Environment experts have said that private sector investment remains crucial for driving Nigeria’s water sector to its full potential, lamenting that the country remains far from being ready for a full blown direct private investment. They point out that combining efficient private operation with public/International Development Association (IDA) financing remains the key to optimising the sector’s potential.
The experts have advised that investors seeking opportunities in the country’s water sector through Public Private Partnerships (PPPs) will, for now, have to restrict their investment to management contract level rather than aiming for full concessoning of such services to them.
According to them, promoting public, private partnerships (PPPs) in the water sector requires striking the right balance between the capacities both the public and private entities bring to the table such that the public sector remains restricted to its ability to regulate and facilitate operations of private firms without burdening them.
“The public sector should provide commercial frameworks for infrastructure acquisition, financing, licensing as well as create the enabling environment to assist private firms operate and achieve full cost recovery, while the private sector should invest and produce innovative, affordable products and reliable, efficient services based on profit motives,” an expert who did not want to be named advised.
Despite a growing campaign in recent time to entice investors to the country’s water sector with the aim of mobilizing private finance, increasing the efficiency of capital investment, improving service delivery, optimising the use of existing infrastructure and improving available technical expertise, only few states have succeeded in establishing an efficient PPP model.
The expert noted that despite these opportunities in the sector, the absence of proper preparation of suitable PPP structure and viable financial models, lack of access to affordable finance, the political economy, consumers’ unwillingness to pay for services, among other things, have continued to weaken investors’ interest in the sector.
“As Nigeria’s water sector continues to implement reforms, new prospects and opportunities will continue to emerge for private sector participation”, the expert said, adding that the government must show the political will at state level to create the enabling environment for private sector participation.
“There must be detailed studies and financial modeling to determine tariffs, transfer and subsidies and state governments must be willing to invest in infrastructure as and when required”, the expert said, arguing that, though there are available funds for investments globally, these funds should be structured to encourage the private sector to access at affordable rates.
CHKA UROKO
