Provision of public services and infrastructure has traditionally been the exclusive domain of the government. Urbanization, economic growth and changing consumption patterns have led to an increase in the demand for water in urban areas. Government’s approach towards water management has focused on asset creation and developing new bulk sources of water rather than maintaining the assets created and promoting efficient consumption. Overall levels of water tariffs are too low to cover the operation and maintenance costs let alone generate any surplus for capital investment.
This has led to governments across the world to increasingly look to the private sector to provide supplementary infrastructure investments and public services through public-private partnership (PPPs). PPPs are defined as the contractual arrangement made by the government or statutory entity and a private sector company to provide an infrastructure service. Thus, a PPP project is a project based on a contract or concession agreement between a government or statutory entity and a private sector company for delivering an infrastructure service on payment of user charges.
60 per cent of the PPP projects now address the improvements in O&M with little investments from private sector (less than 10 per cent of the total projects cost in some cases), while the rest aim at sole bulk water augmentation and integrated water projects with both augmentation and O&M improvements. In the last few years since 2012, some projects have started demonstrating their success and, riding on the success of these, a slew of PPP projects came up.