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PPP’s IN NIGERIA : Prospects in the Water Sector

PPP’s IN NIGERIA : Prospects in the Water Sector. PATRICIA SIMON-HART. INTRODUCTION. Water and Sanitation Services are different from other infrastructure sectors! Many Governments are trying to figure out how to strike a balance between roles of the public and private sector in water

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PPP’s IN NIGERIA : Prospects in the Water Sector

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  1. PPP’s IN NIGERIA: Prospects in the Water Sector PATRICIA SIMON-HART

  2. INTRODUCTION Water and Sanitation Services are different from other infrastructure sectors! Many Governments are trying to figure out how to strike a balance between roles of the public and private sector in water PPP approaches successful elsewhere (transport, power, etc) cannot be replicated directly in the water sector Direct Private Investment should not be the focus in the Water Sector Combining efficient private operation with public/IDA financing is more appropriate PPP approach

  3. THE NIGERIAN WATER SECTOR

  4. INSTITUTIONS IN THE NIGERIAN WATER SECTOR • THE FEDERAL MINISTRY OF WATER RESOURCES • STATE MINISTRY OF WATER RESOURCES • STATE URBAN WATER UTILITIES • SMALL TOWN WATER SUPPLY AGENCIES • RURAL WATER SUPPLY AGENCIES • WATER SERVICE REGULATORY BODIES

  5. PPP’s IN WATER Promoting Public-Private Partnerships in the Water Sector requires striking the right balance between capabilities that public and private entities bring to the table. Public Sector Ability to provide commercial frameworks for infrastructure acquisition, financing, licensing – as well as creating the enabling environment to assist private firms operate and achieve full cost recovery. 2. Private Sector Ability to invest and produce innovative, affordable products and reliable, efficient services based on profit motives. 3. Partnership Enabled through the Public Sectors Ability to regulate and facilitate operations contracts to private firms while not burdening them.

  6. WHY DO WE NEED PPP’s IN WATER TO MOBILIZE PRIVATE FINANCE TO INCREASE THE EFFICIENCY OF CAPITAL INVESTMENT RESTRUCTURE GOVERNMENT ESTABLISHMENTS TO REDUCE POLITICAL INTERFERENCE IMPROVE THE QUALITY OF SERVICE OPTIMIZE THE USE OF EXISTING INFRASTRUCTURE IMPROVE COMMERCIAL ORIENTATION INTRODUCE TECHNICAL EXPERTISE IMPROVE OVERALL OPERATIONAL EFFICENCY REDUCE OPERATING COST ELIMINATE GOVERNEMENT INTERVENTION FOR O&M Profitability is linked to service delivery!

  7. THE ENABLING ENVIRONMENT FOR PPP’s in Water

  8. WATER PRODUCTION DISTRIBUTION & SUPPLY SEWAGE AND SANITATION OTHERS AREAS OF INTERVENTION IN THE VALUE CHAIN • Fresh/Ground Water collection • Fresh/Ground Water Treatment • Desalination Plants • Municipality/Household Supply • Supply to Industries • Supply to Unplanned Settlements Unplanned • Waste Water Collection • Waste Water Treatment & disposal • Irrigation • Bottled Water

  9. PPP OPTIONS

  10. SMALL TOWN WATER SUPPLY CURRENT TRENDS IN THE NIGERIAN WATER SECOTR URBAN WATER SUPPLY RURAL WATER SUPPLY

  11. Divestiture (Investor-Owned Utility) HIGH ASSESSING YOUR RISK VS REWARDS Design-Build-Operate (BOT) Concession REWARDS RETURN ON INVESTMENT Lease/ Operating Contract Service Contract Management Contract LOW LOW RISK HIGH REQUIRED INVESTMENTS

  12. TYPICAL PPP PROCESS

  13. KEY CHALLENGES OF WATER PPP’s Access to Water is considered a Fundamental Human right. People still reluctant to pay Absence of proper Preparation of suitable PPP structure and viable Financial Models Governments need be willing to share the associated risks The Political economy Lack of access to affordable finance

  14. THE WAY FORWARD…

  15. As the Nigerian Water Sector continues to implement reforms new prospects and opportunities shall continue to emerge for Private Sector participation. • There has to be political will at State Level to reform and also to create the enabling environment for Private Sector participation • Sector Regulation at State Level must be in place and enforcement evident • The must be detailed studies and financial modeling to determine Tariffs, Transfer and subsidies • State Governments must still be willing to invest in Infrastructure costs as and when required • The Private Sector should consider starting with Management contracts and gradually move ultimately to concessions • Tariffs must be set for full recovery of O&M and any management fees • Utilities should design networks to offer bulk water services to an area that can operate in isolation • Development funding should be structured to encourage the Private sector access at affordable rates for investment in the water and sanitation sector • In the water Sector one solution does not fit all. Understand your environment and structure the PPP to the unique environment. RECOMMENDATIONS AND CONCLUSION

  16. Thank you for listening.WATER IS LIFE! SANITATION IS DIGNITY!!LET’S BUILD PARTNERSHIPS!!!

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