A handful of multinational companies dominate the international market for the private operation and management of urban water and sanitation utilities.¹ A very large number (millions) of micro- and informal enterprises are engaged in supplying water and sanitation services to low-income households who are not served by water and sanitation utilities and do not have their own facilities. Between these two extremes are local private water and sanitation providers, that sell water and sanitation services, and range from small enterprises with a staff of one to a few dozen to large enterprises with hundreds if not thousands of employees. They...

Table 1 summarizes, in very broad terms, the differences between private water and sanitation providers of three different types: multinational water and sanitation companies, local/national companies and micro-/informal enterprises. There are numerous ways of distinguishing different private water and sanitation providers. This tripartite classification implicitly refers to three dimensions: size (micro, small, medium or large enterprises), recognition by the state (formal or informal), and scale of operations (multinational or local). By and large these three aspects move together.

The smallest “micro” operators, such as itinerant water vendors or nightsoil collectors, are more likely to be part of the informal sector,...

It is possible to draw certain parallels between categories of sanitation and water service providers, as indicated in Table 2. The itinerant water vendors that go door-to-door selling buckets of water have their parallel in the (far less common) itinerant nightsoil collectors that go door-to-door collecting the waste from bucket toilets. The pay-per-bucket water kiosks that exist to varying degrees in most low-income cities have their parallel in the pay-per-use toilets. The water network operators have their parallel in the sewerage network operators (who are often one and the same), and in both cases it is useful to distinguish between...

It is still comparatively rare for local private companies to operate the ex-public urban water and sewerage utilities that until recently monopolized the water and sewerage networks in most low- and middle-income countries. There are cases in Latin America, Africa and Asia where local companies have been given contracts to operate town and even city utilities. This form of operation may put them into direct competition with multinational companies (and their consortia), however, and the extent to which local companies can win contracts on their own depends not only on their capacities but also on public-sector policies, which are themselves...

In many parts of the world, but especially Latin America, there is evidence of small companies operating a diverse array of independent water networks (Collignon and Vezina, 2000; Solo, 2003; Conan, 2003). Independent sewerage network operators are far less common, and are more likely to involve non-governmental organizations than private companies. (The best example of a pro-poor sewerage “operator” is probably still the Orangi Pilot Project, with an approach to community organization, if not to sewers, which could hardly be more different from that of the typical private company (Hasan, 2001).) The difference presumably stems from the strong consumer demand...

Private companies are often contracted to extend water and sewerage networks, but less often build and manage their own extensions to the main utility network. For sewerage, customer willingness to pay is a serious constraint, and without the support of the government (or a developer or civil-society organization willing to organize local provision) it is likely to be difficult to obtain payments to the value of the service provided. For water, there are undoubtedly commercial opportunities, many of which have not been exploited. The principal barriers lie in legal systems that do not allow private sub-networks, technical constraints that make...

Judging from first principles, trucks are more likely to be an economical way of transporting faecal material from homes than of transporting water to them. After all, the volume of water a household of five needs to meet its basic hygiene requirements is about a hundred times the volume of faecal material it will produce. Pipes will almost certainly be the most cost-effective means of getting people water (for revealing price comparisons, see Table 3, above). Sewerage pipes are not only more expensive, but in many circumstances less necessary. There are other safe ways of disposing of faecal material, even...

While the role of private companies in providing water and sanitation services is often highly controversial, their role in producing the products needed to obtain these services is largely uncontentious. Almost nobody claims that private companies should not make latrine platforms or water pumps. Moreover, while the poorest urban dwellers make as few purchases as possible, their ability to access adequate water and sanitation depends to a significant degree on the availability of suitable water and sanitation technologies on the local market, and the availability of spare parts and repair workers to service them. The scope for change is also...

This section examines private-sector participation (“PSP”) by nationally based rather than multinational companies, in water and wastewater service contracts in developing countries in Asia, Africa and Latin America. It is based on information about contract awards drawn from a variety of sources: corporate (annual reports, analyst presentations, press releases and company project profiles); multilateral (the World Bank /IFC and Asian Development Bank); specialist media (in particular, Global Water Report, Global Water Intelligence and Asian Water) and local media reports. This information has been synthesized in the 2004–05 edition of the Masons Water Yearbook. Contracts with multinational companies in countries...

In most countries, little attention has been devoted to the role local companies play, and how they could be convinced to provide better services to the urban poor. If local and national governments are to encourage these companies to play a more significant and positive role, they first need to review existing laws and regulations, particularly where they inhibit local companies from providing better services to the urban poor, or prevent local companies from competing to provide better services. Community and civil-society groups may need to consider how they can engage with local companies. International development agencies may need to...