Characteristics of public–private partnerships for municipal wastewater treatment in Taiwan

Abstract

The Taiwan government promulgated the ‘Act for Promotion of Private Participation in Infrastructure Projects’, which preselected 13 types of major infrastructure projects, including wastewater treatment plants, to be funded and operated under the Public–Private partnership (PPP) model. In overcoming the constraints associated with traditional procurement, the PPP wastewater treatment plant (WTPPP) projects have been developed as a means of balancing the government's financial situation, while improving in wastewater treatment rate by utilizing the private sector's funding, innovations and technologies. Three WTPPP projects, namely Tamsui, Nanzih and Lodong, have been investigated in this article to highlight the characteristics of Taiwan's WTPPP in terms of project framework, payment mechanism, capital cost rate, risk allocation, tender approach and tax breaks. Incorporating household connection as the concessionaire's responsibility has been a unique characteristic of Taiwan's WTPPP. All the three projects are performing well, as is evident from an analysis of their construction schedules and quality, household connection numbers and financial situations. In this article, a more detailed discussion demonstrates different perspectives about contractual structure, bankability, milestone targets, repayment for household connections, incentive and responsibility and contract renegotiation. While three WTPPPs appear to be performing well in their early stages, success for these projects can be defined only over their entire concession periods. Continuous monitoring of these projects shall further verify whether they can keep performing to expectations.