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

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Water tariffs are often too low In many Pacific countries water tariffs are held below cost. Vanuatu and Papua New Guinea are exceptions to the rule. In these countries, the higher tariffs reflect a requirement to recover reasonable costs and to generate a return on investment. When tariffs are held below cost, operation efficiency and maintenance often suffer. Nonrevenue water is an important measure of efficiency. While water utilities in many developing countries are able to achieve levels of between 20 and 30% non-revenue water, Figure 5.3 shows that in the Pacific only Vanuatu (Port Vila) has achieved this level of performance. Figure 5.3: Non-Revenue Water 70% 60% Non-Revenue Water (%) 50% 40% 30% 20% 10% 0% Vanuatu St. Lucia PNG Marshall Islands Pohnpei (FSM) Yap (FSM) Kosrae (FSM) Dominica Kiribati Solomon Islands Fiji Samoa Jamaica Source: Castalia Interviews, Pacific Water Association 2001 Benchmarking Survey Notes: PNG: Papua New Guinea, FSM: Federated States of Micronesia There is room to improve efficiency and asset maintenance In the water and electricity sectors, Pacific countries have lower labor productivity levels than most comparator countries. They also have high distribution system losses, increasing the cost of service. In the past, government policies in Pacific countries have emphasized construction and extension of infrastructure over maintenance. As a result, road networks in many countries are in poor condition and some ports and airports have also been poorly maintained. 18
6 Why the Difference in Performance The preceding section showed that levels of infrastructure access, quality and efficiency vary between countries of a similar size and income level within the Pacific region itself, and relative to the comparator countries. There a re a number of possible reasons for the difference in performance. It is critically important to diagnose the problem correctly. It may be tempting to ascribe problems to the physical, social, and cultural features of the Pacific countries which are outside government control. However, an incorrect diagnosis would lead to poor policies. In this section we consider the different defining characteristics, such as population size, remoteness, or topography. Some of these characteristics make it more difficult to achieve good infrastructure performance, such as small scale, limited human resources or dependence on aid. We ask if these characteristics explain poor performance. We then look at the institutional and management arrangements which influence infrastructure performance. Strong institutions can help small dispersed communities to improve performance despite any natural disadvantages. We ask to what extent weak institutions explain poor outcomes. 6.1 The Pacific Context Pacific nations are relatively poor. Figure 6.1 shows that they have lower levels of income per capita than almost all comparator countries. Figure 6.1: GNI per Capita (Atlas Method) GNI per capita (Atlas - current US$) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Source: World Development Indicators 2003 Timor-Leste Papua NewGuinea Solomon Islands Kiribati Philippines Vanuatu Samoa Tonga Micronesia, Fed. Sts. Fiji Marshall Islands Jamaica Dominica Grenada St. Lucia Mauritius St. Kitts and Nevis Barbados 19
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 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 72 and 73: Figure 8.5: Mainlines Trend 0.600 N
Page 76 and 77:
Figure 8.11: Total Annual Per Capit
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9 How do we meet the Challenge This
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Box 9.3: Can private sector involve
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Box 9.6: How can the public sector
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The proportion of mainline access a
Page 86 and 87:
Box A.2: Introducing Telecommunicat
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Universal Access Universal access r
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good example of this. The Kiwi Shar
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Figure A.7: Reported Faults per 100
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Table A.1: Institutional Indicators
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and there have been calls to recons
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A.2 Electricity Sector Analysis A s
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Figure A.10: Average Electricity Ta
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Figure A.11: Economies of Scale in
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interest rate relief on a US$9m loa
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As Figure A.14 shows, Vanuatu perfo
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Table A.3: Industry Structure and G
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Regional Cooperation in Electricity
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A.3 Water and Sanitation Sector Ana
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Figure A.17: Availability of Water
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Figure A.20: Staff per 1000 Connect
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including full operating expenses a
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Corporatization is often employed t
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operating costs, collections levels
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Figure A.25: Road Network Density v
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Federated States of Micronesia at b
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In Samoa: Samoa’s Public Works De
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Many Pacific countries already outs
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4. Domestic and Pacific Island serv
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Figure A.31: TEU Throughput Levels
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system reduces cargo handling effic
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Economies of Scale Port operations
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The landlord model is the most comm
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Fiji 84 Ports The Maritime and Port
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Apia Port has become one of the bes
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Kiribati 90 Ports The Kiribati Port
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In Shipping: Services are considere
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Figure A.36: Total Passenger Throug
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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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