Many water supply and sanitation (WSS) utilities are locked in a vicious spiral of weak performance, insufficient funding for maintenance leading to deterioration of assets, and political interference. But some utilities in developing countries have improved their management efficiency, transparency, and responsiveness to consumers through public-private partnerships. Simultaneously, in many countries, centralized public providers have been decentralized to operate at the municipal level.

Key Challenges
Many inefficient utilities could considerably reduce their operating and capital costs by implementing institutional restructuring and introducing clear and transparent financial planning. Benchmarking utility performance over time and among companies can provide managers and policymakers with the quantitative information needed to assess efficiency. Revenues can often be increased substantially by charging for what is delivered and by collecting bills in a timely manner, as well as by adjusting tariffs.

Other means to improve services include enhancing the accountability of utility managers and employees through the use of business plans, standard processes, streamlined procedures, cost-accounting techniques that link resource use to outputs, and through decentralization of responsibilities to lower tiers of management.

Performance of public utilities can be improved -by increasing autonomy and ensuring adequate accountability mechanisms. This is done by leaving the task of policymaking to local or central government while assigning responsibility for service delivery to a corporatized utility with a separate oversight board.

Public-private partnerships (PPPs) can also improve the autonomy and accountability orientation of service providers. PPPs in WSS take a wide range of forms: service contracts, management contracts, leases/ affermages, and concessions. Recent PPPs generally require low investments from the private sector.

Traditional monopoly service providers have often ignored the needs of poor urban households, but those that have extended services to the poor often find the poor wiling and able to pay their regular bills. Where a range of suitable options is offered, through utilities or alternative means such as small-scale providers, the poor have benefited.

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World Bank Response
The World Bank Group operates across the spectrum of public and private provision World Bank WSS projects support utilities to address key operational performance issues. We support well performing public utilities and those that put in place credible programs to improve performance and foster financial sustainability. We also support reform where PPPs are introduced as a means for increasing providers’ efficiency and performance.

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