expertise in setting up entities • Advice on best legal entities

  11. CONCLUSIONS • Extensive skills and manpower in private sector • Short term and long term involvement is probably required • Win-win solutions are possible

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