PPP in the Water Sector in Central Asia

Central Asian countries like Uzbekistan and Kazaksthan are experimenting with PPPs in the Water Sector - rural and urban water supply. However, the private partner does not fund construction of water supply systems or rehabilitate it. For funding requirements, it is done through Donor Agencies like ADB and World Bank. Privatization assistance or PPPs as they term it is in the form of contracting out of management especially maintenance and recovery. However, this form of PPP has not found great success so far. One good reason being that better maintenance and service reflects on costs and therefore require tariff enhancements. This is not forthcoming from the Government as it could be a political disaster. Therefore the private sector has to make ado with scrimpy margins which is not a great incentive for them to continue. In India water supply has not taken off as a PPP route as yet as it is politically sensitive. These countries require to follow the India model where the more easily acceptable areas will have to be explored first. However, they do not have the high consumer volumes to justify such sectors like airports, roads etc. Therefore PPP will continue to be experimented in the water sector where the consumer base is large and hopefully acceptable to tariff revisions.