Management Contracts and Water Utilities : The Case of Monagas State in Venezuela
The management contract for water and sanitation services in the Venezuelan state of Monagas, awarded in early 1997 to a Spanish firm, is one of very few signed and active management contracts in the water sector. Management contracts pose design c...
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| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1998/12/2529401/management-contracts-water-utilities-case-monagas-state-venezuela http://hdl.handle.net/10986/11520 |
| Summary: | The management contract for water and
sanitation services in the Venezuelan state of Monagas,
awarded in early 1997 to a Spanish firm, is one of very few
signed and active management contracts in the water sector.
Management contracts pose design challenges. Their built-in
incentives do not include equity at risk, so surrogate
incentives must be designed, such as a performance bonus.
Deciding how to award these contracts is also a challenge,
because they lie somewhere between technical assistance
(which should be awarded on the basis of skill and
experience) and a lease (which should be awarded on the
basis of price). It is too early to say whether management
contracts can evolve into a more high-powered form of
private participation like a concession. But the early
operational results are very positive, and the experience
sheds light on when a management contract is the right
choice, how it should be designed to introduce the right
incentives for the contractor and the public
representatives, and what steps to take in awarding it. |
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