Alianzas Público-Privadas: Factores que determinan
tipos de contratos en la industria del agua
Hugo Zarco Jasso
25 de Marzo, 2011
MOTIVATION AND RESEARCH QUESTION
Motivation:
To examine the factors determining the adoption of various forms of
“hybrid” public-private governance structures
Theoretical Perspectives:
•Public Management
•International Management
•Institutional Economics
Research Question:
“What determines the degree of private participation in public-private
contractual arrangements?”
CONCEPTUAL FRAMEWORK AND EMPIRICAL ANALYSIS
CONCEPTUAL FRAMEWORK
Research Paper #1
• Framework for analysing the
relationship between public and
private organizations entering
into PPP within the context of
cross-sector collaboration.
• Build on public and private
organization to develop a model
for mapping PPPs into a
continuum of hybrid
organizations.
EMPIRICAL STUDIES
Research Paper #2
• Analysis of contract
entry mode as the
outcome of negotiation
between multinational
companies and host
countries.
• Results of this process
are strongly affected by
the unequal distribution
of resources between the
parties and by the limited
competition in the sector.
• Existing contract modes
are not flexible enough to
accommodate
uncertainties and shift
bargaining power
between partners.
Research Paper #3
• Comparative analysis
of performance for
different contractual
arrangements in the
Spanish water Industry
• Results offer evidence
that that consumers pay
more when
municipalities choose
PPPs, controlling for
other aspects of supply
and demand in water
distribution that could
affect prices.
•Local government
decisions are not
necessarily based on
efficiency grounds.
CONCEPTUAL FRAMEWORK AND EMPIRICAL ANALYSIS
CONCEPTUAL FRAMEWORK
Research Paper #1
• Framework for analysing
the relationship between
public and private
organizations entering into
PPP within the context of
cross-sector collaboration.
• Build on public and private
organization to develop a
model for mapping PPPs
into a continuum of hybrid
organizations.
EMPIRICAL STUDIES
Research Paper #2
• Analysis of contract
entry mode as the
outcome of negotiation
between multinational
companies and host
countries.
• Results of this process
are strongly affected by
the unequal distribution
of resources between the
parties and by the limited
competition in the sector.
• Existing contract modes
are not flexible enough to
accommodate
uncertainties and shift
bargaining power
between partners.
Research Paper #3
• Comparative analysis
of performance for
different contractual
arrangements in the
Spanish water Industry
• Results offer evidence
that that consumers pay
more when
municipalities choose
PPPs, controlling for
other aspects of supply
and demand in water
distribution that could
affect prices.
•Local government
decisions are not
necessarily based on
efficiency grounds.
Research Paper 1
NEED OF A THEORETICAL FRAMEWORK
• Definition: PPPs can be defined as cooperative agreements where
public sector agencies enter into long-term contractual
relationships with private sector entities for the construction or
management of public sector infrastructure facilities by the private
sector entity.
• Public-private partnerships (PPPs) have been developed in the
context of ‘New Public Management’ (NPM) reform
 assumptions are important.
• In practice, experiences with PPPs have been mixed in
developing countries (Estache, 2004; Guasch et al., 2003) as well
as in developed countries (Engel et al., 2008).
Research Paper 1
INTENDED THEORETICAL CONTRIBUTION
• Despite there exists a burgeoning literature on the topic of
privatization there has been little systematic work on the
determinants of the mix of public-private participation (Mahoney
et al., 2009).
• A key issue in the proposed framework is to change how the term
“public” is to be understood when referring to public services
because it is confusing to equate “public” with public ownership.
• Apart from asset ownership, private sector involvement in the
provision of public services has two distinct elements: operational
and financial.
Research Paper 1
EXTENDED FRAMEWORK: HYBRID CONTRACTUAL
ARRANGEMENTS
• By considering that no organization is wholly public or private the
proposed framework builds on three dimensions:
– Control of operations: the justification for the involvement of the
private sector is essentially managerial.
– Funding of underlying project: considered as a commodity that can
be equally raised by both sectors.
– Ownership of assets: overall, private ownership offers more
incentives for cost reduction, but these incentives can induce
quality erosion.
• Main insight:
Ensuring quality under private participation requires increased
oversight (and ownership). As the difference between public and
private ownership disappears, the potential for cost savings from
private ownership may disappear as well.
Research Paper 1
TYPES OF PUBLIC-PRIVATE PARTNERSHIP CONTRACTS
Dimension
Control
Funding
Ownership
Operations and
Maintenance
Capital Investment
Asset Ownership
Public
Public
Public
Public/Private
Public
Public
Management
Contract
Private
Public
Public
Leasing
Contract
Private
Public
Public
Concession of existing
network
Private
Private
Public
BOT Build, Operate and
Transfer
Private
Private
Private then Public
Divestiture
Privatization
Private
Private
Private
Types
Public agency management
non-PPP
Service Contract
outsourcing
CONCEPTUAL FRAMEWORK AND EMPIRICAL ANALYSIS
CONCEPTUAL FRAMEWORK
Research paper #1
• Framework for analysing the
relationship between public and
private organizations entering
into PPP within the context of
cross-sector collaboration.
• Build on public and private
organization to develop a model
for mapping PPPs into a
continuum of hybrid
organizations.
EMPIRICAL STUDIES
Research paper #2
• Analysis of contract
entry mode as the
outcome of negotiation
between multinational
companies and host
countries.
• Results of this process
are strongly affected by
the unequal distribution
of resources between the
parties and by the limited
competition in the sector.
• Existing contract modes
are not flexible enough to
accommodate
uncertainties and shift
bargaining power
between partners.
Research paper #3
• Comparative analysis
of performance for
different contractual
arrangements in the
Spanish water Industry
• Results offer evidence
that that consumers pay
more when
municipalities choose
PPPs, controlling for
other aspects of supply
and demand in water
distribution that could
affect prices.
•Local government
decisions are not
necessarily based on
efficiency grounds.
Research Paper 2
MOTIVATION
• Entry mode:
– Critical element of international expansion
– Strategic decision costly to reverse
• Research question:
“What are the determinants of contract type as the outcome of bargaining
between host countries and MNCs prior to project initiation?”
• Previous work in IB literature have analyzed firm-specific
advantages as reflected in the amount of ownership in an equity
vs. non-equity setting.
Research Paper 2
BARGAINING MODEL OF MNC-HOST GOVERNMENT RELATIONS
Research Paper 2
HYPOTHESES RELATED TO THE EFFECT OF SOURCES
OF BARGAINING POWER ON CONTRACT DIMENSIONS
Supported
P. Supported
Supported
Not Supported
P. Supported
Supported
Supported
Research Paper 2
SAMPLE SIZE OF WATER PROJECTS WITH MNCs
Research Paper 2
DESCRIPTION OF DATA
CONCEPTUAL FRAMEWORK AND EMPIRICAL ANALYSIS
CONCEPTUAL FRAMEWORK
Research paper #1
• Framework for analysing the
relationship between public and
private organizations entering
into PPP within the context of
cross-sector collaboration.
• Build on public and private
organization to develop a model
for mapping PPPs into a
continuum of hybrid
organizations.
EMPIRICAL STUDIES
Research paper #2
Research paper #3
• Analysis of contract
entry mode as the
outcome of negotiation
between multinational
companies and host
countries.
• Comparative analysis
of performance for
different contractual
arrangements in the
Spanish water Industry
• Results of this process
are strongly affected by
the unequal distribution
of resources between the
parties and by the limited
competition in the sector.
• Results offer evidence
that that consumers pay
more when
municipalities choose
PPPs, controlling for
other aspects of supply
and demand in water
distribution that could
affect prices.
• Existing contract modes
are not flexible enough to
accommodate
uncertainties and shift
bargaining power
between partners.
•Local government
decisions are not
necessarily based on
efficiency grounds.
Research Paper 3
MOTIVATION
• This chapter tries to identify the factors that make public-private
partnerships (PPPs) a more or less efficient alternative for service
provision.
• This study tries to extend similar previous work (e.g. Menard and
Saussier, 2002) that has put aside institutional factors that are not
related to efficiency.
• Research question:
“What is the relationship between the type of contractual arrangement
chosen and the associated performance?”
Research Paper 3
WATER DISTRIBUTION IN SPANISH MUNICIPALITIES
•
We use a database that provides information on 1207 municipalities
that decided either to maintain public provision or enter into a PPP
(i.e. leasing, concession, mix society).
•
It represents 43% of the Spanish population for a period of seven
years.
Urban water mana gement in Spain (2003, as percentage of population served)
Percentage
Market share of
Management regime
(population)
private bu siness
Direct Management (Public )
50.2%
-Agbar Group
25.3%
50.8%
Aqualia (FCC Group)
9.7%
19.4%
Bouygues Gro up
6.7%
13.4%
Other private operators
6.5%
13%
Source: River Basin Institutions and Agbar
DEFINITION OF VARIABLES AND DESCRIPTIVE STATISTICS
18
Research Paper 3
MODEL SETTING
•
Utility function for partnering:
•
Price equation for municipality i:
=-0.48,
=0.25,
= 0.178 euros/m3
Research Paper 3
ESTIMATION RESULTS
• Consumers pay less when municipalities choose leasing
contracts (controlling for other aspects of supply and
demand in water distribution that could affect prices).
• In contrast to previous findings that focus on variables
related to the governance per se, it shows that contract
decisions –in a politically salient industry like water– are not
necessarily based on efficiency criteria.
OVERALL CONCLUSIONS
• Despite growing experience in using public-private
partnerships it has not translated into clear strategies for
contracting and measuring their performance.
– Performance of public and private sector companies should not
be generalized.
– Even within the private sector companies, their performances
varies significantly from one city to another, and also could vary
over time even in the same municipality.
• Current debate on private participation has become extremely
polarized (focused on who owns the assets in water utilities)
 it will only result in the kind of debate that is more prone to ideology
than substance.
OVERALL CONCLUSIONS
• Existing contracts modes are not flexible enough to
accommodate uncertainties and to shift bargaining power
between governments and investors over the life of
infrastructure projects
 Need of new arrangements that help to reverse recent decline in the
number of water infrastructure projects and better balance interests