Water and sanitation services, which qualify as essential public services, need to be regulated from an economic, environmental and public health standpoint.
AFD, within the framework of its research program on PPPs, has worked on theoretical approaches and institutional models for regulation. One of the interesting issues identified for research work is the regulation of Small-Scale Independent Providers, which have emerged in a spontaneous manner or have been promoted by public authorities over the past few years.
The question of how to oversee these initiatives without hampering their innovation potential has been studied by AFD and GRET through a common research and capitalisation program on Small-Scale Independent Providers in the water sector. The present paper, which fits in this collaboration, is a practical case study on how Laotian authorities, with GRET assistance, have recently developed an innovative regulatory framework for PPP contracts signed with small entrepreneurs, in parallel with the more classic regulation of State-owned water enterprises. The paper focuses on identifying the main functions of water supply regulation and analyses the choices that have been made so far in this regulatory process, which is still under development.