Understanding Water PPPs – The Facts
A Public-Private Partnership (PPP) in water and wastewater is a contractual agreement between a public authority and a private operator to deliver water services. The public authority remains the “master” – setting objectives, goals, and conditions – whilst the private operator becomes the “servant”, carrying out operations and transferring technology and expertise to improve services.
Through these agreements, the skills and assets of both sectors combine to deliver essential services. Each party shares in the risks and rewards, working towards a common goal: reliable, safe water and sanitation for communities.
Almost 1 billion people still use unsafe drinking water sources, whilst 2.5 billion lack proper sanitation facilities. The water sector globally is chronically underfunded and inefficient. Meeting Sustainable Development Goal 6 – universal access to safe water and sanitation by 2030 – requires massive investment that traditional funding alone cannot deliver.
PPPs offer a mechanism to:
Private operators now include increasingly local and regional providers, bringing down costs through competition whilst understanding local contexts.
Contracts vary significantly in scope and duration, typically ranging from 3 to 30+ years depending on complexity:
Technical Assistance Contracts (3–5 years): Providing specific expertise – reducing water loss, improving billing, implementing new technology.
Management Contracts (3–5 years): Private operator manages day-to-day operations whilst the public authority retains assets and investment responsibility.
Lease/Affermage Contracts (8–15 years): Operator leases the infrastructure, manages operations and maintenance, and collects revenue whilst the authority retains ownership.
Design-Build-Operate Contracts (15–25 years): Private partner designs, builds, and operates new facilities – common for wastewater treatment plants or desalination facilities.
Concessions (20–30 years): Comprehensive contracts where the operator takes on significant investment obligations whilst operating the service.
A critical fact often misunderstood: the public authority always controls the contract and pricing policy. Water remains a public service under public control. The private operator works within the framework set by the authority.
Sustainable water services require cost recovery. Most costs – labour, energy, chemicals, financing for infrastructure – are external factors, not controlled by operators. When authorities engage private operators, they often make important economic decisions simultaneously:
This means PPPs sometimes “appear” more expensive, but they’re often simply reflecting decisions about investment and cost recovery that the authority has already made and would occur regardless of who operates the service.
Private operators access various financing sources to fund needed investments:
All financing mechanisms except grants require repayment over the contract term through the agreed revenue model.
There’s evidence from around the world demonstrates PPPs’ impact. In Manila, Philippines, access jumped from 26% to 99% since 1997, with diarrhoea incidences falling 75%. Poor families who paid $3 per cubic metre for bottled water now pay 18 cents through subsidised tariffs.
Water operators link the natural and human water cycles – taking water from nature, treating it safely for use, collecting wastewater, treating it to remove pollution, and returning it to nature. This cycle must be sustainable.
Simple breakdown showing what makes up the cost of water services – positioned here. Can this be done?
No. In a PPP, the public authority retains ownership and control. Water remains a public service under public oversight. The private operator is contracted to deliver services under conditions set by the authority.
Tariff levels are controlled by the public authority, not the operator. Any increases reflect decisions about investment needs and cost recovery that the authority has made. Many PPPs actually improve affordability through efficiency gains whilst expanding access to those previously unserved.
PPPs are about results. Operators are paid for delivering agreed performance standards – improved service, reduced water loss, expanded access, better water quality. Contracts include penalties for underperformance. The primary goal is improved public services. .
Contracts include detailed termination provisions. Assets remain public property. The authority can replace an underperforming operator or resume direct management. Well-designed contracts protect the public interest. Do PPPs mean job losses?
Evidence shows PPPs typically maintain or increase employment. As services expand and improve, workforce needs grow. Many contracts include provisions for transferring existing public employees with protected conditions.
Yes – particularly where traditional approaches have failed to deliver. Many successful PPPs specifically target underserved populations through subsidised connection fees, lifeline tariffs for basic consumption, and flexible payment schemes. Examples from Benin, Uganda, and Manila demonstrate pro-poor outcomes.
The public authority continuously monitors contract performance. Independent regulators may provide additional oversight. Performance data is often published, and communities have channels to raise concerns. Transparency is built into contract design.
PPPs can advance the human right to water by expanding access, improving quality, and ensuring service sustainability. The UN recognises that different operational models – public or private – can deliver this right when properly governed. What matters is outcomes: safe, accessible, affordable water for all.perly governed. What matters are the outcomes: safe, accessible, affordable water for all.