International Desalination Association-Asia Conference Singapore, March 21-23, 2001 Energy, Economics, Privatization and Financing Panel 'Structuring Successful Private Water Projects'

摘要

The private sector can play a critical role in implementing Asian water supply projects. The BOO/T structure represents a tested means by which project owners can mobilize capital, technology, and management expertise for these projects. There are other approaches for private sector participation in the water sector, and the BOO/T structure should not be viewed as a replacement for water utilities' overall restructuring and privatization plans. However, the BOO/T structure may be particularly appropriate for promoting large-scale desalination projects—particularly dual-purpose power and water projects—that can produce water in a cost-effective manner. Private sector developers and financiers will require an appropriate balance of risk-sharing with host country governments before considering investment in water treatment projects. Many of the lessons learned from financing BOO/T power projects can be applied to private water projects. To the extent that host countries can transfer the knowledge and experience gained from implementing private power projects, this should help move private water projects forward. However, structuring BOO/T water projects is not a simple process. Compared with the power sector, the institutional and regulatory framework for the water sector is less advanced. In addition, risk allocation for private water projects is more complex for many reasons, including the greater number of government agencies involved, the local nature of the project, consumer preferences and practices, and deficiencies in the financial and operating performance of many water utility offtakers. In order to successfully structure private desalination projects, investors, lenders and host country governments will need to address many challenges. Careful due diligence and creative risk-sharing arrangements can help promote private water projects. First and foremost, the project's technical, commercial, and financial viability must be sound, otherwise no amount of financial engineering will make the project work. Assuming the project possesses the right fundamentals, there is considerable room for multilateral financial institutions to catalyze private sector financing sources. In addition, host country governments will need to adopt an investment framework that is compatible with private sector interests. Finally, all parties to the project must fully understand the technical, commercial, and financial risks and opportunities inherent in desalination projects. We believe that proceedings such as the International Desalination Association's Conference on Desalination in Singapore are an important step toward achieving success in this area.