Contracting water services with public and private partners: a case study approach

The provision of water services is frequently a responsibility of local governments. Although municipalities remain accountable to the population for the availability, affordability, and quality of these services (facing the political repercussions of the perceived outcomes), the current operators may have different organizational models. Regardless of the utilities' governance model (direct or indirect delivery, public, private, or mixed ownership), it is a good practice to establish the rules, objectives, and administrative procedures between the competent authorities and the operators (or the partners) in a written agreement. In this paper we compare the contracts of two Portuguese utilities with different governance models: a public-private partnership and a public-public partnership. Since the best-practice guidelines are analogous, the (good) contracting practices should not differ significantly between the two arrangements. However, the results of the case-study analysis show that there are major differences in crucial details between the contracts employed, and that in many aspects the public interest is not safeguarded.