I'd like to first say a warm Hello to everyone on the occasion of my first post on this forum.

Last Wednesday (March 22nd) was "World Water Day", and one of India's leading newspapers 'The Hindu' carried several articles regarding Water and Sanitation (W&S)infrastructure. An editorial titled "Privatization: come hell or high water" lashed out against the privatization of Water and Sanitation systems, citing oft quoted arguments such as
1. Those who cannot pay will not be served by private providers
2. Privatization in W&S has a poor history with several failed examples
3. Multilateral institutions often push privatization in W&S onto developing countries regardless of the consequences

Another article titled 'Support erodes for private water management' endorsed this view.

However, David Mulford, the U.S. Ambassador to India wrote an opinion piece in the same newspaper titled 'India's water and sanitation challenges', wherein he provided an interesting counter-view to the other pieces mentioned here. Mr. Mulford cited the example of the W&S system in Tiruppur (a town in the Southern Indian state of Tamil Nadu), which was developed on a Build-Own-Operate-Transfer (BOOT)basis by the New Tirupur Area Development Corporation, a Public-Private Partnership (PPP) venture. Although criticisms do exist about this project (which was supported by USAID and is incidentally also the first PPP in W&S in South Asia operating on a BOOT basis), by and large this project has been hailed as a roaring success! The poor in fact get water at a cost that is less than what they paid to unregulated private vendors who supplied them with water earlier. In addition, they seem to be happy about their current state of affairs!

Pure privatization in W&S has its theoretical advantages, but somehow the 'water is a human right' viewpoint and other social considerations have prevented it from being successful. On the other hand the public sector has often been known to be inefficient in its operational performance, although from a social viewpoint it is regarded as less controversial. As the Tirupur example shows, perhaps the solution is to blend the two to extract the best of both worlds, and promote Public Private Partnerships in this area, wherein the public sector helps enhance project legitimacy and serves to quell social pressures against privatization, while the private sector helps in improving operational efficiency. For this to happen however, both parties should possibly have both a financial as well as an operational stake in the project, since being a partner in name only might not incentivize the public and the private parties to contribute to the best of their abilities.

Posted by ashwin at March 27, 2006 8:08 PM