By their nature, public-private partnerships (PPPs) involve many legal issues, from the legal frameworks that guide their structure to the day-to-day implementation of the contract itself. These legal issues can take on new dimensions and complexity when applied to irrigation. Here are some of those specific to irrigation PPPs:
All irrigation PPPs involve the use of land, and are therefore complicated by laws and regulations governing ownership, title, and use.
Ownership: Land ownership may be limited to local parties or may prohibit ownership by the private sector. In Ethiopia, rural land is owned by the government and only individuals who were willing to farm it personally are entitled to own land.
Title: Land title can also be difficult to establish, particularly in countries where there are significant customary land rights (common in Sub-Saharan Africa).
Use: Complications can arise from restrictions on land use for irrigation generally or particular types of irrigation, which can be compounded by variation in these restrictions within a country from one jurisdiction to the next.
Restrictions on extracting water (the key input to irrigation PPPs) can significantly affect the structure and feasibility of a transaction.
Levels: Water extraction can be limited by national or international law. Bodies of water that are defined as international waterways are subject to international law that can restrict water extraction. Waterways in the Nile Basin fall under a treaty of the Nile Basin Initiative that limits the amount of water that can be extracted, as well as its use.
Permits: Extracting water usually requires a permit, often issued by the ministry of water or the ministry of the environment, or sometimes both. Water user associations sometimes also play a role. Determining who grants permits and the process for obtaining them can be difficult and can lead to delays in project implementation.
Charges: The pricing regimes for water extraction can be complex and vague, making it hard to determine how they are set, who sets them and whether there are different rules for raw water and for irrigation. The price of water is critical to determining the financial feasibility of a potential PPP. The private provider needs certainty regarding the price of raw water, the price at which it can on-sell irrigation water, as well as the quantities it is allowed to sell.
Complex institutional arrangements can make it difficult to determine who the appropriate public counterpart is for irrigation PPPs—typically, the national entity in charge of irrigation services. However, competing claims from the authority responsible for water resources or the ministry of environment can complicate this. Local entities may also play a role. An important consideration is whether the relevant entity has the power to enter into PPP arrangements—a subnational authority or a parastatal may need express power to do so.
For more on legal and commercial PPPs in irrigation, together with precedent contracts, visit the PPP in Infrastructure Resource Center at www.worldbank.org/ppp.