The Public Private Partnership is an arrangement involving the management of public utilities in which the governmental agencies combine with private sector operators by entering into short, medium and long term agreements. Under the agreement, payments for services are linked to pre-identified performance targets with the outcome guaranteed by the private partners.
There are five basic models in PPP with several variants to suit the situation and the existing status. Starting with Management Contracts and O&M Contracts (ranging in terms from 3 to 5 years), and other models such as Lease, Build-Operate-Transfer (BOT), Build-Own-Operate (BOO) and Concession the term of agreement can go up to 25-30 years.
Apart from improving efficiency and better customer services through adoption of international best practices, the PPPs with different models are expected to provide the following benefits with particular reference to water sector:
- Expert Consultancy Services in areas like O&M, reduction of leakages and Non-Revenue Water (NRW) and Improvement in revenue collection
- Assumption of full responsibility for operation and maintenance of existing assets and water services
- Bring in investment to rehabilitate and improve existing assets
- Develop and operate new assets
- Bring in investment for addition of new assets