New PDF release: Private sector participation in water supply and sanitation

By Emanuel Idelovitch

ISBN-10: 0821332198

ISBN-13: 9780821332191

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Page 14 Service Contracts Service contracts are the simplest form of private sector participation, whereby the public authority retains overall responsibility for operation and maintenance of the system, except for the specific, limited-scope services that are contracted out or outsourced. The public authority also bears all the commercial risk and must finance fixed assets as well as working capital. The responsibility of the private contractor is limited to managing its own personnel and services efficiently.

In many cases, water charges are based on lot size and property value, regardless of the amount of water consumed. The unmetered system creates distortions in consumer charges, which Page 9 result in legitimate consumer protests. The amount of water produced is usually estimated and not metered. The paucity of reliable data makes planning difficult. Under these circumstances, any attempt to manage demand becomes futile. Water demand may reach very high values of 500600 liters per capita a daydouble the norm for metered and well-managed water supply systems.

Leaseholders are responsible for all operation and maintenance functions, including offices, vehicles and spare parts, renewals, and replacements as well as for billing, collection, and financing working capital. In many cases, leaseholders pay the owners a rental fee sufficient to service the debt and finance part of the investment program. Lease contracts can be medium or long-term in duration. They usually last five to ten years but can be extended for as long as twenty years. Payments to leaseholders are contingent on the difference between the tariff revenues collected and the operating costs.

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Private sector participation in water supply and sanitation in Latin America by Emanuel Idelovitch

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