Abstract:
Development of new infrastructure, providing social services efficiently and effectively, and better targeting of services to those in most need, are critical to alleviate poverty and provide economic opportunities for the less fortunate. Reforms using "quasi- public" contracts, commercializing public agencies, contracting out specific services to the private sector, and transferring responsibility for providing services to the private sector would be better alternatives to leverage with private sector skills and resources.
Small-scale entrepreneurs and urban poor communities are the focus of this paper in developing a model as a feasible strategy of private sector financing of development and operation of water services for improved efficiency and reduced wastage. The case study on urban water supply at Halgahakumbura low-income settlement is developed using base data of various pilot studies of the National Water Supply and Drainage Board in the recent past and the recent initiative of 'Pro-poor Public-Private
Community Partnership' to provide an individual water connections in urban low income settlements.
The analysis shows that further subsidy is required to make the project viable. It is clear that in order to reap the maximum benefit to the economy as well as attracting competitive private service providers, the users should pay the full cost of service. If the social affordability level is inadequate, then the Government should complement user fees with a carefully targeted subsidy payment, ensuring the subsidy to those in most need.
