public public partnership

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Public Services International Research Unit

(PSIRU)www.psiru.org

The Business School

Public-Public Partnerships as a catalyst forcapacity building and institutional

development !essons from Stoc"holm#atten$s e%perience in the &altic region

by

Emanuele Lobina and David HallPSIRU, Business School, University of Greenich

!ld Royal "aval #olle$e, Par% Ro, London SE&' (LS, U)

e*lobina+$re*ac*u%d*-*hall+$re*ac*u%

Date. &/th0u$ust 1''2

Pa3er 3resented at IR# and U"ES#!4IHE Sym3osium on

Sustainable 5ater Su33ly and Sanitation. Stren$thenin$ #a3acity for Local GovernanceDelft, the "etherlands, 12416 Se3tember 1''2

PSIRU' &usiness School' University of reenwich' Par" Row' !ondon S*+ ,!S' U.. Website:www.psiru.org Email:[email protected] Tel: +44-(0)208-331-9933 Fax: +44 (0)208-331-8665

Director: D!i" #$$ %eserc&ers: 'e et&bri"ge* ,ue$e obi* te!e &o,s* /$"i,ir opo!* /io$et orr$

Public Services International Research Unit (PSIRU) is prt o t&e &usiness School t t&e University ofreenwich (www.gre.c.u). %s reserc& is cetre" o t&e ,itece o e7tesi!e "tbse o t&eecoo,ic* po$itic$* soci$ " tec&ic$ e7periece wit& pri!tistio " restructurig o pub$ic ser!ices wor$"wi"e* ot&e ,u$titio$ co,pies i!o$!e" " o t&e i,pct o t&e po$icies o itertio$ ci$ istitutios " t&e
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% i!ersit o >reewic&www.psiru.org

ABSTRACT........................................................................................................................................................................3

KEYWORDS......................................................................................................................................................................3

INTRODUCTION..............................................................................................................................................................4

THE EXPERIENCE WITH PPPS OF THE LAST 15 YEARS IN DEVELOPING COUNTRIES: THEORY AND

PRACTICE.........................................................................................................................................................................5

PUBLIC-PUBLIC PARTNERSHIPS (PUPS: A TYPOLOGY AND DEFINITIONS........................................ ........!

STOCKHOL" VATTEN#S EXPERIENCE WITH PUPS IN THE BALTIC REGION.............................................$

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Abstract

!ne mechanism for addressin$ the 3roblems of a lac% of institutional ca3acity is that of 3ublic43ublic3artnershi3s APUPs, hereby established 3ublic sector o3erators are used to assist the develo3ment of localmana$erial, financial, and accountability ca3acity* Drain$ on em3irical evidence on to PUPs beteen

Stoc%holm;s munici3ally4oned ater com3any and its counter3arts in )aunas, Lithuania and Ri$a, Latviaand eCtra3olatin$ from the available literature, this 3a3er loo%s at the differences beteen the dynamics ofPPPs and PUPs and at the develo3mental 3otential of PUPs*

7he dynamics of PUPs are radically different from those of PPPs, in terms of the underlyin$ ob-ectives andmotivations, the basis of the 3artnershi3 and the confi$uration of accountability netor%s, ris% mana$ement,3romotion and im3lementation of institutional chan$e and in terms of %noled$e transfer and ca3acitybuildin$* Institutional and or$anisational chan$e associated ith PPPs is systematically informed by the3rivate o3erator;s commercial ob-ectives, hich re3resents an element of ri$idity and 3otential conflict as3rofit4see%in$ mi$ht and often does diver$e from develo3mental ob-ectives* 7he anta$onistic character ofPPPs and the shoc% thera3y a33roach of related 3olicies have encountered ides3read social and 3oliticalo33osition on an international scale* #onversely, as a result of their not4for43rofit basis and retainment of

3ublic onershi3 and mana$ement of o3erations, PUPs rely on a more $radual and collaborative a33roach tochan$e hich can facilitate socio43olitical acce3tability and local commitment*

7he develo3mental 3otential of PUPs de3ends on the establishment of clear ob-ectives, in li$ht of the3olitical mandate, ith the collaboration bein$ stimulated by mutual trust and understandin$ and 3ublicsector ethos* Unfettered by any conflict of interest inherent to 3ublic ater o3erations, the 3rinci3al4a$entrelationshi3 beteen the PUP;s 3olitical and financial s3onsors and the 3artners can be stren$thened byintroducin$ trans3arency and accountability reFuirements in terms of re3ortin$* Disci3line in theim3lementation 3hase can be further instilled throu$h 3lannin$ and the thorou$h structurin$ of the 3ro-ect*PUPs are intrinsically about ca3acity buildin$ and trainin$, than%s to their advanced ability to transfer%noled$e treated as a 3ublic $ood rather than as a 3rivate, mar%etable asset* Hoever, their cost4effectiveness and lon$4term develo3mental im3act can be enhanced by incor3oratin$ investment and in4house restructurin$ 3ro$rammes into 3artnershi3 desi$n* 7he inclusion of civil society and communityre3resentatives amon$ the 3artners mi$ht favour the success of PUPs as local commitment is facilitated andca3acity is develo3ed for local $overnance, ith hi$hly interconnected accountability netor%s actin$ ascatalysts for %noled$e transfer and reinforcin$ the ability to ta%e decisions and actions* Bilateral donors andI


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Introduction

In the last &/ to 1' years, the international debate on the reform of the urban ater su33ly and sanitationsector has 3rimarily revolved around the 3rivatisation of o3erations throu$h Public4Private Partnershi3sAPPPs or Private Sector Partici3ation APSP* 0s considerable resources have been devoted to PPPs as thefavourite o3tion of International


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The experience with PPPs of the last 15 years in developing countries: theory andpractice


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the introduction of a re$ulatory a$ency, hose structure ill have to be su33orted by consumers throu$htariffs or the $overnment, or the com3etitive selection of the 3rivate o3erator* Even relatively hi$htransaction costs mi$ht not 3rovide $uarantees that they ill achieve their intended $oal ALobina Hall,1''=. 11*

C0*+,/* ,'2+

7his ar$ument 3osits that contracts are inadeFuate to re$ulate com3leC relationshi3s such as the 3rinci3al4

a$ent relationshi3 beteen local authorities and 3rivate ater o3erators, due to the im3ossibility offoreseein$ all the variables that mi$ht affect the im3lementation of contractual obli$ations under PPPs,3articularly so in develo3in$ countries* 0s summarised by Braadbaart A1''&. &2, 7he contract instrumentsim3ly cannot co3e ith the combined challen$e of a lon$ time horion, hi$h uncertainty, difficult to defineservice and 3roblematic environment* 5hat results are soft tar$ets, sFuishy out3uts, and endlessne$otiations*

D,6'/ '*+* 7'

7his a33roach identifies the dynamic interest4see%in$ behaviour of 3rivate o3erators as the cause ofdiscre3ancy beteen the theory and 3ractice of ater 3rivatisation* 8"#s ould rely on their su3eriorresources in terms of information, but also technical eC3ertise and le$al resources and 3olitical clout inres3ect of host $overnments and other sta%eholders to 3ursue their commercial considerations* 7he mostim3ortant factor drivin$ outcomes a33ears to be continual 3rofit4see%in$ and ris%4avoidin$ behaviour ofinternational ater com3anies, in interaction ith local and national $overnments A3ursuin$ miCed 3oliticaland fiscal $oals, 3olitical and community movements, and international donors and institutions 3ursuin$their on $oals* 7he results of this 3rocess are stron$ly affected by the uneFual distribution of resources ands%ills beteen the 3arties and by the limited com3etition in this sector* It is these dynamics, e ar$ue, hicheC3lain the actual Amisallocation of ris%, the Aineffectiveness of $overnance, and the content Aand constantrevision of the contracts themselves, as ell as the actual outcomes in terms of investment finance,eCtension of systems Aor failure to eCtend, 3ricin$ 3olicies, and trans3arency ALobina Hall, 1''=. =4>*7his inconsistency ould be observable on 3ricin$ levels, the delivery of eC3ected investment 3ro$rammesand $eneral im3lementation of contracts, includin$ the delivery of services to the 3oor ALobina Hall, 1''=.(4== Hall Lobina, forthcomin$ in Geoforum* 0 corollary of this ar$ument is that the international 3rivate

sector is characterised by a limited ris% ta%in$ ca3acity hich eC3lains 8"#s; ithdraal from develo3in$countries in the face of currency ris% or other unforeseen occurrences* It is this intrinsic aversion to ris%hich ould ma%e it unsuitable to address the lon$ term needs of develo3in$ countries in relation to aterservices AHall Lobina, 1''>. 1@&41@1*

0nother corollary, and one more relevant to ca3acity buildin$ and local $overnance, is that ater 8"#sould tend to retain their %noled$e at mana$erial level in that its transfer to local actors ould underminethe very raison d;Jtre of PSP* 7hey ould instead transfer more limited technical and o3erational %noled$eto local staff, local community members and other sta%eholders should that 3rove instrumental to theenhancement of the PPP;s 3rofitability ALobina Hall, forthcomin$ in Pro$ress in Develo3ment StudiesHall Lobina, forthcomin$ in Geoforum* 7his ould contribute to eC3lain hy meanin$ful and effective3ublic 3artici3ation or community involvement in decision ma%in$ on and monitorin$ of PSP a33ears to be

eCtremely uncommon ALobina Hall, 1''=. 1'41&*

S0/'0-802'*'/,2 2'*'6,/ ,9 8082,+ +'*,/ *0 PPP

7his ar$ument 3ostulates that, contrary to the 3ublic sector, the 3rivate sector and 3articularly so theinternational 3rivate sector do not en-oy the socio43olitical le$itimacy hich is a 3recondition for theacce3tation of reforms by local communities across develo3in$ countries* Both critics and su33orters of3rivatisation have noted the im3ortance of 3olitical resistance to 3rivatisation as a ne$ative factor ma%in$ theeconomic viability of 3rivate o3erators more ris%y and thus underminin$ the viability of PPPs AHall, Lobinaand de la 8otte, 1''/ Lobina Hall, forthcomin$ in Pro$ress in Develo3ment Studies*

In li$ht of the above, e offer the folloin$ analytical frameor% to identify the essential features of PPPs,althou$h this can be a33lied to other ty3es of 3artnershi3s so that com3etin$ a33roaches to the reform ofurban ater systems and their im3lications can be com3ared* 7he characteristics of the 3artnershi3 areFualified from the 3ers3ective of the eCternal or su33ortin$ 3artner, so that in the case of PPPs theird i ti i b d th i t t ; h t th t hi
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T,2 1. P,+*+)'8 ,*+ 0 PPP ' *+,'*'0 ,9 9;208' /0*+' (+06 *) 8+8/*'; 0

*) 880+*' 8,+*+F,*+ 0 8,+*+)'8 D/+'8*'0

Primary ob-ective Profit maCimisation, in li$ht of mandate from shareholders8ain incentive 4 Short term. mar%et 3enetration

4 8edium to lon$ term. eC3loitation of ca3tive mar%et and contribution to mother com3any;s $roth

Relationshi3 ith local3artner Princi3al4a$ent relationshi3 beteen local authoritiesKdecision ma%ers and the 3rivate o3eratorInstitutional chan$e 4 Reform of institutional frameor% is reFuired before the be$innin$ of PPP Ae*$* ith introduction of

re$ulatory a$ency, reform of 3ricin$ structure4 !r$anisational chan$e of local underta%in$ to be carried out by 3rivate o3erator, in line ithcommercial im3eratives4 Institutional reforms introduced reflect established models of PPPs Ae*$*


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hi$h, althou$h to date no definitive survey has been carried out, and it encom3asses a ide variety ofsu33ortin$ and su33orted 3artners in various re$ions* Des3ite some miCed 3ast eC3eriences ith tinnin$arran$ements in the ater sector A8iranda, 1''2. /@ Lariola Danielsson, &((6. /, the eC3eriencesrevieed in different re$ional conteCts varyin$ from #entral and Eastern Euro3e A#EE to 0frica and 0sia,su$$est that the develo3mental 3otential of PUPs is hi$h AHall, 1''' Hall Lobina, 1''= but that remainslar$ely unta33ed*

#toc$hol% &atten's experience with P!Ps in the (altic region

7he eC3erience of Stoc%holm;s munici3ally4oned ater su33ly and sanitation com3any Stoc%holm :attenas a su33ortin$ 3artner in the Baltic area is of 3articular interest in li$ht of the institutional and o3erationalissues addressed throu$hout the &(('s; in collaboration ith the local 3artners in )aunas, Lithuania andRi$a, Latvia, the substantial investment 3ro$rammes realised and the lon$ term 3ositive im3act $enerated interms of ca3acity buildin$* 7he identification of Baltic Sea 3ollution as a 3roblem shared by "ordic andBaltic countries 3rom3ted an international initiative, the HEL#!8 #ommission, aimed at findin$ solutionsthrou$h coo3eration* Internationally coordinated efforts attracted the human and financial resources reFuiredto address underinvestment in and 3oor Fuality of ater su33ly and sanitation services in countriesunder$oin$ transition from communist re$imes*


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#toc$hol% &atten's approach to P!Ps in Kaunas/ +ithuania and 0iga/ +atvia

Stoc%holm :atten;s PUPs have been ty3ically lin%ed to s3ecific investment 3ro$rammes ith technicalassistance and ca3acity buildin$ ta%in$ 3lace in order to su33ort the concurrent institutional reform of thelocal ater o3erators, chan$e of their o3erational 3ractices and investment im3lementation* 7he schemes3rovided for the 3artial recovery of Stoc%holm :atten;s costs and did not contem3late the 3ossibility ofma%in$ 3rofits out of the PUPs*

7he costs of Stoc%holm :atten;s human resources devoted to the tinnin$ ere covered by the SedishInternational Develo3ment #oo3eration 0$ency ASida, hile the investment 3ro$ramme carried out by thelocal ater o3erators ith the assistance of Stoc%holm :atten received fundin$ from the EBRD, EIB ad othermultilateral and bilateral a$encies and as co4financed by the host $overnments and su33orted 3artners* 7heInternational


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#toc$hol% &atten's P!P in Kaunas/ +ithuania

#oo3eration beteen "ordic and Baltic ca3ital cities started in &((1 and, u3on reFuest of EBRD and iththe su33ort of Sida a tinnin$ arran$ement beteen Stoc%holm :atten and )auno :andenys started in&((>* Hoever, it should be noted that Stoc%holm :atten had already established contact ith the Balticutilities as early as &(6(* )aunas A3o3ulation of >=',''' had been identified by HEL#!8 as one of the five3riority hot4s3ots in Lithuania since it as not endoed ith a asteater treatment 3lant and re3resented(' of the collected, untreated sea$e in Lithuania* 7he )aunas 5ater and Environment Pro-ect A)5EPrelied on a total investment bud$et of USO &'& million, 6' of hich as devoted to asteater treatmentand the remainder to ater su33ly* of total 3ro-ect costs, ith Sida3rovidin$ fundin$ of SE) &2*> million AUSO 1*1@ million to su33ort both 3hases of the tinnin$arran$ement ALariola Danielsson, &((6. =4>* 7he investment 3ro$ramme as financed by the EBRD,"E*& million* 0 3riority Investment Pro$ramme, Procurement

Plan, Im3lementation Schedule, Loan 0$reements and State Guarantee 0$reements ere defined amon$other documents* In this 3hase, the Pro-ect Im3lementation Unit APIU as also established ALariola Danielsson, &((6. 6*

7he Loan 0$reements ere made of loan covenants ith the EBRD and "E


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7he 3artners; commitment and the unleashed %noled$e transfer a33ear to lie at the core of the PUP;ssuccess* Both AStoc%holm :atten and A)auno :andenys too% the tinnin$ a$reement very seriously* 7here has been an eCchan$e of %noled$e and eC3erience on all levels M beteen the Boards, beteen thetrade unions, the mana$ement teams and of course beteen all %inds of s3ecialists ALariola Danielsson,&((6. &=*

7he consultants commissioned to revie the tinnin$ arran$ement for Sida summarised the achievements ofthe PUP as follos. A)auno :andenys faced an enormous 3ressure to 3re3are and im3lement the bi$$estinvestment 3ro-ect of its history and, at the same time, transform 3rofoundly its le$al status, $overnance andor$anisation structure, mana$ement systems and 3ractices, customer relations, financial mana$ement andinformation systems* It has succeeded amain$ly ell, lar$ely due to AStoc%holm :atten assistance ALariola Danielsson, &((6. &2*

#toc$hol% &atten's P!P in 0iga/ +atvia

5ith a 3o3ulation of 6'',''', Ri$a is the lar$est city in Baltic countries and $enerates around 2' ofLatvia;s total munici3al asteater load ALariola et al., 1'''. i* Before &((&, all of Ri$a;s asteater

underent no ty3e of treatment ALariola et al., 1'''. 1>, hile asteater collected from #entral Ri$aAith 1'',''' inhabitants as dischar$ed untreated until the ince3tion of the tinnin$* 0 recentlyconstructed asteater treatment 3lant as in need of ma-or rehabilitation hile 2' of the distributionnetor% as re3orted to be in bad condition ALariola et al., 1'''. i*

Stoc%holm :atten started coo3eratin$ ith Ri$a 5ater in &((1 and in &((> the Ri$a 5ater andEnvironmental Pro$ramme AR5EP as launched to im3rove ater su33ly and sanitation services in Ri$aand the environment of the Dau$ava River and the Baltic Sea* Ri$a 5ater 3re3ared a feasibility study for theinvestment 3ro-ect ith assistance from Stoc%holm :atten and the Siss

Phase II too% 3lace from "ovember &((2 to December 1''' ALariola et al., 1'''. (4&'* 7he a$reementbeteen Ri$a 5ater and Stoc%holm :atten identified the folloin$ ob-ectives. a the 3romotion ofenvironmental sustainability and infrastructure develo3ment aimed at im3rovin$ the environmentalconditions of the Dau$ava river, the Gulf of Ri$a and the Baltic Sea by reducin$ the environmental im3act ofRi$a;s asteater b im3rovin$ the Fuality and reliability of ater su33ly and asteater services in Ri$ac enhancin$ the financial 3erformance throu$h im3roved mana$ement, o3erational efficiency, costrecovery and institutional develo3ment transformin$ Ri$a 5ater into an autonomous, self4financin$ and self4$overnin$ enter3rise ALariola et al., 1'''. =*

Li%e in the case of Stoc%holm :atten;s tinnin$ ith )auno :andenys, Phase II of the Ri$a tinnin$a$reement as made u3 of an institutional develo3ment com3onent and an investment im3lementation3ro$ramme ALariola et al., 1'''. (4&'* 7he tinnin$ a$reement identified the sco3e of or%, the freFuencyand content of re3ortin$, administrative matters, the to 3artners; res3ective duties, the terms of referencefor the PIU and a time chart for the im3lementation of the investment 3ro$ramme ALariola et al., 1'''. (4&'*Li%e in the case of )aunas, the Loan 0$reement beteen the EBRD and Ri$a 5ater sha3ed the content andim3lementation of the tinnin$ 3ro$ramme, reFuirin$ a number of s3ecific actions at institutional,mana$erial, financial and o3erational level contained in a #or3orate Develo3ment Plan and s3ecifyin$ %eyfinancial indicators in terms of tariff increases, reserve account and debt service covera$e ALariola et al.,1'''. &&*

>2 of the 3ro-ected USO &'>*@ million investment 3ro$ramme as to be co4financed by the #ity of Ri$aand Ri$a 5ater, hile the EBRD and EIB ould to$ether fund =( and the remainder as to be 3rovided by


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a$reement, the 3urchase of eFui3ment for the rehabilitation of the biolo$ical treatment unit and the3re3aration of tender documents for the asteater treatment 3lant, for a total SE) =@*& million ALariola etal., 1'''. =* !f this sum, SE) 1'*= million ere devoted to the 3urchase of eFui3ment for the asteatertreatment 3lant, hile SE) &2*6 million AUSO 1*> million ere allocated to Phase II of the tinnin$ and the3re3aration of tender documents ALariola et al., 1'''. (* 7he timely im3lementation of the investment3ro$ramme, ith the connection of the inhabitants of #entral Ri$a to the asteater treatment 3lant, resultedin a considerable environmental benefit for the hole re$ion ALariola et al., 1'''. 1@*

0s re$ards institutional and or$anisational chan$es, Stoc%holm :atten;s 5ater Utility 8ana$ement 0dvisoractively 3artici3ated in the 3rocess and influenced both Ri$a 5ater;s to3 mana$ement and Ri$a;s localauthorities ALariola et al., 1'''. &@* 0imin$ at stren$thenin$ the ater o3erator;s autonomy from munici3alauthorities, chan$es ithin the $overnance frameor% of Ri$a 5ater included the introduction of aSu3ervisory #ouncil althou$h its activities remained under the close scrutiny of a munici3al committeeALariola et al., 1'''. ii* 0lso, the EBRD reFuired and obtained the establishment of a re$ulatory unitsu3ervisin$ Ri$a 5ater;s tariffs and o3erations, actin$ as an interface beteen the consumers and theutility ALariola et al., 1'''. &@*

0s re$ards or$anisational chan$es, the installation and consolidation of the 3lannin$ 3rocess as describedby the consultants reviein$ the tinnin$ as a ma-or achievement ALariola et al., 1'''. &(* 7he ARi$a5ater mana$ement and staff are no able to mana$e the 3lannin$ 3rocess inde3endently, ith su3ervisoryassistance from AStoc%holm :atten only ALariola et al., 1'''. ii* Stoc%holm :atten;s o3erational su33ort toRi$a 5ater;s mana$ement as valuable ALariola et al., 1'''. ii, 1&41= and the established PIU 3roved fullycom3etent for handlin$ the 3rocurement of the investment 3ro-ects* PIU has $ained much eC3eriencefrom AStoc%holm :atten, and is no able to act inde3endently in most fields* 7oday, there is little need forsu33ort from AStoc%holm :atten ALariola et al., 1'''. 1&41=* 0 customer database softare as installedand efforts ere made at im3rovin$ the reliability of meterin$ and meter readin$ and the effectiveness of billcollection ALariola et al., 1'''. 1'41&*

Im3ortantly from the social 3oint of vie, Ri$a 5ater and Stoc%holm :atten 3ersuaded the munici3ality toestablish a social su33ort facility for the families and individuals that cannot afford to 3ay for ater* 0 visit

to AStoc%holm :atten ins3ired ARi$a 5ater financial staff to im3lement the chan$e ALariola et al., 1'''. 1'41&*

0 staff reduction 3lan as devised to enhance efficiency, hich 3ro-ected a reduction in the or%force from&/=@ in &((6 to &='2 in 1''=* Hoever, the 3lan alloed for the recruitment of ne staff due to theintroduced technolo$ical innovations Afor a total of 1/4=' or%ers in late &((( and cuts ere notindiscriminate* 0 test had been carried out to evaluate hether services 3reviously 3rovided by the 7rans3ortand 5or%sho3 De3artment could be outsourced but this as re-ected as in4house 3rovision 3roved moreefficient than resort to the mar%et ALariola et al., 1'''. 1'*

0ll the tinnin$ modules included trainin$ com3onents and the transfer of %no4ho too% 3lace on a idefront* Study tours to AStoc%holm :atten, and on4the4-ob trainin$ 3rovided by AStoc%holm :atten eC3erts,

have been the most useful form of trainin$ ALariola et al., 1'''. 1&* Stoc%holm :atten delivered some (man years of assistance to the Ri$a tinnin$ arran$ements, includin$ @/ man months for three resident lon$4term advisors and => man months for &2 short4term eC3erts AB-er$$aard, 1''2. 6*

verall assess%ent of the two P!Ps

Revies and evaluations of these 3rocesses have been consistently enthusiastic, hatever their criticalobservations on s3ecific as3ects* 7he SID0 revie of its overall munici3al tinnin$ 3ro$ramme described itas a successful eC3eriment the revie of the )aunas eC3erience in &((6 described it as overhelmin$ly3ositive 1 the revie of the Ri$a tinnin$ set out a stri%in$ summary of ma-or technical, environmental,financial, mana$erial and $overnance achievements. S


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pro%ect, the Aualit1 and reliabilit1 of water suppl1 and wastewater services has improved in $iga. )he

twinning arrangement has essentiall1 stimulated and supported the process of transforming $< into an

autonomous, self-financing and self-governing enterprise. )here is a better understanding and appreciation

on a political level of the reAuirements for arriving at an administrativel1 and financiall1 independent water

compan1. $< is ver1 satisfied with the twinning arrangement and wishes to continue close cooperation with

S


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the concentration of resources on %noled$e transfer aimed at ca3acity buildin$ and local $overnance,ithout deviations from the intended reform 3ath*

7he 3rocess as initiated at the 3olitical level, first ith an international initiative aimed at coordinatin$multilateral and bilateral coo3eration, then ith the 3olitical mandate instructin$ Stoc%holm :atten to act asa su33ortin$ 3artner to its to Baltic counter3arts ALariola Danielsson, &((6. &', &/*


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this 3rocess and influenced both R5;s ARi$a 5ater;s to3 mana$ement and Ri$a;s munici3al decision4ma%ers in modernisin$ the $overnance structure and 3ractices ALariola et al.,1'''. &@* 7he centrality oftrust to the dynamics of the 3artnershi3 contributes to sheddin$ li$ht on the factors behind the success ofPUPs*

7ime re3resents an im3ortant element in cementin$ trust beteen the 3artners and sta%eholders such as localauthorities, thus eC3lainin$ the a33arently lon$ duration of the 3artnershi3s*


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Lariola et al. A1'''. iv, &( also criticise reliance on Fualitative ob-ectives under Stoc%holm :atten;stinnin$ arran$ements and recommend that in the future Sida should structure a more robust contractualframeor%, hereby terms of references should include 3re4determined, measurable tar$ets in technical,environmental, financial and institutional 3erformance* 7he transformation of tinnin$ arran$ements intomana$ement contracts is seen as a solution to enhance cost effectiveness* In tinnin$ arran$ements, the3artners are eC3ected to s3ecify the 3erformance ob-ectives durin$ the tinnin$ 3rocess* In mana$ementa$reements these ob-ectives are s3ecified in advance, and the financial com3ensation of the 3rivate sector

o3erator de3ends on achievement of the 3erformance ob-ectives* 7his is the ay to im3rove the effectivenessof tinnin$ arran$ements, too ALariola et al.,1'''. ='* Even this 3ro3osition a33ears incon$ruous to thevery nature of PUPs* In fact, contrary to mana$ement contracts and other ty3es of PPP, PUPs are not basedon a 3rinci3al4a$ent relationshi3 beteen local authorities and an o3erator motivated by commercial $ain,but on a 3eer relationshi3 for$ed around common values and ob-ectives, hich eCclude 3rofit4see%in$,hose merit is to encoura$e local commitment to sustainable chan$e* 7his im3lies that the success of the3artnershi3 does not merely de3end on the ca3ability and efforts of the su33ortin$ 3artner but also on thesu33orted 3artner and decision ma%ers; rece3tiveness* In turn, this ill be determined by such factors as thelocal or$anisational culture, institutional frameor% and socio4economic conditions*


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su$$ests that the focus in selectin$ the su33ortin$ 3artner should sitch to its suitability, in terms of acFuired%noled$e, includin$ 3rior contacts ith the su33orted 3artner, rather than on cost reduction* 7rans3arencyand the ensuin$ accountability ould thus act as a safe$uard a$ainst rent4see%in$ from individuals oror$anisations, and a com3lementary stimulus to en$a$e in the 3artnershi3*

* 7rainin$ as also 3rovided to 3re3are re3resentatives of local authoritiesto en$a$e in their ne res3onsibility as non4eCecutive members of the Board of )auno :andenys* 7heBoard trainin$ in )aunas and in Stoc%holm for five Board members as considered crucially im3ortant to$ive direction to the ne Board ALariola Danielsson, &((6. 1&* B-er$$aard A1''2. &' recommends thattrainin$ su33ort in institutional and or$anisational develo3ment is arran$ed at an early sta$e of the 3ro-ectfor the benefit of the su33orted 3artner and local authorities to overcome the 3ossible lac% of familiarity iththe conce3t of tinnin$*


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In terms of trainin$ effectiveness, tinnin$ arran$ements can rely on the 3ublic utility4to43ublic utilityrelationshi3 ith the su33ortin$ 3artner offerin$ first4hand eC3erience hich consultants or other eC3ertsmi$ht hardly have ALariola Danielsson, &((6. 1&* 7he effectiveness of trainin$ and ca3acity buildin$ isde3endent u3on the incentives to %noled$e transfer beteen the 3artners* In this sense, in li$ht of their not4for43rofit basis, PUPs a33ear to be a more advanced vehicle for %noled$e transfer than PPPs* 0s noted Aseeabove section on )he e"perience with PPPs of the last 5 1ears in developing countries& theor1 and

practice, 3rivate o3erators re$ard %noled$e at mana$erial level as a 3rivate $ood from hich de3ends their

ability to eCtract rent* Under PPPs, %noled$e transfer aimed the buildin$ of local mana$erial ca3acity isthus inhibited by hat the 3rivate o3erator 3erceives as a ris% of losin$ is com3etitive advanta$e toards3ublic mana$ers and undermine the rationale behind PSP* #onversely, 3ublic ater o3erators and 3articularlyso the su33ortin$ 3artner under not4for43rofit PUPs, vie their %noled$e as a 3ublic $ood characterised bynon4a33ro3riability, non4eCcludability, non4eChaustibility and non4tradability ALobina Hall, forthcomin$ inPro$ress in Develo3ment Studies* 7his can eC3lain the 3ositive and lon$ term im3act 3roduced byStoc%holm :atten;s trainin$ activities in )aunas and Ri$a*

million AUSO 1*1@ million,

eFual to a33roCimately 1*1 of the delivered investment 3ro$ramme of USO &'& million ALariola Danielsson, &((6. =4>* 7he bud$et for 3hases I and II of the Ri$a tinnin$ amounted to SE) &(*6 million,corres3ondin$ to 1*@ of the realised USO &'>*@ million investment 3ro$ramme ALariola et al., 1'''. &, (*0lthou$h such estimates do not consider the costs of the 3reliminary 3eriods, they also overloo% theconsiderable lon$ term im3act in terms of ca3acity buildin$ and institutional and or$anisational chan$eALariola et al.,1'''. 16, let alone the investment 3ro$rammes carried out after the com3letion of the totinnin$ arran$ements hich these made 3ossible*

Lariola Danielsson A&((6. 11, 0nneC = observe that the cost of the second 3hase of the )aunas tinnin$,after discountin$ the amount of the relative investment 3ro$rammes and the sie of the cities, as in lineith that of / 5orld Ban%4funded tinnin$ arran$ements in the Baltic re$ion* !n the other hand, Lariola etal.A1'''. =& recommend that the number of lon$ term advisors should be reduced from = to one, ith more

intensive resort to short term advisors com3ensatin$ for the reduced resident team* 7his seems to su$$estthat, for a $iven level of Fuality in the delivery of the 3artnershi3;s 3ro$ramme, there mi$ht be limited sco3efor cuttin$ costs*

7he bud$et for the second 3hase of the )aunas tinnin$, eFual to SE) &1*= million, favourably com3ared toestimates for the same ty3e of or% 3roduced by to consultin$ com3anies* !ne ay of chec%in$ the costeffectiveness Aof the tinnin$ of is to see if someone else could have done the same Fuality service at aloer cost* 5e therefore as%ed three senior consultants from to different com3anies Aone technicalconsultant and to mana$ement consultants to ma%e a bud$et estimate for the 3ro-ect, based on thetinnin$ a$reement* 7heir estimates of the costs for im3lementin$ the tinnin$ a$reement varied beteen&/ and &6*/ million SE) ALariola Danielsson, &((6. 11*

7his 3a3er does not directly address the cost effectiveness of PUPs as com3ared to PPPs* Hoever, e offerthe folloin$ observations on factors 3otentially affectin$ cost effectiveness under different a33roaches to


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hole set of 3erformance and 3olitical ris%s are retained by the local 3ublic o3erator and local authorities* Bycontrast, ris% under PPPs has to be meticulously allocated in order to safe$uard the future 3rofitability of theventure and that reFuires more substantial costs in terms of financial, le$al, consultin$ and other transactioncosts* It has been estimated that under 3rivate infrastructure 3ro-ects transaction costs alone can reach / to&' of total 3ro-ect cost ALobina Hall, 1''=. 11* Second, the not4for43rofit basis of PUPs allos for themaCimum reinvestment of the mobilised financial resources into the local system, ith no 3rofits eCtractedin the form of dividends* 7his contrasts ith the im3act on 3ricin$ derivin$ from 3rivate shareholders;

demands in terms of remuneration and on investment im3lementation under PPPs* Problems freFuentlyobserved include resort to tactical resources to eCert u3ards 3ressure on tariffs, includin$ the use ofmana$ement fees to eCtract increasin$ revenues from o3erations, to$ether ith the recurrent reduction in thevalue of investment 3ro$rammes realised under PPPs and 3ost3onement in their im3lementation ALobina Hall, 1''=. &'4&1, 1141(*

Institutional and organisational develop%ent

7he to tinnin$ arran$ements in )aunas and Ri$a indicate that PUPs can not only 3rovide ca3acitybuildin$ and investment but also convey institutional and or$anisational chan$e* 7his is im3ortant,institutional stren$thenin$ bein$ a develo3mental $oal in itself* 4//, 2142=, 2242@*Davis A1''>. 2=422 shos that in the case of to 3ublic sector4community PUPs in 0hmedabad, India and0ad and Nammu, Pa%istan direct contact beteen 3ublic sector em3loyees and local communities createdreci3rocal commitment ith dis3lays of $ratitude resultin$ in 3rofessional 3ride and im3roved service levels*7his su$$ests that, irres3ective of the ty3e of PUP and the develo3mental conteCt, establishin$ $enuinebonds amon$ 3artners and sta%eholders based on reco$nition of the res3ective roles and shared ob-ectives, isinstrumental to the success of the 3artnershi3*


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7he outcome of institutional chan$e is hi$hly de3endent on the local conteCt AB-er$$aard, 1''2. (, so thatthe form of in4house restructurin$ associated ith the analysed tinnin$ arran$ements is not to 3rovenecessarily adeFuate or socially acce3table in a different environment* In certain cases, a33ro3riate, sociallyand 3olitically acce3table institutional and or$anisational chan$e mi$ht reFuire the eCtension of the3artnershi3 to actors re3resentative a broader set of interests than those carried by the relevant o3erators,local authorities and financiers* 0s it is the case in Porto 0le$re, Brail AHall et al., 1''1, this could ta%e3lace ith a more direct en$a$ement of other sta%eholders, such as local communities and civil society

re3resentatives, in the monitorin$ and conduction of 3ublic ater o3erations and the surroundin$ $overnancestructures* It is thus 3ossible to envisa$e the develo3ment of international 3ublic sector4community3artnershi3s, a hybrid beteen domestic $overnment4community 3artnershi3s and cross4borderdevelo3ment 3artnershi3s as cate$orised above Asee section on Public-Public Partnerships 9P;Ps:& @t1polog1 and definitions, hereby the relationshi3 beteen the to 3ublic ater o3erators is enlar$ed to theres3ective communities and civil society re3resentatives* 7his mi$ht entail the develo3ment of 3arallel3artnershi3s beteen civil society and community re3resentatives related to the su33ortin$ 3artner and theircounter3arts in the su33orted city, aimed at buildin$ local ca3acity ithin the local community* Such cross4border 3ublic sector4community PUPs mi$ht be suitable to develo3in$ 3ublic 3artici3ation mechanisms iththe su33ort of 3ublic ater o3erators and their res3ective social 3artners, from such established cases asPorto 0le$re, Brail AHall et al., 1''1. &'4&&, &(, #ordoba, S3ain A!bservatorio de los Servicios Pblicos,1''/. 1', 1/, >@4>6 and Grenoble,


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bloc% tariffs, the abolition of any cross4subsidies from commercial and industrial consumers to householdsand avera$e billin$ amountin$ to / of dis3osable household income&&*

Donors and Icom3are / 5orld Ban%4funded tinnin$ a$reements in the Baltic re$ion ith the )aunas and Ri$a PUPs andobserve that the main differences include the smaller bud$ets for tinnin$ su33ort and investment finance in5orld Ban%4s3onsored schemes, to$ether ith stron$er focus on monitorin$* 0ll such features have

im3lications on the cost effectiveness of PUPs* 0lthou$h Lariola Danielsson A&((6. 1= note that therelative bud$ets ere overall 3ro3ortionate to the sie of cities and investment 3ro-ects, 7he bi$$er bud$etsin )aunas and Ri$a have alloed a continuous 3resence of several forei$n eC3erts, hich has not been3ossible in the 5orld Ban% 3ro-ects* It is 3ossible to assume that tryin$ to enhance the cost effectiveness ofPUPs by reducin$ the bud$et for tinnin$ su33ort mi$ht 3rove counter3roductive as this ill reduceeC3osure to the su33ortin$ 3artner;s %noled$e and eC3ertise* In other ords, it is hi$hly li%ely that for a$iven de$ree of 3artner suitability and a $iven level of 3artnershi3 Fuality a reduction in man3oer resourcesdevoted to the 3artnershi3 ill not translate into im3roved cost effectiveness of the PUP* In turn, this im3liesthat in order to achieve a $iven desired ob-ective in terms of ca3acity buildin$, investment im3lementationandKor su33ort to institutional chan$e a minimum amount of tinnin$ resources ill be reFuired, hoseidentification ill be crucial to the 3artnershi3 success*

The features of P!Ps in transition and developing countries: a typology

In li$ht of the above, e offer the folloin$ analytical frameor% to identify the essential features of therevieed PUPs so that these can be com3ared to those of PPPs or other 3artnershi3s, includin$ other ty3es ofPUPs, alloin$ for an evaluation of com3etin$ a33roaches to the reform of urban ater systems and theirim3lications* 7he characteristics of the revieed PUPs are Fualified from the 3ers3ective of the eCternal orsu33ortin$ 3artner, in this case Stoc%holm :atten*

T,2 %. P,+*+)'8 ,*+ 0 PUP ' *+,'*'0 ,9 9;208' /0*+' (+06 *) 8+8/*'; 0

*) 880+*' 8,+*+F,*+ 0 8,+*+)'8 D/+'8*'0

Primary ob-ective #ontribution to develo3ment, in li$ht of mandate from 3olitical leaders of su33ortin$ 3artner;s homecountry and 3artnershi3 financiers8ain incentive Public sector ethos. 3ride in 3ublic sector;s mission and sharin$ of on ca3abilityRelationshi3 ith local3artner

4 Peer relationshi3 3ublic utility4to43ublic utility based on trust and mutual understandin$4 0dvisory role to local decision ma%ers, 3ossibly facilitated by local 3artner

Ris% mana$ement "o 3erformance or 3olitical ris% is assumed by the forei$n 3artner as the local 3artner remains fully inchar$e of o3erations* 7his im3lies that the effectiveness of ris% miti$ation de3ends on the institutionaland or$anisational reforms introduced in 3arallel to the 3artnershi3

Institutional chan$e 4 Possibility of institutional and or$anisational chan$e if the PUP is eCtended beyond mere transfer oftechnical %no4ho4 If institutional and or$anisational chan$e is 3art of PUP, this ta%es 3lace in 3arallel ith ca3acitybuildin$ and investment 3ro$ramme4 Institutional and or$anisational reforms introduced tend to de3end on su33ortin$ 3artner;seC3erience and financiers; 3olicy

4 Gradual a33roach de3endin$ on su33ortin$ 3artner;s 3ersuasion ability and rece3tiveness of local3artner and decision ma%ers4 #ommunity involvement and 3ublic 3artici3ation de3end on 3artnershi3 desi$n, as in the case of3ublic sector4community PUPs, and local institutional conteCt* 5hen this ha33ens, commitment to the3artnershi3 and success thereof may be stren$thened

#a3acity buildin$ and%noled$e transfer

4 Resources devoted to buildin$ local mana$erial ca3acity accordin$ to need and 3artnershi3 desi$nAthus influenced by 3olitical mandate and financiers; 3olicy4 Resources devoted to trainin$ of local or%force accordin$ to need and 3artnershi3 desi$n Athusinfluenced by 3olitical mandate and financiers; 3olicy4 Possibility of eCtendin$ 3artnershi3 to other sta%eholders Ae*$* trade unions4to4trade unionsrelationshi3 accordin$ to institutional and or$anisational com3onent of PUP4 0bsence of commercial ob-ectives means that all resources can be devoted to ca3acity buildin$ andstren$thenin$ of local $overnance4 )noled$e as a 3ublic $ood im3lies incentive for maCimum %noled$e transfer to local 3artner andassociated sta%eholders ALobina Hall, forthcomin$ in Pro$ress in Develo3ment Studies

0ccountability 0ccountability to 3olitical oners and financiers, stren$thened by re3ortin$ on PUP;s activities*0ccountability to local authorities is re3laced by collaborative a33roach* #onflict resolution is basedon 3ersuasion and informal amicable means


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The !3 initiative on 4ater perator Partnerships 4Ps" and practicality of P!Ps

7he United "ations Secretary General 0dvisory Board on ater AU"SG0B is launchin$ a scheme hichas ori$inally aimed at, and is still functional to, 3rovidin$ a $lobal mechanism for the 3romotion of PUPsin ater su33ly and sanitation* Such mechanism could hel3 overcome the fra$mentation that often

characterises PUP initiatives orldide and facilitate scalin$ u3 of the most successful eC3eriencesA8iranda, 1''2. />4//, /(*

Durin$ the >th 5orld 5ater


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It remains unclear hether the $eneral commitments ado3ted by heads of state and $overnments ith the U"8illennium Declaration AUnited "ations, 1''' and the ater4related tar$ets contained in the 8DGs Ae*$*8DG @ M Ensure environmental sustainability ill 3rovide the 3olitical momentum needed for catalysin$national and munici3al resources around U"SG0B;s $lobal mechanism on a $lobal scale* 8uch ill de3endon U"SG0B;s 3romotional efforts and the demonstrational effect of the first PUPs s3urred by the $lobalmechanism* Hoever, there mi$ht be advanta$es in launchin$ inter4$overnmental initiatives at an

international or re$ional level aimed at identifyin$ concrete, concerted actions relyin$ on PUPs as aninstrument for the achievement of develo3mental $oals in ater su33ly and sanitation*

The initiators of P!Ps and local decision %a$ing dyna%ics

Decision ma%in$ dynamics around the initiation of PUPs may be difficult to 3redict* In the relatively uniformconteCt of the Baltic re$ion, actors; behavioural 3atterns behind the initiatives leadin$ to the ado3tion ofPUPs in )aunas and Ri$a ere o33osite* In )aunas, it as the 3ublic ater o3erator to ta%e the lead in thelaunch of the tinnin$ arran$ement after contacts ith Sedish consultancy )4)onsult ere established in&(6( and )auno :andenys re3resentatives visited Stoc%holm to ascertain the ty3e of su33ort they couldobtain* 0fter )4)onsult elaborated a feasibility study, the EBRD as%ed directly Stoc%holm :atten to become

the tinnin$ 3artner of )auno :andenys ALariola Danielsson, &((6. &'4&&* 7he investment 3ro-ect andthe tinnin$ arran$ement as essentially im3osed on a sus3icious, reluctant munici3ality, characterised byfreFuent 3olitical chan$es A2 mayors in )aunas since &((/ ALariola Danielsson, &((6. &@* 7hefreFuent chan$es in )aunas munici3al $overnance, not observed in the same scale in other munici3alities,caused friction in the relationshi3 beteen the munici3ality of )aunas and )auno :andenys ALariola Danielsson, &((6. &2, hich 3roved 3roblematic for the im3lementation of the tinnin$ arran$ement &1* Bycontrast, in Ri$a the local decision to enter a 3artnershi3 ith Stoc%holm :atten ori$inated at 3olitical levelhile Ri$a 5ater as initially reluctant to en$a$e&=*

7his su$$ests that there are advanta$es in ma%in$ the U"SG0B mechanism fleCible enou$h to allo formaCimum interaction ithin a broader set of sta%eholders from different cities, ith 3articular reference tomunici3al $overnments hose involvement is vital to the success of PUPs* Hoever, it cannot be eCcluded

that initiatives could not stem from other sta%eholders, such as trade unions, civil society and communityre3resentatives* "ot only should the U"SG0B mechanism be 3romoted amon$ sta%eholders and theres3ective national, re$ional and international associations orldide, but their free access to the mechanismshould be fully $ranted so that they can 3rovide enhanced stimulus to PUPs, includin$ 3olitical 3ressurelocally eCerted from bottom4u3* Sta%eholders; involvement beyond o3erators mi$ht facilitate the inclusion ofinstitutional and or$anisational develo3ment com3onents in the 3ro$ramme underlyin$ the 3artnershi3, sothat this is not confined to technical ca3acity buildin$ or investment im3lementation*


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0t least initially, the Ri$a resident team as entirely made u3 of individuals recruited from outside theStoc%holm :atten or$anisation, hich 3roved 3roblematic* 7he first 5ater Utility 8ana$ement 0dvisor asa33ointed in December &((/ but left in 8ay &((2 due to co4o3eration 3roblems ith the mana$ement ofRi$a 5ater* Des3ite lon$ eC3erience in international 3ro-ect mana$ement in the construction sector, the first5ater Utility 8ana$ement 0dvisor had little eC3erience from or% ith administrative and or$anisationalchan$e and develo3ment hich as the ma-or tas% for this 3osition ALariola et al., 1'''. &>* Stoc%holm:atten decided to re3lace the first Ri$a 5ater Utility 8ana$ement 0dvisor ith the 0dvisor or%in$ ith

the )aunas tinnin$ 3ro$ramme, ho had -oined Stoc%holm :atten in &((>* Lariola et al.A1'''. &(, 16, =&3raise the ne Ri$a 5ater Utility 8ana$ement 0dvisor for his effectiveness in li$ht of his %noled$e ofboth tinnin$ 3artners and eC3erience in a transition environment* 7he im3act of the other to residentadvisors, the Pro-ect Im3lementation 0dvisor and


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7hey should be 3art of the ordinary structure and ell inte$rated into the day4to4day runnin$ of o3erations* 7he to tinnin$ a$reements brou$ht a considerable strain on the or$anisation ALariola Danielsson,&((6. &1* 7he effectiveness of PUPs mi$ht thus be enhanced by su33ortin$ 3artners develo3in$ 3artnershi3sas any of their on 3ro-ects, from 3lannin$ to im3lementation and follo u3, full financial covera$e for thehuman resources em3loyed in terms of resident advisors, short term eC3erts and 3rofessional administrativesu33ort*

*nhancing the potential for $nowledge transfer

7he relative difficulties encountered by Stoc%holm :atten in contributin$ human resources to the totinnin$ arran$ements in )aunas and Ri$a 3oint to the limited ca3acity of "orthern 3ublic ater o3eratorsto satisfy the reFuirements of the 8DGs on a $lobal scale throu$h PUPs* 0 3ossible solution mi$ht bere3resented by the simultaneous 3romotion of "orth4South 3artnershi3s, to$ether ith South4South and evendomestic PUPs or PUPs entered into by 3artners from the same country* In that sense, 8iranda A1''2. />notes that there is enormous advanta$e and 3otential for south4south coo3eration, mostly ithin the samecontinent, 3erha3s beteen close cultures and ithin a common lan$ua$e* Successful domestic PUPs canbe observed in various continents from Latin 0merica to 0frica and 0sia, and involve not only atero3erators but also trade unions and local communities*

In !di, South 0frica, 3arastatal Rand 5ater #om3any acted as a ca3acity4buildin$ 3artner to 3eri4urbanmunici3alities ith the su33ort of trade union S085U* 0 similar 3artnershi3 has been initiated inHarrismith, South 0frica AHall et al., 1''/. &1, 16 Hall, 1''&. ='* In Indonesia, 3ublic ater com3anyPD08 7irtanadi has su33orted other smaller utilities in "orthern Sumatra throu$h an !3erational #ontractAReclaimin$ Public 5ater, 1''2. (* In the Phili33ines, the Local 5ater Utilities 0dministration AL5U0 has3rovided su33ort to the 5ater Districts o3eratin$ over >6' munici3alities includin$ urban and 3eri4urbanareas* 7he L5U0 has 3layed an im3ortant role in enhancin$ the technical and financial 3erformance of the5ater Districts as technical su33ort a$ency, develo3ment ban% and informal re$ulator ABraadbaart et al*,&(((* In Honduras, state ater o3erator S0"00 has delivered trainin$ and technical assistance tocommunity4based or$anisations and "G!s runnin$ rural ater system AHall, 1''&. ='* S0"00 itself hadunder$one in4house restructurin$ ith the su33ort of trade unions ALobina Hall, 1'''. >@4>6* In the

3rovince of Buenos 0ires 0r$entina, folloin$ a failed 3rivatisation, ater or%ers too% over o3erations in1''1 hile consumers associations ere re3resented both in the re$ulatory a$ency and the mana$ement ofater com3any 0BS0* In to years, ater su33ly covera$e increased from 26 to @& hile seera$ecovera$e $re from >= to >/* 0lso, over &'')m of 3i3es have been re3laced, ater 3ressurestren$thened and asteater treatment 3lants reactivated A0morebieta, 1''/. &>(4&/@* In Nuly 1''2, afterthe termination of the 3rivatised concession to 0GB0, the 3ublicly4oned, or%ers4o3erated and socially4controlled 0BS0 too% over o3erations in other @ munici3alities of the Buenos 0ires 3rovince ith almost >million inhabitants&/*

7he effectiveness of PUPs can also be enhanced by levera$in$ on the %noled$e elicited from the variousPUPs, if this as to be $athered and disseminated by the or$anisation hostin$ the U"SG0B $lobalmechanism* Hall Lobina Aforthcomin$ in Geoforum observe that the most far reachin$ innovative

a33roaches to eCtendin$ connections to the urban and 3eri4urban 3oor are more li%ely to come from localcommunities, 3ublic authorities and 3olitical activity* Hoever, such innovations and the associated%noled$e are li%ely to be transmitted to other 3ublic sector bodies only as a result of $eo$ra3hicalconti$uity, as shon by the case of So Paulo;s S0BESP benefitin$ from the eC3erience of #!BES, orthrou$h PUPs* Develo3ment coo3eration a$encies have also diffused this ty3e of %noled$e, for eCam3le inthe case of the condominial seera$e systems hich ere initially develo3ed in Brail* Benefitin$ from itsuniFuely strate$ic 3osition, the or$anisation hostin$ the U"SG0B $lobal mechanism mi$ht launch a $lobalLearnin$ 0lliance across 3ublic ater o3erators, communities and other sta%eholders aimed at $atherin$ anddisseminatin$ %noled$e derived from PUPs beyond the involved 3artners* 8oriarty et al* A1''/. 6 3rovidethe folloin$ definition of Learnin$ 0lliance. 0t its sim3lest a Learnin$ 0lliances is a series of lin%ed3latforms, eCistin$ at different institutional levels Anational, district, community, etc* and created ith theaim of brin$in$ to$ether a ran$e of sta%eholders interested in innovation and the creation of ne %noled$ein an area of common interest* 7he sta%eholders involved should have com3lementary ca3abilities hich,hen combined, ill allo the ne %noled$e created in the innovation 3rocess to be brou$ht to scale*


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Some of the %ey ca3abilities reFuired are in. im3lementation, re$ulation, 3olicy and le$islation, research andlearnin$, and documentation and dissemination*

0etaining $nowledge and capacity within the supported partner and surrounding institutionalsetting

7he effectiveness of PUPs de3ends to a considerable eCtent on the lon$ term effects in terms of lon$ termretainment of the transferred %noled$e and built ca3acity ithin the su33orted 3artner and the surroundin$institutional settin$* 8oriarty et al. A1''/. && define %noled$e as the intrinsic ability of individuals or$rou3s to carry out actions* observe that the most effective PUPs amon$ those revieed are those herethe local community as en$a$ed as a 3artner* 7his can be eC3lained in li$ht of enhanced %noled$edistribution throu$h the hi$hly interconnected accountability netor%s ty3ical of advanced 3artici3atorymechanisms ALobina Hall, forthcomin$ in Pro$ress in Develo3ment Studies* Intense %noled$ecirculation amon$ the involved sta%eholders ould facilitate the mutual sharin$ and reinforcin$ of 3rinci3lesinformin$ decisions and action, thus fosterin$ the entrenchment of locally acce3table and relevant%noled$e*

0 second a33roach 3ertains to the consolidation of %noled$e and ca3acity at an or$anisational rather thaninstitutional level and, contrary to the first a33roach, is based on the conce3t of %noled$e as a 3rivate $ood*8ore 3recisely, once transferred to the mana$ement and staff of the su33orted 3artner, %noled$e ouldbecome a 3ro3rietary $ood characterised by a33ro3riability and tradability in function of the scarcity of

Fualified human resources available throu$h the local -ob mar%et and the difficulty to re3licate the transfer of%noled$e from the su33ortin$ to the su33orted 3artner* 0 classical a33roach to retainin$ 3ublic sectormana$ement and staff folloin$ in4house restructurin$ and ca3acity enhancement is to offer com3etitiveremuneration 3ac%a$es and incentives ABaietti et al., 1''2 8u$isha and Ber$, 1''2. &(* Remuneration andincentives offered to 3ublic mana$ers and em3loyees holdin$ relevant %noled$e should thus reflect theo33ortunity costs of re3lacin$ them ithin the or$anisation, hich mi$ht be hi$h in develo3in$ countries*Hoever, other factors are also to be ta%en into account*


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necessarily eChausted ith %noled$e transfer throu$h a s3ecific 3ro$ramme* In other ords, it is 3ossiblethat none of the identified a33roaches to retainin$ local institutional and or$anisational ca3acity mi$htre3resent a silver bullet in itself and that a combined, sustained effort mi$ht be reFuired until %noled$e isdiffused enou$h ithin the tar$et institution or or$anisation to eCclude that any chan$es in %ey individualsmi$ht 3re-udice the acFuired body of %noled$e*

,onclusions

5e offer the folloin$ sets of conclusions, res3ectively on the differences beteen the dynamics behindPPPs and PUPs, the 3otential develo3mental im3act of PUPs and im3lications on their 3romotion and scalin$u3, and areas for further research*

7he dynamics of PUPs are radically different from those of PPPs, in terms of the underlyin$ ob-ectives andmotivations, the basis of the 3artnershi3 and the confi$uration of accountability netor%s, ris% 3erce3tionand mana$ement, the ay in hich institutional chan$e is related to ado3tion of the 3artnershi3 and in termsof transferrin$ %noled$e and build local ca3acity* 7he introduction of institutional and or$anisationalreforms is in most cases a 3recondition to PPPs, hile the ado3tion of PUPs mi$ht be instrumental to 3ublicsector reform de3endin$ on the instructions im3arted on the 3artners by the 3olitical and financial s3onsors*

Institutional and or$anisational chan$e associated ith PPPs is systematically informed by the 3rivateo3erator;s commercial ob-ectives, hich re3resents an element of ri$idity and 3otential conflict as 3rofit4see%in$ mi$ht and often does diver$e from develo3mental ob-ectives* 7he anta$onistic character of PPPs andthe shoc% thera3y a33roach of related 3olicies have led to ides3read social and 3olitical o33osition toPSP on an international scale* #onversely, as a result of their not4for43rofit basis and retainment of 3ubliconershi3 and mana$ement of o3erations, PUPs rely on a more $radual and collaborative a33roach tochan$e hich can facilitate socio43olitical acce3tability and local commitment*

7he develo3mental 3otential of PUPs de3ends on the establishment of clear ob-ectives for the 3artnershi3, inli$ht of a 3olitical mandate from the res3ective $overnments, ith the collaboration bein$ stimulated bymutual trust and understandin$ and 3ublic sector ethos* Unfettered by any conflict of interest inherent to theconduction of 3ublic ater o3erations, the 3rinci3al4a$ent relationshi3 beteen the 3olitical and financials3onsors of PUPs and the 3artners can be stren$thened by introducin$ trans3arency and accountabilityreFuirements in terms of re3ortin$* Disci3line in the im3lementation 3hase can be further instilled throu$h3lannin$ and the thorou$h structurin$ of the 3ro-ect* PUPs are intrinsically about ca3acity buildin$, to aconsiderable eCtent throu$h trainin$, in li$ht of the advanced ability to transfer %noled$e treated as a 3ublic$ood rather than as a 3rivate, mar%etable asset* Hoever, their cost4effectiveness and lon$4termdevelo3mental im3act can be enhanced by incor3oratin$ investment and in4house restructurin$ 3ro$rammesinto 3artnershi3 desi$n* 7he inclusion of civil society and community re3resentatives amon$ the 3artnersmi$ht favour the success of PUPs as local commitment is facilitated and ca3acity is develo3ed for local$overnance, ith hi$hly interconnected accountability netor%s actin$ as catalysts for %noled$e transferand reinforcin$ the ability to ta%e decisions and actions* Bilateral donors and I


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3romotion in the future c the causes of 3ast failures ith PUPs and attem3ts at 3ublic sector reform, so that3artnershi3 desi$n can be im3roved and institutional and or$anisational develo3ment made more effective*

0eferences

0morebieta, G* A1''/ 0r$entina. 5or%ers; #o4o3erative 7a%es over Post4Enron, in BalanyV, B*, Brennan,B*, Hoedeman, !*, )ishimoto, S* P* 7erhorst Aeds*$eclaiming Public #orru3tion in Public Service Delivery. EC3erience from South 0sia;s 5ater and SanitationSector, in 5orld Develo3ment :ol* =1, "o* &, 33* /=M@&*


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Hall, D* Lobina, E* A1''> Private and 3ublic interests in ater and ener$y, inEatural $esources 3orum,16, 33* 12641@@ Ahtt3.KK*blac%ell4syner$y*comKlin%sKdoiK&'*&&&&K-*&>@@46(>@*1''>*''&''*CK3df*

Hall, D* E* Lobina A1''= International Solidarity in 5ater 4 Public4Public Partnershi3s in "orth4EastEuro3e*PS4$; $eports, 8arch 1''= Ahtt3.KK*3siru*or$Kre3ortsK1''=4'=454"Eeuro3e*doc*

Hall, D*, Lobina, E*, :iero, !* 8* H* 8alt A1''1 5ater in Porto 0le$re, Brail M accountable, effective,

sustainable and democratic, Asecond name, co4authored ith David Hall et al.*Goint PS4$; and 8@*paper, 3resented at United "ations 5orld Summit on Sustainable Develo3ment, Nohannesbur$, South0frica, 12*64'>*(*1''1 Ahtt3.KK*3siru*or$Kre3ortsK1''14'6454dmae*3df*

Hall, D*, Lobina, E* R* de la 8otte A1''/ Public resistance to 3rivatisation in ater and ener$y, inevelopment in Practice, :olume &/, "umbers = >, Nune 1''/, 33* 1624='&Ahtt3.KK*3siru*or$Kre3ortsK1''/4'245E4resist*3df*

)itchen H A1''= YPublicM3ublic 3artnershi3sY,Eewsletter H. 8cIntosh 9aba and 0ssociates. #ity*December 1''=* htt3.KK*%s3*or$*aKholonl&/*htm

Lariola, 8* B* Danielsson A&((6 7innin$ coo3eration beteen )aunas 5ater #om3any, Lithuania andStoc%holm 5ater #om3any* Sida *valuation $eports, (6K&(, commissioned by Sida ASedish InternationalDevelo3ment #oo3eration 0$ency, De3artment for #entral and Eastern Euro3e, Se3tember &((6Ahtt3.KK*sida*seKsharedK-s3Kdonload*-s3Zf[utv(64&(*3dfa[11((*

Lariola, 8*, \hlund, S*, H]%ansson, B* I* Emsis A1''' 7innin$ coo3eration beteen Ri$a 5ater#om3any and Stoc%holm 5ater #om3any* Sida *valuation $eports, ''K@, re3ort commissioned by SidaASedish International Develo3ment #oo3eration 0$ency, De3artment for #entral and Eastern Euro3e,8ay 1''' Ahtt3.KK*oecd*or$KdataoecdK/6K2'K=/&(>6&@*3df*

Lobina, E* 7he reform of ater su33ly o3erations throu$hout the institutional and or$anisational s3ectrum inGrenoble, Nuly 1''2, or$anised by the 5orld Develo3ment 8ovementand 5ater0id, 33* /142'*

8oriarty, P*,


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8u$isha, S* and S* :* Ber$ A1''2 7urnin$ around Stru$$lin$ State4!ned Enter3rises in Develo3in$#ountries 4 7he case of "5S# U$anda, inPapers prepared for a seminar on $eforming public utilitiesto meet the water and sanitation 8illennium evelopment 0oal at the ;?s epartment for 4nternational

evelopment, > Nuly 1''2, or$anised by the 5orld Develo3ment 8ovement and 5ater0id, 33* &&4=1*

!bservatorio de los Servicios Pblicos A1''/ D&@. 5ater7ime case study M #ordoba, S3ain, /K=/&(@(&2*3df*

Reclaimin$ Public 5ater A1''2 Public 5ater for 0ll M the Role of Public4Public Partnershi3s* I$eclaimingPublic Public and 3rivate sector roles in ater su33ly and sanitation services, !3erationalGuidance for 5orld Ban% Grou3 Staff, 03ril A5ashin$ton D#. 7he 5orld Ban%* 0vailable athtt3.KK*orldban%*or$KatsanAaccessed &6 !ctober 1''>*

5orld Health !r$aniation, &((1, 7he International Drin%in$ 5ater Su33ly and Sanitation Decade* End ofDecade Revie Aas at December &(('* Geneva. 5H!*

3otes
http://www.psiru.org/http://www.watertime.net/docs/WP2/D17_Cordoba.dochttp://www.oecd.org/dataoecd/56/45/35197916.pdfhttp://www.tni.org/water-docs/pubwaterforall.pdfhttp://www.watertime.net/docs/WP2/D38_Stockholm.dochttp://www.un.org/millennium/declaration/ares552e.pdfhttp://www.worldbank.org/watsanhttp://www.watertime.net/docs/WP2/D17_Cordoba.dochttp://www.oecd.org/dataoecd/56/45/35197916.pdfhttp://www.tni.org/water-docs/pubwaterforall.pdfhttp://www.watertime.net/docs/WP2/D38_Stockholm.dochttp://www.un.org/millennium/declaration/ares552e.pdfhttp://www.worldbank.org/watsanhttp://www.psiru.org/


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&7his and subseFuent Fuotes are from Baltic Sea Environment Proceedin$s "o. @1 A8arch 12, &((6 HELSI")I#!88ISSI!" 7he Baltic Sea Noint #om3rehensive Environmental 0ction Pro$ramme. Recommendations for U3datin$and Stren$thenin$ htt3.KK*helcom*fiK3itfKbse3@1*html 4 Beyond the N#P U3datin$1Sida Evaluation 98/19 Twinning Cooperation between Kaunas water Company, Lithuania and Sto!holm "ater Company# $ugust 1998

=Sida Evaluation %%/& Twinning Cooperation between 'iga "ater Company and Sto!holm "ater Company# (ay )%%%

>A%D ress %e$ese* BA%D reews co,,it,et to %ig Wter i t!iC* 20


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&/Source. #ambia el 3roveedor de a$ua en siete distritos del conurbano bonaerense #ambia el 3roveedor de a$ua en sietedistritos del conurbano,a EaciJnA0r$entina, 1>th Nuly 1''2*&2Source. Intervie ith Steen B-er$aard, Director of International Pro-ects, Stoc%holm :atten 0B, 1&st8arch 1''2*&@Source. Intervie ith Steen B-er$aard, Director of International Pro-ects, Stoc%holm :atten 0B, 1&st8arch 1''2*

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