Concessions

Concessions include all contractual arrangements through which a private firm obtains the right from government to provide a service under conditions of significant market power. A more restrictive definition of a concession is a private sector arrangement where asset ownership remains in public hands but where the private operator is responsible for new investments, as well as operating and maintaining existing assets.

Concessions are typically used for introducing private participation in infrastructure. Different contract types, such as performance-based management contracts, leases, affermages, build-operate-transfers, or even divestitures under license, have various degrees of underlying risk allocated to public and private parties.

This toolkit aims at helping policymakers and their advisors better understand some of the most important and difficult issues related to the design, award, implementation, monitoring, and financing of concessions.

Water and sanitation services have specific features that complicate their provision and management. They are essential services characterized by natural monopoly, and their assets are difficult and expensive to develop and monitor. This toolkit aims to assist governments in developing countries that are interested in using private participation to help expand access to safe water and sanitation services at a reasonable cost.

Instead of identifying a single approach, the toolkit illustrates policy design options to support arrangements that deliver good quality water services to the poor, discussing the main advantages and disadvantages of the several options. In doing this the toolkit also helps governments to see whether private participation might be part of the solution to problems in the water sector.

Download the toolkit (PDF, 772KB).