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

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operating costs, collections levels and service quality were low, and there was little investment capital available. The Government let a concession contract in 1994 which allowed UNELCO (the existing privately-owned electricity operator) to supply water and electricity services to Port Vila for a period of 40 years. Under this contract, all management, operating and investment functions are delegated to the concessionaire. Asset ownership and contract performance monitoring is controlled by the Government based on periodic technical and financial reports. Under this concession, UNELCO is required to guarantee quality, quantity and continuity of service and incurs penalties for non-compliance. The concession has been operating for ten years. In this time, it has delivered significant service benefits including 52 : service continuity for 24 hours a day, reductions in non-revenue water, and network expansion. Annual losses of US$440,000 in 1991 were transformed into a reported surplus of US$12,000 in 2000. Private sector involvement via a concession has also been implemented in the Port Moresby water utility ‘Eda Ranu’ in Papua New Guinea. Until 1996, Port Moresby’s water services were provided by the National Capital District Commission, the local government for the National Capital District region. In 1996, Eda Ranu was formed on the basis of a 22 year BOT contract. JC-KRTA, a Malaysian company, was engaged to maintain and operate the water and sewerage network in the capital city in conjunction with a government owned company called Water and Sewerage Pty Ltd. We were unable to collect detailed benchmarking information from this utility for comparative purposes, but some reports suggest that this has been less successful. Problems in the tender process, and a flawed contract, which gave the private operator responsibility for the supply, but not the distribution side of the water system, have been noted as some of the reasons behind poor performance. For example, under the contract, the private operator is not responsible for leaks, illegal connections, low water pressure or water shortages. This provides few incentives for good quality service delivery. Regulation: There are no independent regulatory authorities for the water and sanitation sector in the Pacific and any oversight or monitoring functions are performed by the Government Ministry responsible for the water sector, if at all. With the exception of Papua New Guinea Water Board and Vanuatu’s UNELCO, tariffs do not cover the utilities’ operating costs. Where the utility is run by a private operator under a concession contract, contract monitoring is key. This requires legal, financial and engineering skills. Although it is possible for Governments to oversee the contract monitoring function, smaller countries may not have the specialist resources or capacity in-house. One solution to this issue is to create a small specialist contract monitoring unit, as a separate legal entity outside of the Ministry, whose task it is to enforce contracts. Additional specialist analytic capability could be contracted in from regional firms to complement permanent staff when workload or expertise requirements exceed the norm. Alternatively, a regional regulatory body could be considered. 52 “A Case Study of the Privatisation of Port Vila”, John Chaniel, UNELCO Vanuatu Ltd; “Infrastructure Regulatory Review for Government of Vanuatu”, Castalia, July 2004 114
Output Based Subsidies: For social and political reasons, it is often necessary to hold tariffs below cost. In such cases, it is important that this is done explicitly, and that a subsidy is provided which, together with tariffs, allows the utility to recover its costs. Subsidy provision should not come at the cost of accountability. One solution to this is for governments to pay the subsidy on an output basis. That is, the subsidy should be paid per unit of water supplied or customer connected, thereby ensuring that there are still incentives for the utility to operate efficiently. Output based aid mechanisms are discussed further in Box 7.6. A.5 Roads Sector Analysis Road networks in the Pacific are government owned, as in most countries. In the past, projects, policies and funding for road construction have taken priority over road maintenance and operations in Pacific countries, contributing to poor road quality. Because of this, in recent years, policy emphasis has shifted from road network extension to upgrading, maintaining and improving road management efficiency. A.1.5 Benchmarking This section compares the performance of Pacific countries against the indicators of road coverage and road quality. Road Coverage The adequacy of a road network is evaluated by the extent to which it connects key communities throughout the country and whether it can accommodate existing and expected levels of traffic. Figure A.24: Road Network Density Roads (km)/Land area ( Sq. km) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 - PNG Solomon Islands Vanuatu Palau Fiji Timor Samoa New Zealand Marshall I. FSM Philippines Kiribati Tonga Mauritius Jamaica St. Lucia Barbados Source: Road km data from CIA World Fact Book, land area figures are from WDI database (latest data) Notes: PNG: Papua New Guinea, FSM: Federated States of Micronesia Figure A.32 compares the density of the road networks in Pacific and comparator countries by dividing the total kilometers of road in each country by that country’s total land area. Road networks are strongly influenced by the geography and topology of a country. They are also influenced by population density. Figure compares road network density with population density in Pacific and comparator countries. The trend line illustrates the expected relationship between the two. 115
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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
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7.2.2 Choose an Appropriate Reform
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Box 7.5: Public Sector Reforms in t
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Pacific countries, management salar
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There are three classic types of pr
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While private sector involvement ma
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Air services would also benefit fro
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7.2.5 Regional Coordination One opt
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8 What’s the Size of the Challeng
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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 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 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: 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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Fiji Kiribati Marshall Islands Micr
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Barbados Dominica Grenada Jamaica M
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“A-Z World Airports Online” www
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