_Section 6_ _Likely significance of allowingfree_ **_entry_** Similar responses could be expected in Uganda, for domestic as well as commercial and industrial customers. In Uganda self-generation of electricity is widespread. Many firms have standby petrol or diesel generators because of the unreliability of grid supply. These firms' generators seem to work for around 4-6 hours on average per day, which suggests a high level of un-utilised capacity.<sup>80</sup> Allowing free entry in Uganda for on-selling electricity would probably result initially in neighbours supplying power to each other. This could develop into club and co-operative arrangements, and eventually to the point that private companies set up specialising in the supply of electricity to areas currently unserved or poorly served.

In sanitation, Lee and Anas (1992) cite the private effluent collection and treatment facility on the Agbara Industrial Estate in Nigeria as an example of a utility pool. This facility was established by the private developer of the estate, and is operated by a management company. Similar arrangements can be envisaged in other industrial areas as environmental standards are tightened.

Many developing countries in the Caribbean and elsewhere depend on tourism. Where resorts line a beach, the costs of pollution can be largely internalised by a club of resorts in the area. Currently many hotels rely on package plants, which are noncore business, do not benefit from economies of scale, and often malfunction. If free entry were the norm, it is possible that resorts would club together to establish a single large sewage treatment plant, the management of which could be contracted out to a specialised private operator. In this case, it is probable that resorts would allow businesses and household in the area to connect to the system. A similar logic drove the establishment of a private water company supplying desalinated water to hotels and other customers in the Cayman Islands.

Free entry may also improve residential sanitation services in developing countries. The examples of the Orangi Pilot project and its replication in Lahore show that poor people in urban areas value sanitation highly, and are willing and able to pay for it, provided appropriate low cost technologies are used. However such willingness to pay extends only to removal of waste from the area. Additional Govemment intervention (such as providing for interconnection with an existing sewerage system) will be necessary to ensure proper treatment and disposal.

In water, the initial effects of free entry in many places will be to legalise current nonpiped suppliers such as water carriers, water truckers, and people who sell to their neighbours. This may have beneficial effects of increasing certainty in the industry, allowing greater investment, and reducing the scope for racketeering.

One could expect that the next development could be for some people to specialise in on-selling piped water, initially through establishing private water vending kiosks. Low cost extensions of piped supplies into unserved areas could be the next development. Already squatter and slum settlements in many places are served with low-cost plastic piped networks taking water illegally from the mains. Legalising onselling would provide the potential for people who are legally connected to establish 80 Ugandan Ministry of Natural Resources Energy Department, _Report on Rural Electrif oation_ Prepared by Commissioner for Energy Ministry of Natural Resources (1997).

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