# **Figure 1: Water and Sanitation Contracts Awarded by Year and Project Type (1991-2004)**

<!-- Start of picture text --> 50<br>45<br>40<br>35<br>30<br>25<br>20<br>15<br>10<br>5<br>0<br>1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004<br>BOT-type Concession Divestiture Lease type<br>O&M type Total<br><!-- End of picture text -->

**Table 1: Water and Sanitation Contracts Awarded (1991-2004) by Project Type (424 observations)**

|**Year**|**1991**|**1992**|**1993**|**1994**|**1995**|**1996**|**1997**|**1998**|**1999**|**2000**|**2001**|**2002**|**2003**|**2004**|**2005**|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|**No. contracts**<br>**signed**|2|8|9|17|22|20|39|35|45|45|40|36|32|47|27|
|**BOT-type**|2|3|6|11|14|13|28|29|28|31|21|27|19|18|20|
|**Concession**|0|2|2|0|1|1|5|4|1|4|5|6|5|6|5|
|**Divestiture**|0|0|0|0|1|1|1|2|6|2|4|2|4|7|0|
|**Lease type**|0|1|1|4|5|4|4|0|5|5|4|0|2|10|2|
|**O&M type**|0|2|0|2|1|1|1|0|5|3|6|1|2|6|0|

_Contract Types_<sup>_11_</sup> Using a 60-country sample from the WATSAN database, we can see that the proportion of new BOT projects signed out of total projects seems to be falling back to the levels of the mid-1990s (Table 1 & Figure 2). The falling popularity of BOT projects may be explained by the experience that many countries, particularly in the Asian region, have had with this structure.<sup>12</sup> BOTs imply equity risk for the investor, so one explanation for the downward trend could be that private players are lo longer willing to act as

> 11 In the analysis of PSP or what is often labelled public-private partnerships (PPPs), most authors rely on ownership categories – BOT, DBFO, lease etc. – that have been developed on an _ad hoc_ basis mostly by law firms. As a consequence, there is some overlap between categories and some confusion regarding their analytical uses. For the purposes of this paper, we wish to base our categories on underlying economic phenomena: hence we set two proper concepts to define PSP contract types: ownership and risk. In this perspective, ‘divestiture’ refers to cases in which assets are owned by the private sector and all risk is private; ‘concessions’ refers to cases in which assets are under public ownership but the firm has responsibility for financing and implementing all capital investment (financing risk) as well as operating the asset for the period of the contract (management risk) and collecting tariffs from end users (revenue risk); BOT projects have similar characteristics to the exception that the project’s client is a public agency rather than end-users (revenue risk should  thus be lower); A ‘lease’ covers cases where the private sector has _some_ responsibility for financing the investment in the maintenance of assets but key responsibilities and ownership remain in the public domain; finally, ‘management contracts’ are those under which the private party has no responsibility for financing capital investment, does not own the assets and only takes management risk. Thus, with the exception of management contracts, all PSP/PPP type projects are by design DBFOs (Design, Build, Finance, Operate)

12 High tariffs paid to BOT suppliers for treated water near to or exceeding the tariffs paid for water by consumers have undermined the financial viability of public water utilities, rendering some projects unsustainable. In some cases, as in Chengdu, China, demand projections proved to be over-estimated and the use of take-or-pay contracts obliges the public utility to use treated water from the high-cost BOT supplier before using lower-cost sources (Blanc-Brude and Jensen 2004).

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