Analysis of public-private partnerships for China's water service

The private sector in China has been growing since economic reforms were launched in the late 1970s. The massive demand for new infrastructure and improved service levels have precipitated the growth of public–private partnership (PPPs) in the Chinese water urban sector. Although the number of water and wastewater infrastructure projects financed through PPPs had risen to over 130 by the 2004, with an investment commitment of over US$4·8 billion, PPPs still accounted for less than 2% of total investments in the water sector. An institutional analysis was conducted in 2005 to find out how conducive PPPs are for provision of water services in Longgang, a coastal town in the Zhejiang Province of China. Although the operational performance indicators were generally above average, subjective assessment of the internal environment uncovered several gaps, which could be addressed by adopting an appropriate mode of PPPs. A scan of the external environment revealed conditions that are largely conducive to the introduction of PPPs in Longgang Water Utility. This paper showed how an existing institutional analysis framework could be adapted for assessing the suitability of introducing PPPs in water utilities.