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

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In Samoa: Samoa’s Public Works Department has been through significant reforms since 2002. The principle reforms included: significantly reducing staff numbers within the department, outsourcing all road construction and maintenance activities to private operators, and privatizing selected assets. The reforms resulted in the amalgamation of the Public Works Department and the Ministry of Transport, to create the Ministry of Works, Transport and Infrastructure (MWTI) in 2003 The former Ministry of Works had limited regulatory powers and limited ability to generate revenue. It has also been funded by domestic budget allocations in the past. MWTI has outsourced road maintenance and construction services as part of these reforms. Outsourcing has led to the establishment of a number of new private engineering companies, including Samoa Works Engineering which has been awarded the contract for maintenance in Apia 62 An increase in fuel charges with an explicit percentage directed to roads, has been recommended as a priority to ensure that the provision of roads can be accounted for on a commercial basis 63 . This has yet to be implemented The MWTI incorporates all of the activities of the former Ministries of Transport and Works. It is responsible, through the Transport Control Board, for regulating land public passenger transport activities carried out by the private sector. The Transport Control Board generates sufficient revenue from vehicle inspection and licensing activities and funding for any expenditure is allocated to this area from the Government budget. It is not yet clear how much the recent shift to increased outsourcing will impact the cost of undertaking road construction and maintenance work, but costs are reputed to be more explicit under this new model 64 Since road sector reforms have only recently been introduced in Samoa, there is little statistics evidence to support a ‘before and after’ comparison. However, anecdotal evidence suggests that outsourcing has resulted in improved efficiency and more responsive asset management services 65 . These experiences highlight some key drivers of success including: Establishing policies which recognize the importance of road operation and maintenance Linking maintenance with road design contracts Contracting out maintenance work to the private sector Implementing road user charges Creating a single transport authority. 62 Samoa Transport Sector Review, Draft Final Report, World Bank 2004 63 Ibid 64 Ibid 65 Ibid 120
Other Pacific countries (Vanuatu and Marshall Islands) have undergone a similar policy shift. In Vanuatu, several road construction projects have been under-taken in the past five years without adequate economic justification. The result is that many of these roads are unlikely to result in the expected economic or social return on investment, while much needed upgrades for major urban roads in Port Vila and Luganville have been slow 66 . In countries like Papua New Guinea where the road network is still fragmented and sparse, operation and maintenance is still critical, but road construction remains equally important. Contracting Road maintenance contracts are traditionally designed on a per unit basis for a short term assignment, rather than on the quality of output 67 . For example, contractors are paid per pothole fixed in a road, per kilometer of litter removal or lane striping or per hour worked on a particular stretch of road. When paid on this basis, it is in the best interests of the contractor if there are more potholes to fix, for example. They therefore have less incentive to do quality work and contract supervision processes are often not adequate to ensure quality. Internationally, performance based contracts have become more common. Under performance based contracts, success is defined by the achievement of certain minimum performance standards. Payment is based on achievement at different milestones with bonus rewards for good performance and penalties for poor performance. In this scenario, the risk is transferred to the contractor. Long term performance based contracts have been used with some success in New Zealand where almost all roadwork has been outsourced in the past ten years. The New Zealand government has developed a 10-year maintenance contract called a “performance specified management contract”. Under this contract, the contractor takes total responsibility for delivering pre-agreed service levels. Regular audits are carried out to determine compliance. These contracts have amounted to savings of around 20% and have substantially improved services 68 . Outsourcing may not work for all road sectors in Pacific countries. The experience in Vanuatu has been that private contractors are reluctant to maintain remote roads 69 . This could suggest that private sector involvement may not be possible in some of the smaller, more dispersed Pacific Islands and in remote areas of bigger countries. However, the Ministry of Works in Fiji noted that private contractors are just as interested in tendering for the maintenance of remote roads, as they have been for primary highways. If there is a lack of interest in remote and rural roads, the solution may be to increase the value and profitability of these contracts and impose penalties for not doing this work to a certain standard. This may be more attractive to private operators, while safeguarding a certain standard of work. 66 Vanuatu Infrastructure Master Plan Development Framework, Republic of Vanuatu, February 2002 67 “Contracting for Road and Highway Maintenance” Reason Public Policy Institute, March 2003. Interviews with Ministries of Works in Fiji and Samoa confirmed that this is the basis on which outsourcing occurs 68 “In the last 11 years the actual maintenance cost has remained nearly the same in real dollars, yet traffic volumes have increased by 52% and accident rates have decreased by 45%” Robin Dunlap of Transit New Zealand quoted in Contracting for Road and Highway Maintenance” Reason Public Policy Institute, March 2003 69 Vanuatu Infrastructure Master Plan Development Framework, Republic of Vanuatu, February 2002 121
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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 8.5: Mainlines Trend 0.600 N
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Figure 8.11: Total Annual Per Capit
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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 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 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 172 and 173: Barbados Dominica Grenada Jamaica M
Page 174 and 175: Samoa Solomon Islands Timor-Leste T
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Barbados Dominica Grenada Jamaica M
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“A-Z World Airports Online” www
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