Testing the Waters : A Phased Approach to a Water Concession in Trinidad and Tobago
1997
Nankani, Helen
The government of Trinidad and Tobago has adopted a two-phased approach to privatizing its water services. In the first phase, a preconcession, or enhanced management contract, was recently awarded through a competitive bidding process. After three to five years, in the second phase, this management contract will be converted to a long-term concession for which the incumbent will have first rights of negotiation. With the management contract now in place for less than a year, it is too early to draw firm lessons. But the two-phase strategy looks like a good choice for a small country with poor sector information and limited regulatory capacity. The preconcession agreement gives the government time to gather information for better risk allocation in the future, develop a long-term tariff regime, and establish a relationship of trust with a private operator--while it also improves service using private sector management. This Note discusses the strengths and weaknesses of the strategy.
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