The vast majority of public service operators in the world are in the public sector and 90 per cent of all major cities are served by such bodies. In other words, the largest pool of experience and expertise, and the great majority of examples of good practice and sound institutions, are to be found in existing public sector. Because they are public sector, however, they do not have any natural commercial incentive to provide international support. Their incentive stems from solidarity, not profit. Since 1990, however, the policies of international donors and development banks have focussed on the private companies and their incentives. The vast resources of the public sector have been overlooked, even blocked by pro-private policies.
Out of sight of these global policy-makers, however, a growing number of public sector companies have been engaged, in a great variety of ways, in helping others develop the capacity to be effective and accountable public services. These supportive arrangements are now called “public-public partnerships” (PUPs). A public-public partnership (PUP) is simply collaboration between two or more public authorities or organisations, based on solidarity, to improve the capacity and effectiveness of one partner in providing public water or sanitation services. They have been described by Lobina and Hall as: “a peer relationship forged around common values and objectives, which exclude profit-seeking”. Neither partner expects a commercial profit, directly or indirectly.
This makes PUPs very different from the public–private partnerships (PPPs) which have been promoted by the international financial institutions (IFIs) like the World Bank. A great advantage of PUPs is that they avoid the risks of such partnerships: transaction costs, contract failure, renegotiation, the complexities of regulation, commercial opportunism, monopoly pricing, commercial secrecy, currency risk, and lack of public legitimacy.
PUPs are not merely an abstract concept. Acording to conservative estimates, there are over 130 PUPs in around 70 countries in water sector, which shows that far more countries have hosted PUPs than host PPPs in water – according to a report from PPIAF in December 2008, there are only 44 countries with private participation in water. These PUPs cover a period of over 20 years, and been used in all regions of the world.
In the Indian context, the PUP should be encouraged to utilize the existing experience and expertise along with the resources of the Public Sector for the better and efficient delivery of services. The participation of Private Sector should be limited to certain sectors where Public Sector lack resources or latest technology.