Contents -- Foreword -- Acknowledgments -- Preface -- Overview -- 1 Considering private participation -- 1.1 Underlying policy problems in water services -- 1.2 Some possible effects of private participation -- 1.3 The challenge of getting private participation to work -- 1.4 Models of private participation -- 1.5 Approach of the Toolkit -- 2 Planning the process of introducing private participation -- 2.1 Four stages -- 2.2 Stakeholder consultation and analysis -- 2.3 Setting up government institutions to manage the process -- 2.4 Analytic and advisory work required -- 3 Involving stakeholders in the design of the arrangement -- 3.1 Identifying stakeholders -- 3.2 Developing a strategy for engaging stakeholders -- 3.3 Interacting with different groups of stakeholders -- 3.4 Identifying winners and losers under different options -- 4 Setting upstream policy -- 4.1 Allocating responsibilities among different levels of government -- 4.2 Determining the appropriate market structure -- 4.3 Establishing rules for competition -- 5 Setting service standards, tariffs, subsidies, and financial arrangements -- 5.1 Setting a service goal -- 5.2 Estimating the cost of service -- 5.3 Determining the mix of tariffs and subsidies -- 5.4 Implications for design of the arrangement -- 5.5 Accessing and structuring finance for investment -- 6 Allocating responsibilities and risks -- 6.1 Analyzing responsibilities and risks -- 6.2 Determining the best allocation of responsibilities and risks -- 6.3 Designing risk allocation rules -- 6.4 Allocating risks and responsibilities under different models of private participation -- 7 Developing institutions to manage the relationship -- 7.1 Tasks and institutions -- 7.2 Monitoring and enforcing performance -- 7.3 Resolving disputes -- 7.4 Adjusting tariffs -- 7.5 Involving customers -- 7.6 Maintaining good working relations.

7.7 Links between institutions to manage the relationship and models of private participation -- 8 Designing legal instruments for the arrangement -- 8.1 Choosing legal instruments -- 8.2 Working with administrative, concession, and regulatory codes -- 8.3 Ensuring that people comply with their obligations -- 9 Selecting an operator -- 9.1 Choosing a selection method -- 9.2 Setting the selection criteria for competitive bidding -- 9.3 Managing the bidding -- 9.4 Dealing with other issues -- Appendix A: Examples -- Amman (Jordan) -- Cartagena (Colombia) -- Chaumont (France) -- Cochabamba (Bolivia) -- Côte d'Ivoire -- Gabon -- Gdansk (Poland) -- La Paz and El Alto (Bolivia) -- London and Thames Valley (United Kingdom) -- Metro Manila (Philippines) -- San Pedro Sula (Honduras) -- Santiago (Chile) -- Senegal -- Sofia (Bulgaria) -- Tangiers (Morocco) -- Trinidad and Tobago -- Appendix B: The policy simulation model -- Glossary -- References -- Index -- Boxes -- Box 2.1 Central government support and private participation for building local government capacity in South Africa -- Box 2.2 A typical contract package -- Box 3.1 Could more consultation have helped the La Paz-El Alto and Cochabamba concessions? -- Box 3.2 Household surveys to determine willingness to pay -- Box 3.3 Advantages of involving stakeholders in Kathmandu, Nepal -- Box 3.4 Advantages of involving stakeholders in Cartagena, Colombia -- Box 3.5 Teschie Tankers Water Association in Accra, Ghana -- Box 4.1 Controversies over water service responsibilities in Brazil -- Box 4.2 Aggregation of water service in small towns in France -- Box 4.3 Difficulties splitting a national utility in Ghana -- Box 4.4 Splitting the metropolitan provider service area in Manila -- Box 4.5 Single metropolitan provider in Buenos Aires -- Box 4.6 Franchising and other professional support models for small towns.

Box 4.7 Separating water and sanitation services in Senegal -- Box 4.8 Joint water and electricity service provision in Gabon and Morocco -- Box 4.9 Limits to capital market competition in England and Wales -- Box 5.1 Service targets for the Buenos Aires concession -- Box 5.2 The capital maintenance approach to estimating depreciation -- Box 5.3 Output-based aid approaches -- Box 5.4 Designing tariffs and subsidies to help poor people -- Box 6.1 Example of the need for reset mechanisms -- Box 6.2 Market testing-A way to determine whether the operator's costs are reasonable? -- Box 6.3 Event-based reviews in The Gambia and Gabon -- Box 6.4 Examples of hybrid arrangements -- Box 7.1 Renegotiating an affermage-lease in Senegal -- Box 8.1 Renegotiation and risk transfer-the Manila water concessions -- Box 9.1 Transparency in Manila -- Box 9.2 A note on terminology -- Box 9.3 Two-stage prequalification in the European Union -- Box 9.4 Be careful what you ask for-how information in proposals relates to evaluation criteria and contracts -- Box 9.5 Best and final offers and competitive negotiation in the United Kingdom -- Checklists -- What to do before beginning the process discussed in this Toolkit -- Managing the process of introducing private participation -- Setting service standards, tariffs, subsidies, and financing -- Allocating risks and responsibilities -- Issues to consider in designing expert panels for dispute resolution -- General background law-Additional issues for due diligence -- Designing legal instruments to embody the arrangement -- Selecting the operator -- Figures -- Figure 1.1 Perceived fairness allows a lower rate of return to be promised for a given legal protection -- Figure 1.2 Operator and contracting authority's share of customer revenue under five arrangements.

Figure 1.3 The allocation of risk to the operator and determination of subsidies -- Figure 2.1 Stages of the process -- Figure 3.1 Steps in involving stakeholders in design -- Figure 3.2 Social impact modeling -- Figure 4.1 Upstream policy decisions and implications for the transaction process -- Figure 4.2 Imaginary country showing urban areas and water supply features -- Figure 4.3 Value chain for a water services business -- Figure 5.1 Balancing service standards, tariffs, and subsidies -- Figure 5.2 A possible structure for development-agency finance in an arrangement -- Figure 6.1 Key areas of responsibility -- Figure 6.2 Demand risk-A forecast and two possible outcomes -- Figure 6.3 Demand risk for the operator -- Figure 6.4 Links between risks -- Figure 6.5 Initial and final risk allocation for a concession -- Figure 6.6 Currency risk -- Figure 6.7 Summary of key decisions in designing resets -- Figure 7.1 Information, capability, incentives, and legitimacy -- Figure 7.2 Possible institutions in a management contract -- Figure 7.3 Possible institutions in a concession contract -- More information -- Things the Toolkit doesn't address -- Considering private participation -- The process of introducing private participation -- Involving stakeholders -- Setting upstream policy -- Setting service standards, tariffs, subsidies, and financial arrangements -- Allocating risks and responsibilities -- Choosing and designing institutions to manage the relationship -- Designing legal instruments to embody the arrangement -- Selecting the operator -- Financial modeling -- Tables -- Table 1.1 Five arrangements -- Table 2.1 Advice that may be needed -- Table 3.1 Stakeholder identification and composition -- Table 3.2 Five types of interaction with stakeholders -- Table 3.3 Four ways of communicating with stakeholders.

Table 3.4 Stakeholders and ways to involve them in designing arrangements -- Table 4.1 Benefits and costs of increasing scale and scope -- Table 5.1 Types of subsidy -- Table 6.1 Objectives of tariff resets and corresponding risk allocation -- Table 6.2 Hypothetical operator-Financial position -- Table 6.3 Impact of reset objectives on methodology and outcomes -- Table 7.1 Choice of tasks and institutions -- Table 7.2 Typical strengths and weaknesses of selected institutions -- Table 8.1 Legal and implementation design issues -- Table 8.2 Legal instruments -- Table 8.3 Appropriate instruments for particular tasks -- Table 9.1 Example of a weighted-average technical score -- Table 9.2 Possible scoring of items in technical proposals -- Table 9.3 Some possible financial criteria by type of arrangement -- Table 9.4 Comparing ways to combine financial and technical scores -- Table A.1 Illustrative approach to stakeholder analysis.