Risk factors and mitigation measures in public-private water sector partnerships: lessons from the Asutifi North District, Ghana

Abstract

Public-private partnerships (PPPs) are promoted as a practical option for developing countries to meet their water sector infrastructure gaps. Despite their appeal, PPP projects have been described as complex and challenging, and the water sector PPPs are particularly associated with high failure rates. Risk analysis and evaluations have been identified as critical to the success of PPPs. In this paper, we examine an on-going PPP arrangement for piped water supply in the Asutifi North District of Ghana under a Build, Operate, and Transfer arrangement. Safe Water Network will provide the supply systems and transfer ownership to the District Authority at the end of the contract. We reviewed key project documents to ascertain the measures that would minimize the likelihood of risk occurring during the project cycle. Of 11 risk factors, 7 were anticipated in the project documents. We recommend that project documents be reviewed and amended to address the unanticipated risks.

Stakeholders Mapping Based on Risk of Public Private Partnership (PPP) NonRegional Water Supply Provision in Indonesia

“…The objective of risk identification arising from stakeholders is to identify risks related to stakeholders, and these risks are divided into four quadrants. According to PT Penjaminan Infrastruktur Indonesia [40], those risks are as follows: (1) Location risk is an event where the land intended for the project facility is not available or cannot be used thus affecting the plan and budget of the responsibility of one party; (2) Design risk, construction and operational testing is the event arise from design, construction and commissioning; (3) Sponsor Risk is an event where project company cannot fulfill its obligation stipulated on the PPP agreement due to act of sponsor, failure to secure loan or the failure of financial institution to provide loan; (4) Financial risk is an event that affect or related to financial feasibility; (5) Operational risk is an event related to the disruption experienced by the project company to provide services; (6) Revenue risk is an event where project revenue cannot be fulfilled according to the financial projection; (7) Connectivity risk is an event related to availability payment and financial feasibility in refer to the condition of connectivity system; (8) Interface risk is an event related to the project implementation from many parties that disrupt the project and infrastructure service done by public sector or vice versa; (9) Political risk is an event caused by government action or inaction that causes material loss and affects equity and loan payment; (10) Force majeure is an event caused by the prolonged force majeure outside of all parties control.…”

“…PPP can be implemented to provide hospitals, schools, water supplies, and waste treatment [9]. PPP can be chosen by developing countries to minimize inequality in the water sector [10]. Countries that have implemented PPP in the water sector are South Korea and Singapore, where fiscal pressure, political incentives, and socioeconomic pressure become the catalysts for its implementation [11].…”