PPES/HG-V [private participation in environmental services] : global impact review

Although USAID's decision to end the program 2 years early and reduce HG funds makes evaluation complicated, results were generally positive, with a remarkable evolution in Tunisia in the acceptance and the use of the private sector in the provision of environmental services. Achievements under the four objectives of the "Planning Action and Cooperation Timetable (PACT)" were as follows: Under the first PACT objective, to increase private sector provision of environmental services, progress has been made in the area of solid waste collection and wastewater services, and pilot projects are underway in solid and liquid waste management services. Progress in land development and landfills has been slower, with the most complex project being the El-Matar pilot project. Under the second PACT objective, to strengthen private sector finance of environmental services, progress has been made in reducing subsidies to the Office National de l'Assainissement (ONAS) for operational costs and increasing wastewater tariffs, a new fiscal code for local authorities has made user fees more transparent and authorized periodic increases in tax rates, and two new government funds -- Fonds de Depollution (FODEP), a grant fund, and Fonds de Credits Environnementaux (FOCRED), a subsidized revolving loan fund -- have been very helpful in encouraging the private finance of solid waste collection. The program also assisted in preparing Tunisia's first Build, Operate, Transfer (BOT) project in wastewater treatment, which should significantly increase private sector finance. Finally, the El-Matar land development project is based on a model of private financing of land development through cost recovery from beneficiaries. However, much remains to be done under this objective -- 4 years is not long enough to develop the new financial instruments needed to increase private sector finance, efforts to increase private finance vary from sector to sector, and studies of the potential role of the private sector in financing urban environmental services and land development are only now being completed. In the third PACT objective, to improve the public sector capacity to manage enhanced private sector participation, progress has been made. Starting from a base of 0%, it appears likely that 10% of ONAS activities will be contracted with the private sector by 2001, a period of only 8 years. However, ONAS may be reluctant to push the 10% barrier and may pursue pilot activities on a regional level to determine the feasibility of private sector finance outside of Tunis. The structure for land management has not yet to been finalized, although creation of a solid waste department at Agence Nationale de Protection de l'Environnement (ANPE) is an important step. The movement from private sector management contracts to private ownership will be difficult; the question of management structure must be resolved quickly, since it is a condition for going forward with the World Bank's Second Municipal Development Project. Although the objective did not call for strengthening the private sector itself, the program, by including private sector representatives in some activities, resulted in the creation of new opportunities and companies. Tunisian consulting firms were successfully used and thereby strengthened. The fourth PACT objective, aimed at sensitizing the general public to urban environmental issues through NGOs and micro-pilot projects, was not so successful; NGOs are relatively weak in Tunisia and are therefore not well suited to providing the kind of support that the government was seeking. This situation may be slowly improving. In terms of sustainability, under the first objective, only activities concerning the collection of solid waste and the operation and maintenance of urban wastewater networks are sustainable. With regard to the other three objectives, efforts in community participation and greater private sector financial participation are not yet sustainable, and the strengthening of public sector institutions to manage the private sector varies depending upon which public sector institution and which function is being discussed. The main issue, it should be noted, does not, for the most part, involve either private sector technical competence or public sector political will, but rather the creation of a proper institutional framework and policies that will permit the private sector to operate profitably and convince public sector organizations that they have something to gain from collaborating with the private sector. Contains numerous lessons learned.