Feasibility Analysis of Public-Private Partnership in Water Supply:A study on Ward no 20 in Khulna City

Abstract

Development and management of cities is one of the major challenges of this time as well as one of the most complex tasks of our societies. The concept of "partnership" - in terms of urban service provision- is one the core of the approach that may fulfill the challenge. In some instances it has shown positive changes in the urban service delivery system with reference to quality, cost and customer satisfaction of the services provided. There also have the chance of being negative impact such as increasing service charge, autonomy of the private sector etc. which may not accepted by the local authority as well as the local people. So, feasibility study will state the acceptability of the project to the authorities as well as to the people which ensure the sustainability of the project.

The Public-NGOs Initiative on water supply aims to develop a sustainable Public-Private Partnership in water supply management. The most promising approach of Public-Private Partnership for the specific Khulnaian situation has explored and –eventually, when feasibility looks promising-developed, introduced and tested for sustainability and effectiveness for the urban people.

The study has conducted a comparative study between the traditional way of service provision and the participatory way of service provision. This comparative study has assessed the quality, cost and public satisfaction between the stand alone provision and the participatory way.

This study however highlights the conclusions that improvement of water supply system of the city can be achieved through active participation of both Public and Private sector. Looking from different point of view the Public-Private Partnership approach can have positive influences on the sustainability of local water supply provision if the devaluation of money can be controlled within a reasonable range.

1.1 Background of the study

Rapid population growth in the developing countries has created harsh conditions in urban centers, as citizens, lack access to water, sanitation, waste and energy services. The situation at the end of the 20th century and all the more at the beginning of the 21st century is characterized by an enormous urbanization process. It is estimated that in the year 2025 about 60 % of the world population will live in urban areas. ¹

Bangladesh is one of the most densely populated and developing country. A traditional administration is inherited from its independence government. City Corporation and Pauroshova Committee is two tier of local governance systems exist in urban centers of Bangladesh. Generally, public authorities provide urban services. Except Local Government who controls the major and important part of the urban services, other authorities like, Department of Public Health and Engineering, Power Development Board also perform role in delivering some important services e.g. waste collection and management, primary health care, road construction, water and sanitation facilities etc.

Water is one of the most important urban services delivered by the Public Authority. Even though over the last decades since independence, Bangladesh has made progress in development and management of water resources that the country's water equation has worsened. The per capita water availability in the country has fallen and is continuing. Most of the existing water supply system are inefficient and inadequately meet the demand of water delivery. In Dhaka demand of water is required 2482 liters per day where supply of water is available 768 liters. ²

Providing water to every human is most crucial challenge for the service providers. The available facts and figures clearly show that a major water crisis is going on in the country due to the expanding demand of water in domestic use, industrial use and for other use. Increase of population also makes the problem equate. As a result, present water supply system could not meet the increasing need of water.

 

¹ UNDP, 2000, Joint Venture Public-Private Partnerships for Urban Environmental Services, PPPUE    Working Paper Series Volume II, New York

² P. Raja Siregar, 2003, World Bank and ADB’s Role in Privatizing Water in Asia, KAU Indonesia

Water supply in urban areas is marked by poor performance due to the following reasons:

·         Inefficient utilization of resources rely and wills of water supply

·         Lack of transparency

·         Low responsiveness to consumer needs

·         Inefficient collection of bills

·         Lack of community participation in the process

·         Absence of an efficient institutional, policy and regulatory system for prevention and control of water pollution, management and conservation

In developed and developing countries, over the last two decades, Public-Private Partnership in financing, construction and operation has emerged as a new paradigm in the provision of civic services including water supply.

In Bangladesh, partnership between the public and private sectors in the field of urban services is developing. Except, water supply the partnership have already successfully operated in solid waste management and electricity supply. As water is a basic service and also one of the core service provided by the city corporations required to preserve the right of the people of pure water with reasonable price. So, the government should pre-evaluate the terms and conditions of Partnership in water supply system. 

Rules and regulations on public and private sector involvement is not adequate for partnership. There have few questions on cost-benefit analysis, for both the public and private sector if the cost of production and distribution of water is not compensated with the profit they earn they will not continue that partnership projects. Important consideration is the public satisfaction as everything is for the public, so if the partnership projects could not provide the basis for public satisfaction the project will not feasible.

Due to the previous considerations, it is necessary to analyze the feasibility of the public-private partnership in water supply in terms of demand-supply of water, cost-benefit for both public and private sectors and regulations simultaneously to solve the problem involved with the water supply in urban area.

1.2 Objectives

In Bangladesh, public authorities are not efficient enough to meet the total demand of water supply for the people. The ultimate goal of the study is, to make Public-Private partnership which can deliver water more effectively and efficiently with minimizing the cost and maximizing the quality with people’s satisfaction.  Based on these views objectives of the study have considered as follows:

1.      To analyze present situation of the water supply system in the study area,           

2.      To identify the problems involved with the water supply system, and

3.      To show the possibilities and formulation of Public-Private partnership in the implementation and maintenance of water supply.

1.3 Literature review

Public-private partnership, more precisely, NGO-local government partnership as a whole and specially of Bangladesh context, remains all most an unexplored area for the social scientist to the social scientists since long.  However, three categories of literature have been searched for review: a. literature on public-private partnership. State –NGO partnership/collaboration, State-civil society relationship, specially of Bangladesh and developing nation’s context; b. literature on Basic service provision in Bangladesh and c. literature on different experiences regarding with success and failure of PPP throughout the world. Sources of literature are books, articles in journals and electronic publications.

Governance looking through a different lens: Synchronizing poor people’s perspective by JJS (Jagrata Juba Shangha) [2002] focusing on humane governance based on effective participation of people in state, civil society, and private sector activities that conducive to human development. In the context of participation they coated the concept of different authors. In addition to empowerment and equity, they include effectiveness, efficiency, cost sharing, capacity building, wider coverage and community awareness as the major outcomes of participation. Miss governance in Khulna region have also discussed in different case studies.

Murtoza [2002] have shown in his book that to make urban governance fruitful urban local government bodies should be empowered with more resources necessary law reform should be done to enhance the autonomy of the local governments.

Richard Batley [1996] in Public-Private Relationships and Performance in Service provision, compares the arguments for private-sector involvement in service provision with practice in certain countries of LatinAmerica, Africa and Asia.

Pierre’s [1997] edited landmark publication on theoretical and some empirical cases from USA and Europe out lined a broad background of Local government-NGO relations. Contributors of this volume first tried to explain the theoretical perspectives that can be used to analyze the partnership in broader context of the urban governance. Peters provided some useful theoretical framework for understanding partnership while Stoker focuses on the debate of governance and developed framework of understanding of urban governance. Other contributors have discussed some interesting empirical cases drawn from USA and Europe.

Dr. Lutful Hoq Choudhury [1987] focusing on the importance of local bodies and the decentralization of the local bodies. In the context of partnership the author provides some observations and proposed for reorganization of the local bodies.

Ahmed S M. [2002] shows the possibilities of public-private partnership through his BURP thesis “Promoting municipal services through people’s participation”. He provides some comparison among the traditional way of service provision and the participatory way of service provision.

Dutta [2000] examines the various aspects of partnerships in urban development of Ahmedabad’s experience and came to conclusion that necessary legislative reform is necessary for strengthening the city government’s ability to pick up the right option for its development.

PPPUE Working Paper Series Volume II by UNDP, Experience demonstrates, however, that municipalities alone cannot meet the continually growing demand for services. While traditional development assistance plays a vital role in enabling some governments to meet these challenges, it provides only a fraction of the needed investment. New partnerships for sustainable growth – sources of financing, technology, capacity building and management – are urgently needed. True partnerships between public and private sector organizations are one of the most promising emerging forms of cooperation. Through such joint ventures, cities and businesses pool their resources, expertise, and approaches to solving problems in order to tackle urban challenges in a sustainable manner.

Asian Development Bank [August, 2000], Published document “TECHNICAL ASSISTANCE FOR PUBLIC-PRIVATE-COMMUNITY PARTNERSHIPS IN URBAN SERVICES FOR THE POOR” shows  PPPP experience in the provision of urban services to poor communities in selected DMC cities, and establish the most successful practices and innovative approaches. This will provide a basis to assist DMC governments in strengthening (i) incentives to attract PSP, make PSP financially sustainable, and improve PSP in urban services that reach the poor; (ii) institutional, contractual, and regulatory6 arrangements; and (iii) sector policy issues related to pricing and competition. The longer term objective is to improve urban services to poor households at affordable rates, to improve their quality of life.

A publication of the Freedom from Debt Coalition (Philippines), [January 2005], shows the failure experiences of water supply privatization in the services provision in Philippine. As the Public Authorities was unable to provide services to all they want to be privatizing the water supply authority, but with the privatization of water supply authority water tariff increase drastically. People create mob against the authority and they have to be surrendered against the mass movement.

Focusing on the previous researches, it reveals that the content of the journal/book articles did not respond well to portray the real process of local government-NGO partnership process-structure and related values and culture in urban centers of Bangladesh. Therefore, this study, finds its niche in the field of urban research targeted to examine, explain and understand the real possibilities partnership can provide and the problems related with its structure-process.

1.4 Definitions, Concepts and Analytical framework

All the core concepts and term used in this study have been defined here. A relationship between public-private partnership and effectiveness of service tend to established. This section will also provide the indicators for all dependent and independent variables.

1.4.1 Public-Private Partnership (PPP)?

Public-Private Partnership or PPP is much used concept. In the main concept of this study, PPP has been considered as a tool of economic policy through which public service decentralizes. They focus privatization of state activities and incorporation of private parties into administrative activities. Wetteenhall (2003) has pointed out in his book “The Rhetoric and Reality of Public-Private Partnerships” that Public-Private Partnership is just another friendlier name of privatization program (pp3:77-107) However, PPP is popular not only among economist but also among development planners and activist. In this case it is considered as a means by which to combat social exclusion by integrating public and private components of local communities - including local government, local communities, politicians and voluntary groups.

In a public policy setting partnership can be defined as cooperation between organization from public and private sectors for mutual benefit. In the book ’Public-Private Partnership in urban regeneration’ Harding (1990) defined PPP in urban context, as ‘any action which relies on the agreement of actors in the public and private sectors and which also contributes in some way to improving the urban economy and quality of life.’

Again PPP has been defined as an interface of public-private relation where actors (organizations) from public and private arena cooperate, share exchange, negotiate their information, ideas and interests for improving the quality of life of community.

PPP may vary with its purpose, party involved, level of cooperation, risk-resource- responsibility share and many other dimensions. In this research there are two types of PPP who are broadly differentiated from each other on the basis of their source of initiative- PPP initiated by public organization and PPP initiated by private organization. In this study emphasize has been given on the partnership between public authority and local organization.

1.4.2 Feasibility

Generally feasibility refers the degree of sustainability. The PPP Initiative on water services aims to develop a sustainable public private partnership on water supply management. The most promising approach of Public-Private Partnership will be explored and –eventually, when feasibility looks promising-developed, introduced and tested for sustainability and effectiveness for the urban poor.

The feasibility of water services provision is determined by the physical systems put in place and by the institutional framework that determines decision making, tariff setting, management responsibilities, conflict management and monitoring activities among others.

The analytically feasibility assessment includes the following areas required for the sustainability of water supply: (i) institutional; (ii) technical; (iii) financial; (iv) Community involvement and participation; and (v) environment.

1.4.3 Effectiveness

In general, the effectiveness of a public service is defined by the extent to which the goals and objectives of the service are being met. Departing from this conventional way, in this research, effectiveness of urban service provision, more specifically, effectiveness of water supply will be defined with and measured by from the perspective of the citizens of the community - who are the bottom line user of the service.

The effectiveness of services will be considered in following aspects of the service:

a) Cost – cost from both organization side and recipients side

b) Access - how close is the user physically to the service provided.

c) Availability – the continuation of service provision

d) Usage - to what extent does he use it.

e) Reliability - how dependable is the service

f) Responsiveness - to what extent the provider care of his complains

g) Adverse impact- how often does he face adverse impact of the service

h) Community satisfaction – the overall expression of community on that service

1.4.4 Analytical Framework

In the following section it is tried to come up with an analytical framework through which we can address this research problem. The analytical framework is based on following assumptions:

þ  There has demand among the urban poor, NGOs & private sector parties, and national and local (municipal) decision-makers, specifically in the local context of the regions of the Country;

þ  Public-private partnership is a form of private sector participation in public service provision

þ  Public-Private Partnership is enhanced by so many factors, including Socio-Economic Factors, Political Factors, Organizational Structure, Regulatory involvement, Community participation etc.

þ  Feasibility assessment includes the following areas required for the sustainability of water supply; Institutional Settings, Capacity Requirements, Regulatory Involvement, Financial Sustainability, Economic Feasibility and Community Involvement and Pro-poor Activities

þ  If the PPP implemented successfully then it affects effectiveness of public service provision.

The main purpose of the mission is to assess the feasibility for a PPP on water services for the urban areas in Khulna City.

	Community Satisfaction

 

From the above framework it is clear that PPP affects effectiveness of urban service provision. Eventually it affects Community, public and private sector’s achievement. The whole process is embedded in a greater context which could be, for analytical purpose differentiated as different factors (structural context, political culture and organizational factors etc. Here structural factors refer to the structure of the constitutional provision, related legislations, historically rooted process of distribution, power and domination and conflict. Political culture refers roles, norms identities and values among the political actors of the country in general. Organizational factors refer particular rules, regulations, organizational structure, resources available to that organization, the acceptance of that organization to the local people and the Policies of involved organization in the process etc.) The interplay of these factors determines who will form PPP why and so on. They also affect the perception of community and their preferences of interest which determine the level of effectiveness. Moreover these factors also affect the process of accumulation of resources at the community level. And, it is not unlikely that the relationship between dependent and independent variables is also might be affected by these factors. And finally, the private-public partnership perpetuates the achievement of community, private and public sectors.

1.5 Research method

The research method depends on what assumptions one is interested to look into in order to explain and understand the research problem.

1.5.1 Strategy

As the time and resources is limited so, would have conduct study on a small urban area. The study is an explorative one. I case study strategy have selected because my research problem requires detailed data of a particular case with a large number of contextual descriptive data and information.

The study has conducted a comparative study between the traditional way of service provision and the participatory way of service provision. This comparative study will assess the quality, cost and public satisfaction between the stand alone provision and the participatory way.

1.5.2 Research design

The whole has divided into six steps (Fig: 1.2). At the very first stage, I have identified the problem based on the existing situation and reviewing relevant literatures. Secondly, it would be decide that which sector and from which area would be selected. Once it is done, then at the third stage, appropriate data collection tool e.g. survey questionnaire, interview format has developed. Fourthly, a preliminary survey conducted with the prepared questionnaire and reviewed the questionnaire to identify the lackings of the prepared questionnaire and those lackings have corrected. Fifthly, detail data has been collected through the corrected questionnaire. At the sixth stage, data were compiled, analysis and a report is prepared. And finally, the result is synthesized.

Identification of the problem Partnership is an important term that can solve the burning urban problems especially in the urban service provision. Moreover the participatory way will minimize the cost of the service provision and maximize the quality and the public satisfaction. On the other hand there is the possibilities of the service being fully privatized and also have the difficulties in forming partnership among Public Authorities with Private Organizations. So, feasibility study could open the door of confusion.  Selection of the study area  For the study I have selected Ward no 20 in Khulna City, because both the public and private sector service provision is exist here. Selection of the services Under this research I have selected water supply because, all the urban services is not possible to study in the limited time. Moreover, public-private partnership is not applicable in all urban services, such as port (both air and water), terminal etc Sample size determination Sample size have determined through Statistical Method of sampling. In this case I have tried to keep 95% confidence level. Then the area is divided into some grids, each grid represents a strata and the data is collected from each grid, so the total area can be emphasized equally. Sample size has determined through the statistical method given below: (2)   (1)   Mark. L. Berenson et al; Basic Business Statistics; (New jersey; 1992); Page. 347               0   0   Where, n = the initial approximation of n  (sample size)                z = the value corresponding to the area (1- a)/2 from the centre of standardized normal distribution             p = proportion of one of the two characteristics in the population             e   = margin of error             n   = sample size            N = total population For the study confidence interval has considered as 95 %. In such a case the value of z is 1.96, p is the target proportion and assumed that p = 1, as we have taken the entire plot simultaneously. Using all the values in the equation no (1) the value of n has determined. Using the value of n and total population (N) in the equation no (2) the original sample size has determined. 0   0   Total number of plot in my study area is found 2109. After the calculation the sample size is determined 105. For my study I have divided my study area into 16 zones and collected 105 samples by emphasizing equally each zone. Data collection Both qualitative and quantitative data is collected in the research work. The quantitative data helped in identifying the effectiveness of the services and the qualitative data help in finding the public satisfaction. Table: 1.1 A brief plan for data collection Objectives Research question Respondent Method of data collection 1. To analyze present situation of water supply system in the study area.          What is the existing coverage of the service? KCC, DPHE and NGOs working in the Study Area Interview To what extent people use the service? KCC, DPHE, NGOs working in the Study Area and recipients Interview and Questionnaire Survey To what extent the provider care of his complains? KCC, DPHE, NGOs working in the Study Area and recipients Interview and Questionnaire Survey How close is the user physically to the service provided? KCC, DPHE, NGOs working in the Study Area and recipients Interview and Questionnaire Survey 2. To identify the problems involved with the water supply system   To what extant the provider provides the service to the recipients? KCC, DPHE, NGOs working in the Study Area and recipients Interview and Questionnaire Survey What is the cost of the service? Recipients, KCC, DPHE  and NGOs working in the Study Area Questionnaire Survey and interview What is the overall impression of the service? Recipients Questionnaire Survey What are the problems of the delivery system? Recipients, KCC, DPHE  and NGOs working in the Study Area Questionnaire Survey and interview 3. To show the possibilities and formulation of Public-Private partnership in the implementation and maintenance of water supply What is the economic condition of public sector and private organizations? KCC, DPHE and NGOs working in the Study Area Interview The acceptance of the private Organization to the people. Recipients Questionnaire Survey What are the public views about the prospective impact of Public-Private Partnership? Recipients Questionnaire Survey What are the resources available to the private organization? NGOs working in the Study Area Interview How partnerships enhance participation of local community? KCC, DPHE, NGOs working in the Study Area and recipients Interview and Questionnaire survey How PPP ensures effectiveness? KCC, DPHE, NGOs working in the Study Area and recipients Interview and Questionnaire survey impact of PPP service provision in the community KCC, DPHE, NGOs working in the Study Area and recipients Interview and Questionnaire survey What are the changes in the community resources due to PPP? Recipients Questionnaire survey There are mainly two types of source from where I have collected data - Primary and Secondary. Primary sources: The primary source will be determined by identifying the key informants. In this project key informants are participating NGO officials, city corporation officials, Department of public health and Engineering. For citizens perspectives I want to conduct a survey for which sample has selected randomly among the clients of the service of the study area. Secondary sources: Project documents of the concern organization, Report about the concern organizations, partnership project and concern city corporations and Department of public health and engineering News paper (local and national) articles, Magazines, Journal, Books, Research reports etc. Methods of Data collection The conventional method – like interview, household survey, observation etc – has been used for collecting required data. However, the study is very much dependent on the quantitative data which has been selected by household survey among the service users in each study area. Moreover, the study required a huge amount of qualitative data has been collected by semi-structured and in-depth interviews. Therefore it appears that Survey and Interview remain central data collection method in the study. Data Analysis The analysis of data is based on the key questions of the study. Those questions are described below: What is the existing condition of the urban services delivery system in Khulna City Corporation area? What are the factors that hinder or enhance the existing water supply delivery system? What are the main patterns of local government and private nonprofit organization partnership exist in Khulna City Corporation area? What are the factors contribute the formation of partnership in water supply provision? How partnerships affect effectiveness of service provision? What is the impact of PPP service provision on the community in terms of changes in the cost, quality and public satisfaction and how does it occur? What are the critical factors of success of a partnership organization? What are the possibilities of the Public-Private partnership in urban service provision? These research questions are to be broken down into many specific sub-questions. The analysis of the study has designed in several stages. Research Outcome It is assuming that existing urban service delivery system is inefficient. The study will state the feasibility to solve the problems through Public-Private Partnership. In this concern, water supply in urban areas has been considered. 1.6 Limitation of the Study Despite this being the very first attempt to evaluate the feasibility of public private partnership in water supply, it should be acknowledged beforehand that we could not conduct with some important issues and also sometimes fail to collect the actual data which are more relevant to the study. But, we tried to collect those data which can be somehow related with the study. Sometimes, we collect the approximate data due to the unavailability of sources.