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

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interest rate relief on a US$9m loan. There is no overt tariff subsidy to FEA from the government: indeed, the requirement for FEA to meet the government’s policy of rural and social obligation electrification costs the company about US$20m a year. This cost is not yet met by the government as required by the Public Enterprise Act, but there is an agreement between the board and the government that no dividend is paid which acts to offset the financial cost of these cross-subsidies. The lessons learned from FEA reform are relevant to Pacific countries ... A significant part of the success of the FEA reforms has been a government willingness to let the new board operate as a strictly commercial entity, with a profit objective to provide for growth. The relationship between the government and the FEA is open for all to see. This transparency is key to involving private sector operators who require a credit worthy government owned organization with which to agree long term concession, and for the financial institutions which will be funding the US$285m in electricity investment projects forecast as necessary to meet demand growth over the next few years. where clear commercial objectives and transparency of government policy are essential ingredients of successful reform Looking ahead, there are questions about the ability of a vertically integrated, state owned, monopoly electricity institution like the FEA to maintain the continuous pressure to achieve better performance and deliver better service. The success of the FEA reforms owes a great deal to the drive and independence of the present chair of the board and the senior management. Their successors may not always have the same attributes. Nor is there any external influence from a competitive market or an independent regulator. These may well become issues for future policy consideration. Nevertheless, the FEA is an excellent case study of reform in an electricity sector. The focus the board and management has applied on reducing systems losses (including an active campaign on eliminating pilferage), involving private sector partners in the operation of generation assets, removing inefficiencies, increasing customer service standards, fully recovering costs in tariffs, and planning for future growth in demand is a model for needed reforms in other Pacific countries. Fiji provides an example of how the electricity sector can become a reliable and viable contributor to economic growth and social cohesiveness, rather than a drag on government budgets and society at large. Source: Castalia Interviews with FEA, September 2004 96
The overall picture on system loss is not encouraging as shown in Figure A.13. Most Pacific countries have system loss percentages well into double figures with the highest in FSM, Tonga and Samoa, where system losses are running above 17.5%. Vanuatu and Fiji show that it is possible to do much better than this. Figure A.13: System Loss 25 System Losses (% Gross Generation) 20 15 10 5 0 Vanuatu Barbados Fiji New Zealand St Lucia Marshall Islands Grenada Palau Kiribati Jamaica Tonga Samoa Dominica Timor Solomon Islands FSM Source: Meritec Report, country supplied data and Castalia Research Notes: FSM: Federated States of Micronesia Service Quality Quality of electricity service is measured by its reliability, and by the stability of frequency and voltage. Most utilities in the Pacific region do not collect data on frequency and voltage fluctuations in the grid, but we were able to get data on reliability for some countries, measured as hours of lost supply per customer per year. 97
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The Pacific Infrastructure Challeng
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Table of Contents 1 Acronyms and Ab
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Figure 8.4: Annual Per Capita Inves
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Box 7.9: ECTEL - Regulatory Coopera
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kWh MDG MIAA MIPA MNOC MOTCA MOU MP
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2 Executive Summary This discussion
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Fiscal, regulatory and policy decis
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Figure 2.2: Estimated Annual Invest
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3 What’s the Purpose of the Discu
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Box 4.2: Improving Infrastructure f
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5 How well are Pacific Countries Pe
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Figure 5.1: Access to Electricity 1
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Water tariffs are often too low In
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Table 6.1 shows that in addition to
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These characteristics mean that Pac
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6.2 Challenges to Institutions and
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6.2.2 Demographic Issues in the Reg
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These high rural populations mean t
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Figure 6.3: Comparison of Defining
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Lack of legal and regulatory suppor
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7 Challenge: How do we Lift Perform
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7.1.2 Poor Policy Design and Coordi
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different, some efficiency may be g
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Figure 7.1: Accountability in Infra
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Box 7.3: Expert Panels can Improve
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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 100 and 101: Figure A.10: Average Electricity Ta
Page 102 and 103: Figure A.11: Economies of Scale in
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
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establishment period. For the offic
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Vanuatu 101 Airports Vanuatu Limite
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Samoa 104 The Samoa Airport Authori
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Institutional Arrangements in Aviat
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Summary of Aviation Analysis The Pa
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Fiji Kiribati Marshall Islands Micr
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Barbados Dominica Grenada Jamaica M
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Samoa Solomon Islands Timor-Leste T
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Samoa Solomon Islands Timor-Leste T
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