There is a perception among some scholars that the number of urban water and sewerage utilities operated by the private sector in low- and middle-income countries is declining, and that the urban water sector may be experiencing a “remunicipalization” phase. True or not, this belief merits close examination.

With the boom of desalination markets and increasing need for water treatment, it is true that most new private activity in the water sector concerns treatment activities rather than urban utilities. For example, 78 percent of new water projects with private participation signed during the last five years were for water treatment.

However, new urban water and sewerage utility projects with private participation reach financial closure every year in all regions. Over the last five years, 64 urban water and sewerage utility projects reached financial closure in 19 low- and middle-income countries: 22 in East Asia and the Pacific, eight in Europe and Central Asia, 21 in Latin America and the Caribbean, three in the Middle East and North Africa, six in South Asia and four in Sub-Saharan Africa.

In fact, in 2010 the total number of urban water and sewerage utilities operated by the private sector reached a record high of 257 utilities in 35 countries. A closer look reveals that the total number of urban water and sewerage utilities operated by the private sector in low- and middle-income countries has actually never decreased over the last 20 years. The number of new and renewed projects implemented across the years outweighs by far the number of projects concluded or cancelled.

This trend is also verified at the regional level. Here, the number of urban water and sewerage utilities operated by the private sector has never significantly decreased over the last 20 years.

The Latin America and Caribbean region has the highest number of urban water and sewerage utilities currently operated by the private sector (149 utilities in operation), followed by East Asia and the Pacific (56), Europe and Central Asia (30), Sub-Saharan Africa (10), South Asia (eight) and the Middle East and North Africa (four).

When it comes to the type of contractual arrangements, most urban water and sewerage utilities currently operated by the private sector are established under a concession agreement (165). Next is a management and lease contract (61), followed by divestiture (20), and greenfield project (11).

A closer look at the data makes it clear that the hypothesis of an ongoing “remunicipalization” phase is more a misperception than a reality. If the current trend follows the evolution of the last 20 years, the number of urban water and sewerage utilities operated by the private sector in low- and middle-income countries should exceed 300 within the next five years.

Number of urban water and sewerage utilities operated by the private sector in low- and middle-income countries

urban-water_and_sewage-utility

All calculations are based on data from the PPI Database (World Bank and PPIAF): http://ppi.worldbank.org