Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.



Published on

Published in: Business, Technology
  • Be the first to comment

  • Be the first to like this


  1. 1. Urban Infrastructure Provision and Management Master’s Programme Week-2 Session-4 Role of Urban Infrastructure and Its Environment Institute of Urban Development Studies
  2. 2. Recap <ul><li>By Instructor </li></ul>
  3. 3. Session Objectives <ul><li>By the end of session Participants will be able to: </li></ul><ul><li>Recognize external costs of urban infrastructure provision. </li></ul><ul><li>Describe and analyze contemporary debate on Urban Infrastructure. </li></ul><ul><li>Distinguish different options for Public Private Partnerships for Urban Infrastructure Provision and Mnagement. </li></ul>
  4. 4. External Cost (Benefits) <ul><li>A cost that is not borne directly by the person who decides about incurring it. </li></ul><ul><li>For Example if someone decide to play loud music at night and another person who is living next door; he will definitely bear the cost of lost sleep, but he will not decide about the playing of loud music. </li></ul>
  5. 5. The External Cost of Urban Infrastructure in Urban Areas Better Water Supply Less likely contract a waterborne disease Scenario-1 Scenario-2 If one contract a waterborne disease Dispose excreta in a sewer Sewer opens into nearby lake It put the neighbors at risk Even if the person above use a modern sanitary system, still disease Can be spread through food handling or some other form of accidental contact. Or the sewer system could be overwhelmed in a flood.
  6. 6. Conclusion The Higher the quality of the water an individual use, the lower probability of the neighboring community of contracting a water-borne disease and thus the community are comfortable and healthy.
  7. 7. <ul><li>The Externality argument was more relevant for nineteenth-century cities in industrialized courtiers. </li></ul><ul><li>Externality concerns are also still relevant today in developing countries. About 1.1 billion people lack access to clean water, and 2.4 billion lack access to sanitation. </li></ul><ul><li>(water Supply and Sanitation Collaborative Council, 2004). </li></ul>
  8. 8. Contemporary Debate of Infrastructure <ul><li>Public Private Participation (PPP) in Urban Infrastructure works. </li></ul><ul><li>Eco-efficient and sustainable urban infrastructure provision. </li></ul><ul><li>Urban Infrastructure and Crosscutting issues like gender, HIV/AIDS etc. </li></ul><ul><li>Urban Infrastructure Asset Management /IT assisted Urban Infrastructure record keeping. </li></ul>
  9. 9. Public Private Participation (PPP) in Urban Infrastructure works. <ul><li>Basic Options </li></ul><ul><li>Service contract </li></ul><ul><li>Management contract </li></ul><ul><li>Lease </li></ul><ul><li>Build-operate-transfer (BOT) </li></ul><ul><li>Concession </li></ul><ul><li>Divestiture (Asset Sell) </li></ul>
  10. 10. Private Involvement Public Involvement Service contract Management contracts Lease Concession BOT BOO Divestiture (Full Scale Privatization) PPP
  11. 11. <ul><li>Definition: specific tasks are contracted to the private sector, but overall utility management remains with the public sector </li></ul><ul><li>Typical duration: 6 months - 2 years </li></ul><ul><li>Pros: can inject good technical expertise </li></ul><ul><li>Cons: unlikely to improve performance greatly where overall management is weak </li></ul><ul><li>e.g. Mexico City: divided into 4 zones, each allocated to a private service contractor for 10 years, beginning in 1993. Contracts are in 3 stages, and cover: </li></ul><ul><ul><li>mapping the network, consumer census, metering </li></ul></ul><ul><ul><li>regularization of billing </li></ul></ul><ul><ul><li>loss detection and reduction </li></ul></ul>Service Contract
  12. 12. <ul><li>Definition: a private company is paid a fee to operate a set of municipal services with a typical duration of 3 to 5 years </li></ul><ul><li>Pros: gains in managerial efficiency </li></ul><ul><li>Cons: gains can be difficult to enforce; city remains responsible for investment </li></ul><ul><li>e.g. Solid Waste Collection . Common in Caracas, Seoul, Bangkok, Jakarta, Lagos. </li></ul><ul><li>Contractors are often medium-size enterprises (100 contractors in Lagos, 85 in Seoul) </li></ul><ul><li>Cost savings can be significant (in US - pvt sector is 10-30% cheaper, In UK & Canada - private sector is 20-40% cheaper) </li></ul>Management Contract
  13. 13. <ul><li>Definition: a private company leases the assets of a utility, and maintains and operates them, in return for the right to revenues within a typical duration of 10 to 15 years </li></ul><ul><li>Pros: commercial risk borne by the private sector, giving strong performance incentives </li></ul><ul><li>Cons: administratively demanding; government remains responsible for investments </li></ul><ul><li>e.g. Water in Guinea: Guinea instituted a lease contract for water supply in Conakry and 16 other towns in 1989. </li></ul><ul><li>Other issues: </li></ul><ul><li>Continuing difficulties in : connection rate below expectations, high unaccounted-for water, high prices </li></ul><ul><li>Institutional issues: problems in clearly allocating responsibilities and risks; problems in coordinating investment and operations </li></ul>Lease
  14. 14. <ul><li>Definition: private sector develops, finances and operates bulk facilities with typical duration of 15 to 30 years </li></ul><ul><li>Pros: good way of getting efficient delivery of bulk services, with private investment </li></ul><ul><li>Cons: not a good solution if supporting distribution systems are poor, or traffic levels are uncertain </li></ul><ul><li>e.g. Solid Waste in Hong Kong: </li></ul><ul><li>DBO (Design-build-operate) for refuse transfer stations and a chemical waste plant. For waste plant, capital cost paid over 5years in monthly installments; </li></ul><ul><li>DBO for landfills (including restoration and after care)- capital costs paid in lump sums at milestones </li></ul>Build Operate Transfer (BOO)
  15. 15. <ul><li>Definition: city owns the assets, but contracts with the private sector for operations, maintenance and investment with a typical duration of 25 to 30 years. </li></ul><ul><li>Pros: potential for high efficiency in operations and investment </li></ul><ul><li>Cons: requires considerable commitment and regulatory capacity </li></ul><ul><li>e.g. Water & Sanitation Manila (South Asian): </li></ul><ul><li>- A 25-year water and sewerage concession began in Manila in 1997 </li></ul><ul><li>requires increase in water connections from 65% to 100% of households within 10 years </li></ul><ul><li>requires increase in sewerage connections from 8% to 83% of households within 25 years </li></ul>Concession
  16. 16. <ul><li>Definition: the assets of a municipal utility are sold to the private sector </li></ul><ul><li>Typical duration: indefinite, but may be limited by a license </li></ul><ul><li>Pros: potential for high efficiency gains </li></ul><ul><li>Cons: requires credible regulatory framework </li></ul><ul><li>Example: England and Wales </li></ul>Divestiture (Asset Sale)
  17. 17. Conclusion <ul><li>By Participants </li></ul>
  18. 18. Thank You