GOING PRIVATE

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Public-private partnerships seem to be making headway in various markets around the world. In the US, legislation to lift the cap on private activity bonds for water projects is moving ahead smoothly.

* The Sustainable Water Infrastructure Investment Act is now in front of the Senate finance committee If it becomes law, it would enable private developers to finance water projects using tax-exempt bonds, ensuring public finance no longer has an automatic advantage over private finance.

* In Nigeria, the Lagos State Government has asked for expressions of interest from private developers for the Odomola Water Supply Scheme, which is expected to have an eventual capacity of close to 1,000,000m3/d.

* Also in Africa, the Botswana government is reforming and restructuring its energy, water and sanitation sectors, and hopes to attract private capital into infrastructure investments. It is looking to set up an independent regulatory authority to establish a framework for private sector participation, and Mott MacDonald is leading the advisory consortium.

* Across the continent, Egypt’s parliament has approved new legislation concerning the future of PPPs in the country. It clears the way for a pipeline of potable water treatment and desalination projects to be tendered on a privately financed basis over the next two years. Hitherto, only wastewater projects have been open to private finance. One gets the feeling that passing the law was the easy bit. The difficult bit will be making the numbers add up. Egyptian water tariffs cover only a fraction of utility operating costs.

* Colombia is using a different tack to bring capital into the water sector. It has corraled 32 municipalities together to issue a COP180 billion ($92 million) 19-year bond paying interest at 8% to finance the municipalities’ capital investment needs. “This issue employs an innovative technique of organising many small and medium-sized municipalities into a legal trust which becomes the technical issuer of the bonds and funder of the loans to the individual municipalities,” Martin Baker, director of Colombia Infrastructure Group, explained.