Concessions in the water sector

Directive 93/38 EEC coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, the so-called public procurement Directive, covers public works, supplies and services. The Directive, however, does not cover concessions but when the Council of Ministers adopted the Directive he also asked the European Commission to undertake a study on the different systems of concessions in the European Union. The European Commission has now issued a draft interpretative communication on concessions under Community law on public contracts. This communication will probably be the start for the European Commission to propose to harmonize Community legislation on concessions. The European Commission is also preparing the next multilateral round of World Trade Organization Services negotiations due to start in the year 2000; the common objective of these negotiations is a worldwide liberalisation of trade in services and a.o. environmental services. Finally new EU legislation on water quality will need for private financing for large-scale infrastructure projects and these different initiatives of the European Union brings us to the conclusion that the water sector will be progressively liberalized and that the private sector will be much more involved in the future in the supply of drinking water and the treatment of waste water.

The World Bank foresees that in the next 10 years more than 600 billion dollars will be needed to provide the world population with drinking water of good quality; the World Bank gives loans to countries presenting managing plans for the development of their drinking water supply but favours plans involving the private sector. In a report to the General Assembly of the United Nations on available water resources it is stressed that the supply of drinking water should be more market oriented and that water is a product the price of which should be fixed according to demand and supply of available resources. The next round of services negotiations under the World Trade Organisation will favour the transition from public monopolies to a liberalised market with the example of other sectors in mind. Liberalisation and deregulation are considered as an opportunity for the development of companies and as European companies are leading the way in the environment sector, it is predictable that the European Commission will promote a world-wide liberalisation of trade in environmental services. In the European Union public authorities in Member States are already increasingly calling on the private sector to provide public services on their behalf using various procedures and on a variety of scales.