Bahrain is taking no chances with its wastewater privatisation. With water-loss levels unacceptably high and the quality of treated water so poor that the agricultural sector refuses to use it for irrigation, it is clear the state-run utilities should be replaced.

The entry of the private sector will bring much-needed investment, technology and experience to improve standards.

There will be no shortage of interest from international developers. Because the Muharraq sewage treatment plant is the first part of the privatisation plan, the government has opted for a low-risk approach by guaranteeing the supply of effluent and the offtake of treated water.

This relieves the developer of much of the risk and ensures a steady stream of income, but it is not necessarily the most efficient system for the state in the long run.

In time, Manama will hope to invite companies to take control of the wastewater collection and distribution networks, thereby passing on market risk to the private sector.

The hope will also be that as efficiencies and services improve, domestic and industrial users will be more willing to pay more for their wastewater treatment.

Water privatisation in the region is gaining traction, with Saudi Arabia and Abu Dhabi already bringing in the private sector. If they can make the schemes work, more of the region will surely follow and perhaps take more risks earlier on.