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Katharina Gassner, a senior economist at the World Bank, published recent global study on the impact of private sector participation (PSP) in water and electricity distribution. The study analyzed a sample of more than 1,200 public and privately run utilities. Results are reported in Does Private Sector Participation Improve Performance in Electricity and Water Distribution?, published in PPIAF's Trends and Policy Options series. Gassner, the main author, highlighted the book's main findings and messages (please see her PowerPoint presentation for detail).

The study’s data show that there are many facets to private sector participation in infrastructure, ranging from efficiency considerations to issues of political economy. The legal and contractual framework under which the private sector enters matters. Different types of PSP contracts imply different obligations for the private and public parties—and different degrees of managerial freedom. Different types of contracts also can be expected to lead to differences in the impact a private operator has on company performance. And, Gassner added, trade-offs between efficiency and employment objectives should be clearly understood from the beginning of a PSP program.

Gassner concluded by saying that we should concentrate on creating an environment for sustainable improvements in service delivery by clearly stating objectives and obligations for the different parties to contracts. The role of the government remains crucial even after the introduction of the private sector.