The fact that they can choose not to renew is a big benefit of privatization. A government entity is more likely to keep the job even with poor performance.
In this particular situation the benefit is later and less certain that it would normally be. 10 year contracts, monopoly ownership of the local facilities, with people stuck with the poor performer for now even with non-renewal. Its not really a competitive market, not even as much as can be the case with many other services contracted out by government, let alone most non-government controlled markets.
Competitive market or not many other private water companies do a pretty good job. They tend to charge more, but many government organizations supplying water don't have the funds to invest in necessary maintenance and upgrades and would have to charge more anyway (either directly charging those they provide water to, or charge through taxes receiving some government subsidy).
Apparently in the UK there is a private component to almost all of their water supply. And it seems to work pretty well
- Drinking water quality, as measured by the compliance with iron levels and coliform bacteria in service reservoirs, has improved substantially from 1996 to 2010. [5]
- Network pressure has improved substantially: The share or "properties at risk of low pressure" declined from 1.33% in 1990-95 0.01% in 2009-10. [6]
- Supply interruptions have declined: The share of properties subject to unplanned supply interruptions of 12 hours or more declined from 0.33% to 0.06% during the same period. [6]
- The number of written complaints not responded to within ten working days has declined from 21% to less than 1%. [6]
- leakage has been reduced from 5,112 megaliters per day in 1994-95 to less than 3,281 megaliters per day in 2009-10 (the measuring method of two companies has changed over the period, so the actual reduction is even higher) [7]
en.wikipedia.org
Privitization seems to have worked pretty well in Argentina as well
Abstract:Increasing access to safe drinking water and reducing child mortality constitute crucial
needs for most developing countries around the world. There is little consensus, however, on how
to achieve these goals. One important issue under discussion is whether to increase the
participation of the private sector in water provision. Since clean water and sewage treatment are
critical to control the spread of infectious and parasitic diseases; access, quality, and tariff
changes associated to privatization may affect health outcomes. In the 1990s Argentina embarked
on one of the largest privatization campaigns in the world as part of a structural reform plan. The
program included the privatization of local water companies covering approximately 30 percent
of the country’s municipalities. Using the variation in ownership of water provision across time
and space generated by the privatization process, we find that child mortality fell 5 to 7 percent in
areas that privatized their water services overall; and that the effect was largest (24 percent) in the
poorest areas. We check the robustness of these estimates using cause specific mortality. While
privatization is associated with significant reductions in deaths from infectious and parasitic
diseases, it was uncorrelated with deaths from causes unrelated to water conditions.
iadb.org
The few econometric studies that have looked at the impact of PPP
projects on the quality of water delivered to customers all point to a clear
positive impact. Andrés, Guasch, and others (2008) found that water potability in Latin America improved significantly with the introduction of a
private operator, in both the transition and the post-transition periods. In
Colombia, using household and public health surveys, both Barrera and
Olivera (2007) and Gomez-Lobo and Melendez (2007) found that PPP projects tended to achieve better potability figures than did public water utilities.
In Argentina, Galiani, Gertler, and Schargrodsky (2005) found that the child
mortality rate fell in areas served by private operators.
The few data available in Latin America come from Argentina. Buenos
Aires is one of the rare PPP projects for which reliable data are available on
the yearly evolution of water potability for three key potability parameters
(turbidity, chlorine, and bacteriology). As for access and service continuity, the concessionaire performed well in early years. Before the concession
began operating, only half of the water samples in Buenos Aires complied
with turbidity standards, one-third had insufficient chlorine, and almost
10 percent tested positive for fecal contamination. An overall compliance
rate of more than 99 percent was achieved by the fourth year of private
operation. However, Ducci (2007) reports that problems with water quality
compliance started to occur after 2002 in Buenos Aires and also in the Santa
Fe province concession. In Salta, the concessionaire has achieved gradual
and consistent improvement in overall water potability in the various systems it has been operating in the province since 1998 (Yepes 2007).
In Manila (the Philippines), significant improvements were achieved by
both concessionaires after they took over from public management. In four
years (1996–2000), the level of potability compliance went up from about
96 percent to almost 100 percent, after a more stringent system of water
quality monitoring was put in place under the control of the regulator. These
improvements were sustained in later years, even in the Western zone, despite
the concession going gradually into bankruptcy. Potability compliance in
both concessions has averaged about 99 percent for the past seven years.
Positive performance was also registered for several PPPs in Western
Africa. In Senegal and Niger, the improvement in water potability broadly
followed the progress with service continuity. Potability compliance
in Dakar went up from 95 percent in 1997 to 98 percent by 2001, and in
Niamey it went from 96 percent to 98 percent in the first four years. In
Gabon, potability also improved after the start of the concession, with the
75 Performance and Impact of Water PPP Projects
average turbidity index in Libreville falling from 2.5 to below 1.0. Finally,
the population in Abidjan (Côte d’Ivoire) has enjoyed safe tap water for
decades, a notable exception in the subregion.
ppiaf.org |
