The Welfare Effects of Private Sector Participation in Guinea's Urban Water Supply

Abstract

for comments on earlier drafts. Sector Performance and Organization before ReformAccording to a consultants report from 1985, there were 8,990 legal connections to Conakry's water system at the end of 1983, for a city with about 800,000 residents. In comparison, Abidjan, which was about twice the size of Conakry and had a long history of private participation in the sector, had over 90,000 connections (SODECI, 1986). Most private conmections were a single tap inside a lot or compound -only a small wealthy minority had running water inside their homes (Durany and Morel a l 'Huissier, 1994, p.19). Deputies, senior civil servants and DEG employees were entitled to legal, but unregistered (and unbilled) connections and there were many illegal connections. In principle, water distribution was metered and consumers were charged according to consumption but, in fact, metering was very rare. The lack of metering makes it difficult to estimate how high

Does Private Sector Participation Improve Performance in Electricity and Water Distribution?

“…These issues are addressed by a third set of studies that perform an empirical analysis with respect to a variety of economic agents affected (for example, Galal and others 1994;Chisari, Estache, and Romero 1999;Clarke, Ménard, and Zuluaga 2000;McKenzie and Mookherjee 2003;Galiani, Gertler, and Schargrodsky 2005).…”

Privatization And Poverty: The Distributional Impact of Utility Privatization

“…In Guinea for example, the government received $67 million for investment in the water sector because it undertook a lease agreement with the private sector for management of the capital's water supply. In an assessment of the counterfactual by Menard, Clarke and Zuluaga (2000), the supply of aid from the World Bank is considered to be a major bene¢t of privatization.…”

“…On average, prices were higher than in most other African countries. Productive capacity in the water sector increased substantially because of World Bank assistance but demand lagged far behind supply because of the cost of connections (Menard et al 2000).…”

“…In Guinea, weaknesses in regulation led to overcharging by the private water company (a fact only discovered in the course of a World Bank audit) and the government regulator was powerless to make the private operator comply with ¢nancial disclosure requirements which meant the regulator had no way of verifying costs and the basis for tari¡s (Menard et al 2000). Thus the private ¢rm was earning more than twice the agreed amount but the regulatory body was not able to discover this without a World Bank audit.…”

The private sector in development: entrepreneurship, regulation, and competitive disciplines

“…However, when real competitioni is not or cannot be introduced, it is more likely that privatization is mishandled, and well-run public firms may do as well as private ones (Kwoka 1]996). Even in such cases, many private projects have outperformed public enterprises-for example, in the water sector in Argentina, Chile, C8te d'Ivoire, and Guinea (Clarke, Menard, and Zuluage 2000;Noll, Shirley, and Cowan 2000). This is not to say that they have all achieved perfect results.…”