In many ways, urban environments are ideal for developing PPPs: there is a high concentration of potential customers, and projects are often high-profile and prioritized by government. There are also a number of sectors in addition to the traditional infrastructure sectors where PPPs have been developed in urban areas: hospitals, solid waste facilities and court buildings, as well as projects tailored to urban areas, such as mass rapid transit and light rail systems in the transport sector.
But urban PPPs in developing countries present significant legal challenges, especially where they involve slums or informal settlements. There are specific concerns about land rights relating to slums: for instance, if a road is to be built through a slum, it must be decided whether the residents have rights to resettlement. Governments debate how to provide services like water or electricity to slums because they recognize that provision of a service might be deemed to be a step towards recognition or “formalization” of the settlement. One solution includes providing a water stand pipe at the entry point to the slum. But private operators may have safety concerns when entering into informal settlements where they may not be able to benefit from police protection.
Land acquisition for infrastructure can also be problematic, given the competition in cities for land use. It is important to identify a right-of-way or plot of land that can be acquired for a PPP project early in the project development process, as this will reflect on the fundamental feasibility of the project.
Urban PPPs in developing countries present significant legal challenges, especially where they involve slums or informal settlements.
The World Bank Legal team has developed the PPPI Resource Center to provide guidance and materials on the legal, contractual, and regulatory issues around PPPs. It includes checklists and risk matrices as well as sample laws and regulations, terms of reference for consultants, and sample agreements and contracts.
Many reference materials on the website relate to urban PPPs and can serve as useful resources. In the transport sector, for example, there are materials for light rail projects and mass rapid transit projects, such as the TransMilenio bus-based rapid transit project in Colombia. Links to and summaries of urban water projects such as the Manila water concession may also be helpful. A section of the PPPI Resource Center is devoted to theft or non-technical losses of water and electricity and the legal tools that countries have developed to manage this issue.
One notable developing trend is that solutions for solid waste collection and disposal increasingly involve PPPs. The World Bank has been involved in a number of initiatives in this sector, including developing model agreements to be used by local authorities for waste collection and disposal services in several countries in North Africa.
There are also significant social and legal issues in developing PPPs in this sector, including the question of how to manage or regularize informal waste-picking and to ensure that the private sector is able to regularize sorting of waste.
To address the needs of practitioners working in solid waste, the PPPI Resource Center has added this sector to its resources.