EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf

More documents

Recommendations

Info

Figure A.10: Average Electricity Tariffs Average Tariffs (Residential and Commercial customers) (US cents per KwH) 35 30 25 20 15 10 5 0 New Zealand Palau FSM Marshall Islands Source: Castalia Source: Castalia Research, SOPAC Notes: PNG: Papua New Guinea, FSM: Federated States of Micronesia Fiji Jamaica St Kitts Timor Barbados Solomon Islands St Lucia Samoa Grenada Vanuatu Dominica Kiribati Tonga Pacific retail electricity tariffs are evenly interspersed among Caribbean comparator countries. Lower tariff Pacific countries can be partly explained by government subsidization. Primary Energy Sources In developing policy recommendations, it is important to start with an understanding of the extent to which high electricity costs are unavoidable, and the extent to which they could be lowered by adopting better policies. The type of primary energy available is a key determinant of cost which is not easily changed by better policies. Table A.2 below presents information on the primary energy sources for the generation of electricity. Table A.2: Source of Primary Energy for Electricity Generation Dominica FSM Fiji Grenada Jamaica Kiribati Marshall Islands New Zealand Palau PNG Samoa Solomon Islands Timor- Leste Tonga Vanuatu Hydro 45 3.7 53 41 2 63 37 0.5 Coal 4 Oil 55 96.3 44 100 98 99 99.5 100 n.a. 63 100 100 99.5 99.5 Gas 26 Other 3 1 0.5 0.5 Source: Country supplied data, SOPAC and Castalia The Influence of Fuel Price on Electricity Prices 41 Information is based on 2003 figures. In recent years the ratio of diesel to hydro generation has fluctuated widely – for example, from a low of 53% in 2003 to a high of 92 percent in 1994 reflecting the impact of drought years. Nevertheless, the trend has been for hydro to contribute a lower share as demand rises. 92
The predominance of oil fired electricity generation – mostly diesel – exposes the Pacific countries to the vagaries of the international oil market. Large variations exist between wholesale and retail prices of fuel in various Pacific countries. These go beyond the simple explanation of ‘small and remote markets’. For example: large volume markets in Papua New Guinea and New Caledonia have consistently reported up to 50% higher pre-tax wholesale prices than much smaller markets. Analysis of the pre-tax wholesale price of fuel (mogas, diesel and kerosene) for three periods in 2003 showed that there is a substantial and systematic fuel price premium, above that charged by efficient fuel suppliers to a reasonably efficient small, remote market, being extracted from the Pacific region. The aggregate value of this premium is calculated as being in excess of US$120 million annually. In the Pacific: Up to 80% of the costs of island utilities can be attributed to fuel costs and outer island fuel costs can be 200 – 400% higher than that of main islands Exclusive ownership of fuel import terminals by multi-national oil companies (MNOCs) results in higher fuel prices, whether they operate as monopolies or not MNOCs use fuel terminal ownership and the resulting barrier to entry for new suppliers to extract high returns from Pacific countries. They therefore have no incentive to enter price competition with small islands Periodic international tendering of fuel supply (made possible by independent or government ownership of at least one import fuel terminal) is an effective form of competition between MNOCs Fuel prices can be influenced by institutional arrangements. Data collected and reported bimonthly over a period of 2 years demonstrated that the pre-tax wholesale price of fuel in countries such as Vanuatu and Kiribati (which have no price regulation and ‘closed market’ monopoly suppliers respectively) are consistently as much as 100% higher than those found in Samoa or the Solomon Islands, which have an open market international tendering process and price regulation. Of the 11 Pacific countries reviewed, only Samoa has a national supply contract with a MNOC. It also has its own fuel terminal and can therefore change suppliers if it chooses. As such, Samoa has negotiated a favorable supply contract by sourcing the country’s total supply from one oil company. This benefit is reflected in diesel and petrol prices which are amongst the lowest in the Pacific region, before government taxes and levies are imposed. The Marshalls Energy Company owns its own fuel terminal and can therefore purchase fuel directly from MNOC suppliers. This contributes towards lower overall fuel prices. However, the Marshalls Energy Company does not supply fuel nationally. Economies of Scale The generation cost of electricity should benefit from economies of scale. Figure A11 sets out the relationship between average end user tariffs 42 and electricity production for most Pacific and comparator countries. It seems that size does have an impact on cost, but it is far from the most important factor. 42 It would be better to use cost rather than tariff in this analysis, but that data was not available 93
Page 2 and 3:
The Pacific Infrastructure Challeng
Page 4 and 5:
Table of Contents 1 Acronyms and Ab
Page 6 and 7:
Figure 8.4: Annual Per Capita Inves
Page 8 and 9:
Box 7.9: ECTEL - Regulatory Coopera
Page 10 and 11:
kWh MDG MIAA MIPA MNOC MOTCA MOU MP
Page 12 and 13:
2 Executive Summary This discussion
Page 14 and 15:
Fiscal, regulatory and policy decis
Page 16 and 17:
Figure 2.2: Estimated Annual Invest
Page 18 and 19:
3 What’s the Purpose of the Discu
Page 20 and 21:
Box 4.2: Improving Infrastructure f
Page 22 and 23:
5 How well are Pacific Countries Pe
Page 24 and 25:
Figure 5.1: Access to Electricity 1
Page 26 and 27:
Water tariffs are often too low In
Page 28 and 29:
Table 6.1 shows that in addition to
Page 30 and 31:
These characteristics mean that Pac
Page 32 and 33:
6.2 Challenges to Institutions and
Page 34 and 35:
6.2.2 Demographic Issues in the Reg
Page 36 and 37:
These high rural populations mean t
Page 38 and 39:
Figure 6.3: Comparison of Defining
Page 40 and 41:
Lack of legal and regulatory suppor
Page 42 and 43:
7 Challenge: How do we Lift Perform
Page 44 and 45:
7.1.2 Poor Policy Design and Coordi
Page 46 and 47:
different, some efficiency may be g
Page 48 and 49:
Figure 7.1: Accountability in Infra
Page 50 and 51: Box 7.3: Expert Panels can Improve
Page 52 and 53: Some of these reforms have already
Page 54 and 55: 7.2.2 Choose an Appropriate Reform
Page 56 and 57: Box 7.5: Public Sector Reforms in t
Page 58 and 59: Pacific countries, management salar
Page 60 and 61: There are three classic types of pr
Page 62 and 63: While private sector involvement ma
Page 64 and 65: Air services would also benefit fro
Page 66 and 67: 7.2.5 Regional Coordination One opt
Page 68 and 69: 8 What’s the Size of the Challeng
Page 70 and 71: Figure 8.3: Annual Per Capita Inves
Page 72 and 73: Figure 8.5: Mainlines Trend 0.600 N
Page 74 and 75: Figure 8.8: Annual Per Capita Inves
Page 76 and 77: Figure 8.11: Total Annual Per Capit
Page 78 and 79: 9 How do we meet the Challenge This
Page 80 and 81: Box 9.3: Can private sector involve
Page 82 and 83: Box 9.6: How can the public sector
Page 84 and 85: The proportion of mainline access a
Page 86 and 87: Box A.2: Introducing Telecommunicat
Page 88 and 89: Universal Access Universal access r
Page 90 and 91: good example of this. The Kiwi Shar
Page 92 and 93: Figure A.7: Reported Faults per 100
Page 94 and 95: Table A.1: Institutional Indicators
Page 96 and 97: and there have been calls to recons
Page 98 and 99: A.2 Electricity Sector Analysis A s
Page 102 and 103: Figure A.11: Economies of Scale in
Page 104 and 105: interest rate relief on a US$9m loa
Page 106 and 107: As Figure A.14 shows, Vanuatu perfo
Page 108 and 109: Table A.3: Industry Structure and G
Page 110 and 111: Regional Cooperation in Electricity
Page 112 and 113: A.3 Water and Sanitation Sector Ana
Page 114 and 115: Figure A.17: Availability of Water
Page 116 and 117: Figure A.20: Staff per 1000 Connect
Page 118 and 119: including full operating expenses a
Page 120 and 121: Corporatization is often employed t
Page 122 and 123: operating costs, collections levels
Page 124 and 125: Figure A.25: Road Network Density v
Page 126 and 127: Federated States of Micronesia at b
Page 128 and 129: In Samoa: Samoa’s Public Works De
Page 130 and 131: Many Pacific countries already outs
Page 132 and 133: 4. Domestic and Pacific Island serv
Page 134 and 135: Figure A.31: TEU Throughput Levels
Page 136 and 137: system reduces cargo handling effic
Page 138 and 139: Economies of Scale Port operations
Page 140 and 141: The landlord model is the most comm
Page 142 and 143: Fiji 84 Ports The Maritime and Port
Page 144 and 145: Apia Port has become one of the bes
Page 146 and 147: Kiribati 90 Ports The Kiribati Port
Page 148 and 149: In Shipping: Services are considere
Page 150 and 151:
Figure A.36: Total Passenger Throug
Page 152 and 153:
Airline Services Figure A.38 illust
Page 154 and 155:
establishment period. For the offic
Page 156 and 157:
Vanuatu 101 Airports Vanuatu Limite
Page 158 and 159:
Samoa 104 The Samoa Airport Authori
Page 160 and 161:
Institutional Arrangements in Aviat
Page 162 and 163:
Summary of Aviation Analysis The Pa
Page 164 and 165:
Fiji Kiribati Marshall Islands Micr
Page 166 and 167:
Barbados Dominica Grenada Jamaica M
Page 168 and 169:
Samoa Solomon Islands Timor-Leste T
Page 170 and 171:
Page 172 and 173:
Page 174 and 175:
Samoa Solomon Islands Timor-Leste T
Page 176 and 177:
Page 178 and 179:
Page 180 and 181:
“A-Z World Airports Online” www
show all

EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf

Create successful ePaper yourself

Delete template?

Save as template?