When seeking to involve the private-sector in water and sanitation infrastructure projects, a host country's legal framework should be considered. Regulation of the sector (including regulation of tariffs, performance and standards) is important for all service delivery, whether provided by the private or public sector. Regulation of tariffs and regulatory risk that this carries are crucial to PPPs in the water sector.
Whilst every regulatory mechanism is unique to the country and framework within which it operates, most models of economic regulation of the water sector fall into one of four major categories. Click on each of these categories to find a summary of the framework, examples and reference materials:
Sample Water Laws and Regulatory Bodies
See below sample legislation and regulation on water & sanitation where private sector participation is envisaged, together with links to regulatory bodies:
- Kenya Water Act 2002 - The Act provides for the decentralisation of powers from the national to the regional and local level; the separation of water resources management from water and sanitation service delivery, as well as the institutional separation of policy, regulatory, asset holding and operational functions. Following the provisions of the Act, the transfer of asset ownership from the Water Ministry and the National Water Corporation to seven regional Water Services Boards (WSBs), and most local governments have handed over their assets to the WSBs. While the WSBs are in charge of asset development and bear overall WSS service responsibility within their areas of jurisdiction, they appoint Water Services Providers (WSPs) to actually provide the service. In urban areas WSPs are mostly local authority-owned utilities that have been established as commercialized, publicly owned companies. In rural areas community-managed projects are being transformed into formally recognized WSPs. The Water Services Regulatory Board has been created to supervise water services provision.
- Performance Contract between Government of Kenya and Water Services Regulatory Board setting out service obligations required from the Kenyan water regulator by the Government of Kenya.
- PPIAF - Gridlines article - Helping a new breed of private water operators access infrastructure finance
UK - England and Wales
Central and South America
- Province of Salta - Laws, Regulations and Concession Contract can be found on Ente Regulador's site (Salta's public services utilities regulator)
Asia and Pacific
- Tasmania Water and Sewerage Industry Act 2008 - An Act to provide for the establishment of an economic regulatory framework for the water and sewerage industry, including the establishment of a licensing regime and providing for the regulation of prices, customer service standards and performance monitoring of that industry and for related matters.
- Vietnam Decree on Clean Water Production, Supply and Consumption 117/2007._ A decree to facilitate the role of private sector in the delivery of water supply in urban areas, rural areas, industrial parks, export processing zones, hi-tech parks and economic zones by providing a legal and institutional basis for undertaking water supply contracts with water providers. The decree delineates the various roles of key institutional players in water supply planning and investment; espouses competition in contracting the services in the delivery of water supply services; encourages cost recovery, provision of investment incentives and ensures the participatory approach in drawing up water supply services contracts.
- Key Topics in the Regulation of Water and Sanitation Services
- Public-Private Partnerships for Urban Water Utilities: A Review of Experiences in Developing Countries. By Philippe Marin (2010).
- Water Theft / Non-Technical Losses - Legislative and Practical Measures
- Improving Water Regulation of Urban Water 2014
- A Governance Guide to the Victorian Water Industry. Melbourne. Victorian Government, Australia, Department of Sustainability and Environment. 2011.
- Improving Water Policy and Governance. New York and Oxford: Routledge.Tortajada, Cecilia, and Asit K. Biswas, eds. 2011.
- Liberalization in the Water Sector: Three Leading Models. 2011 In Handbook of Liberalization, ed. Rolf Kunneke and Matthias Finger. Cheltenham, UK: Elgar. Ménard, Claude, and Aleksandra Peeroo
- Economic Regulation of Urban Water and Sanitation Services: Some Practical Lessons. World Bank 2007. Ehrhardt, David, Eric Groom, Jonathan Halpern, and Seini O’Connor.
- Infrastructure Regulation in Developing Countries: An Exploration of Hybrid and Transitional Models. PPIAF 2007.
- Taking Account of the Poor in Water Sector Regulation. World Bank 2006. Trémolet, and Hunt
- Approaches to Private Participation in Water Services: A Toolkit 2006. World Bank and PPIAF.
- Models of Aggregation for Water and Sanitation Provision. World Bank 2005. ERM, with Stephen Meyers Associates and Hydroconseil, William D. Kingdom