Rejoinder: Still on water challenge in Lagos (2)
THE writer quoted the Managing Director (LWC) that “We do not anticipate any capital expenditure element in the contracts” Of course, every Capital project is driven by capital Expenditure! What the writer might have misconstrued is the fact that the Capital expenditure will not be carried on the Balance Sheet of the Government but by the Private partners who will recover the investment over a protracted period of years under a concession.
By such mechanism, Government is able to address funding of other sectors. Such investments typically are recovered over a negotiated concession period of several years. In order to make water tariff affordable to the public, Concessions usually range from about 20 to 30 years depending on size of investment, and financial model.
It is also very pertinent to state that Public Private Partnership (PPP) does not come in only one (1) mould. It can be structured to fit a particular clime and needs. The fact that there are cases of failed PPP projects as reeled out by the writer does not portend global doom.
In fact, there are successful ongoing PPPs in over 23 countries such as United States, UK, Brazil, Philippines, Haiti, China, Germany, Mexico, Australia, Morocco, Romania, etc.; and closer home in Benin Republic, Niger, Senegal and South Africa. In Lagos, there are privately run water businesses that have been in operation for many years and are able to serve Estates they cover.
These companies have access to private capital and are able to charge cost reflective tariffs for services provided. This is why they have managed to sustain their operations.
This essentially is PPP. Under the proposed PPP, the Private sector funds and develops the water infrastructure (water treatment plant and associated pipeline network to deliver water to homes) under a Build Operate and Transfer (BOT) scheme; the asset is transferred back to the State at the end of the concession.
During the life of the concession, raw water is abstracted from surface sources (rivers, lagoons), which remain under the control of the Government.
The Right to water of the poor segment of the society will be ensured through tariff approval by the Government that allows only efficient cost input and provision of subsidies.
It may surprise the writer to learn that even in Cross River State, water supply in Calabar, Ugep and Akampa are being undertaken under PPP. It may also be of interest to note that annual population growth rate in Europe is only about 0.22% compared to 3% of Sub-Saharan Africa.
We therefore need to make some haste to end the catch-up game we have become accustomed to! The alternative options to using Private Capital include: The Government raising taxes significantly. Waiting for when the Government is financially able to undertake the projects; that is, develop a major Water scheme every 10 to 15 years.
In this case, 30 years hence, we are still struggling to catch up with demand! The Management of Lagos Water Corporation unequivocally reiterates that the State government is not divesting or selling off water assets.
On the contrary, Public Private Partnership (PPP) is a strategy to rapidly develop our water resources to make POTABLE WATER available to all.
LWC retains ownership of the assets, and the Government regulates the sector. Lagos Water Corporation will be willing to meet with the writer for any further clarification required.
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