In the water supply and sanitation sector, ensuring access and service quality is often challenged by a range of factors including population growth, rapid urbanization, climate change as well as aging infrastructure.
Despite governments around the world making significant amounts of investment in the water supply and sanitation sector, infrastructure investment has fallen behind with the cumulative investment gap expected to widen over the coming decades: In the United States, over $655 billion in water infrastructure is needed over the next 20 years Click & Tweet! to keep pace with projected investment needs.
PPPs funding new water infrastructure
With public sector budgets limited, Public Private Partnerships (PPPs) have become a popular tool for funding new water infrastructure Click & Tweet! projects around the world. PPPs involve the private sector exclusively operating, maintaining and carrying out the development of infrastructure or providing services of economic benefit. Governments at all levels often turn to PPPs when facing:
- Budget deficits
- The need to protect against project delays and cost overruns
- A desire or need to diversify the economy by stimulating private sector investment
- A need to maintain the pipeline of projects when government funds are constrained
Overall, the goals of PPPs are to exploit synergies in the joint innovative use of resources and the application of management knowledge for the optimal attainment of the goals of all parties involved.
The rise of PPPs in Kuwait
Kuwait has embarked on a PPP program that promotes collaboration between the public and private sectors to develop quality infrastructure and services for Kuwaiti citizens. To facilitate PPPs, Kuwait has established the Partnerships Technical Bureau, which aims to utilize private sector skills and expertise in the development of projects in the water, as well as the power, sector.
Kuwait’s PPP desalination project
One project that is underway is the Independent Water and Power Producer (IWPP) Project. The IWPP Project aims to generate power with a maximum capacity of 2,500MW through a conventional thermal steam power plant. The electricity generated will then power an on-site seawater desalination plant that will provide a total minimum capacity of 125 million gallons of water per day. The IWPP Project will be set up as a Special Purpose Vehicle, which will design, build, finance, operate and maintain the power generation and water production facility for a fixed duration of time. The Special Purpose Vehicle will sign an Energy Conversion and Water and Power Purchase Agreement with the Ministry of Electricity and Water.
PPPs enable the innovative use of public and private sector resources and capital to achieve social outcomes beneficial for all.