1. PPP’s IN NIGERIA: Prospects in the Water Sector
PATRICIA SIMON-HART

2. INTRODUCTION
Water and Sanitation Services are different from other infrastructure sectors!
Many Governments are trying to figure out how to strike a balance between roles of the public and private sector in water
PPP approaches successful elsewhere (transport, power, etc) cannot be replicated directly in the water sector
Direct Private Investment should not be the focus in the Water Sector
Combining efficient private operation with public/IDA financing is more appropriate PPP approach

3. THE NIGERIAN WATER SECTOR
URBAN WATER SUPPLY
(20,000+)
SMALL TOWNS WATER SUPPLY (5,000 – 20,000)
RURAL WATER SUPPLY
(UNDER 5,000)

4. INSTITUTIONS IN THE NIGERIAN WATER SECTOR
THE FEDERAL MINISTRY OF WATER RESOURCES
STATE MINISTRY OF WATER RESOURCES
STATE URBAN WATER UTILITIES
SMALL TOWN WATER SUPPLY AGENCIES
RURAL WATER SUPPLY AGENCIES
WATER SERVICE REGULATORY BODIES

5. PPP’s IN WATER
Promoting Public-Private Partnerships in the Water Sector requires striking the right balance between capabilities that public and private entities bring to the table.
Public Sector
Ability to provide commercial frameworks for infrastructure acquisition, financing, licensing – as well as creating the enabling environment to assist private firms operate and achieve full cost recovery.
2. Private Sector
Ability to invest and produce innovative, affordable products and reliable, efficient services based on profit motives.
3. Partnership
Enabled through the Public Sectors Ability to regulate and facilitate operations contracts to private firms while not burdening them.

6. WHY DO WE NEED PPP’s IN WATER
TO MOBILIZE PRIVATE FINANCE
TO INCREASE THE EFFICIENCY OF CAPITAL INVESTMENT
RESTRUCTURE GOVERNMENT ESTABLISHMENTS
TO REDUCE POLITICAL INTERFERENCE
IMPROVE THE QUALITY OF SERVICE
OPTIMIZE THE USE OF EXISTING INFRASTRUCTURE
IMPROVE COMMERCIAL ORIENTATION
INTRODUCE TECHNICAL EXPERTISE
IMPROVE OVERALL OPERATIONAL EFFICENCY
REDUCE OPERATING COST
ELIMINATE GOVERNEMENT INTERVENTION FOR O&M
Profitability is linked to service delivery!

7. THE ENABLING ENVIRONMENT FOR PPP’s in Water
Political will for change
Sector Reforms - Policy and New Legislation
Performance based management
Utility reforms – Financial and Operational autonomy, Capacity Development
WATER GOVERNANCE
State Water and Sanitation Regulation
Tariff policy and model
Strong enforcement
Clear Government Communications Strategy
REGULATION
Access to affordable finance
Government guarantees
Government subsidies
Favorable investment climate
FINANCE
Detailed PPP transaction modeling
Transparent Private sector engagement process
Transparent private sector players
EFFECTIE RISK MANAGEMENT

8. AREAS OF INTERVENTION IN THE VALUE CHAIN
WATER PRODUCTION
DISTRIBUTION & SUPPLY
SEWAGE AND SANITATION
OTHERS
Fresh/Ground Water collection
Fresh/Ground Water Treatment
Desalination Plants
Municipality/Household Supply
Supply to Industries
Supply to Unplanned Settlements Unplanned
Waste Water Collection
Waste Water Treatment & disposal
Irrigation
Bottled Water

9. PPP OPTIONS SERVICE/MANAGEMENT CONTRACTS LEASE/AFFERMAGE CONCESSION
BOT
FULL DIVESTITURE
TERM (YEARS)
1-5
8-15
20-30 NA
ASSET OWNERSHIP
Public
public
Private then public
private
INVESTMENT FINANCE
COMMERCIAL RISK
shared
Public/shared
OPERATIONAL RISKS
GOVERNMENT REVENUES
Tariffs minus service fees, taxes
Tariff minus affermage operating price, taxes
Concession fee, taxes
Tariffs minus offtake
Sales private, taxes
PRIVATE REVENUES
Service fees
Affermage operating price
Tariffs minus concession fee
Bulk water sales
tariffs

10. CURRENT TRENDS IN THE NIGERIAN WATER SECOTR
URBAN WATER SUPPLY
SMALL TOWN WATER SUPPLY
CONCESSION
LEASE/ AFFERMAGE
MANAGEMENT CONTRACT
SERVICE CONTRACT
DBOO/ BOO
MANAGEMENT CONTRACT
SERVICE CONTRACT
RURAL WATER SUPPLY
COMMUNITY OWNERSHIP

11. ASSESSING YOUR RISK VS REWARDS
Divestiture
(Investor-Owned Utility)
HIGH
Design-Build-Operate
(BOT)
Concession
REWARDS
RETURN ON INVESTMENT
Lease/
Operating
Contract
Service
Contract
Management
Contract
LOW
LOW
RISK
HIGH
REQUIRED INVESTMENTS

12. TYPICAL PPP PROCESS

13. KEY CHALLENGES OF WATER PPP’s
Access to Water is considered a Fundamental Human right. People still reluctant to pay
Absence of proper Preparation of suitable PPP structure and viable Financial Models
Governments need be willing to share the associated risks
The Political economy
Lack of access to affordable finance

14. THE WAY FORWARD…

15. RECOMMENDATIONS AND CONCLUSION
As the Nigerian Water Sector continues to implement reforms new prospects and opportunities shall continue to emerge for Private Sector participation.
There has to be political will at State Level to reform and also to create the enabling environment for Private Sector participation
Sector Regulation at State Level must be in place and enforcement evident
The must be detailed studies and financial modeling to determine Tariffs, Transfer and subsidies
State Governments must still be willing to invest in Infrastructure costs as and when required
The Private Sector should consider starting with Management contracts and gradually move ultimately to concessions
Tariffs must be set for full recovery of O&M and any management fees
Utilities should design networks to offer bulk water services to an area that can operate in isolation
Development funding should be structured to encourage the Private sector access at affordable rates for investment in the water and sanitation sector
In the water Sector one solution does not fit all. Understand your environment and structure the PPP to the unique environment.

16. Thank you for listening. WATER IS LIFE. SANITATION IS DIGNITY
Thank you for listening. WATER IS LIFE! SANITATION IS DIGNITY!! LET’S BUILD PARTNERSHIPS!!!