IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/1322.html
   My bibliography  Save this paper

Reducing regulatory barriers to private - sector participation in Latin America's water and sanitation services

Author

Listed:
  • Richard, Barbara
  • Triche, Thelma
  • Apogee Research, Inc.

Abstract

The lack of an appropriate regulatory environment is a principal factor behind inadequate water and sanitation services in many parts of Latin America. Many governments recognize the need to improve cost recovery and accountability in services - and increasingly see private sector participation as a tool for improving efficiency and attracting commercial sources of investment finance. Consultants interviewed representatives of private companies that recently contended for contracts to provide water and sanitation services in four Latin American cities (Buenos Aires, Caracas, Mexico City, and Santiago). These private operators identify the regulatory conditions they look for deciding whether to participate in a bid. On the basis of the interviews, the authors identified nine conditions. (1) Specify key terms and conditions of regulation in the contract, leaving little discretionary power to the regulating authority. In particular, specify the key aspects of regulation (such as price, quantity, and quality) in the contract. (2) Spell out credible procedures for the fair resolution of disagreements about contractual or regulatory matters. (3) Carefully specify credible technical objectives which the contractor will be expected to achieve under the contract. (4) See that government tariff policies support the principle of cost recovery for water services - and that tariff adjustment formulas adequately reflect changes in costs, inflation, and the exchange rate. (5) If historical collection rates do not indicate consumers'willingness to pay for services such as tariffs that reflect the cost of service, allow an adequate period of time to phase in higher tariffs - and give the operator adequate protection from nonpayers (either the right to cut off service or recourse to another source of payment). (6) Review public works law, contract law, and accounting practices and, if necessary, amend them in advance to ensure that they accommodate and protect any long-term investments foreseen under build-own-transfer or concession-type arrangements. (7) Eliminate unnecessary and bureaucratic administrative requirements that make bidding expensive. (8) Make a contract and expected profits big enough to warrant the high fixed cost of bidding. (9) Provide the education and outreach needed to inform consumers and secure the support of labor interests. In addition, the firms interviewed said that host countries would be better able to attract private-sector providers if they: (a) used reputable outside technical, legal, and financial advisors; (b) allowed local and foreign banks that finance investments to review and comment on proposed contracts and participate in negotiations; and (c) reduced the cost of bidding for small contracts.

Suggested Citation

  • Richard, Barbara & Triche, Thelma & Apogee Research, Inc., 1994. "Reducing regulatory barriers to private - sector participation in Latin America's water and sanitation services," Policy Research Working Paper Series 1322, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1322
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/08/24/000386194_20120824033528/Rendered/PDF/WPS13220SPANIS0abajo0Sobre0UPS01322.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Philippe Marin, 2009. "Public-Private Partnerships for Urban Water Utilities : A Review of Experiences in Developing Countries," World Bank Publications, The World Bank, number 2703, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1322. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi). General contact details of provider: http://edirc.repec.org/data/dvewbus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.