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

different, some efficiency may be gained from coordinating tender preparation,
selection and contract monitoring activities across the sectors.
Outer islands development is another area that would benefit from infrastructure
coordination. Most Pacific countries have prioritized increasing infrastructure access
to outer islands, but utilities in each sector have individual universal access targets
and none of the utilities interviewed reported planning, prioritizing or implementing
expanded access to their services in conjunction with other utilities. It would also be
sensible to coordinate extending transport, electricity and water with plans for outer
island tourism, health or education development
5) Ineffective coordination between public and private sector roles and responsibilities: The private
sector needs to know what role the country’s government wants it to play. The policy
framework and the processes which flow from that framework need to be
transparent to allow it to respond properly. Lack of coordination in Pacific countries
reduces the effectiveness of private participation in infrastructure, if for no other
reason than private providers face considerable uncertainty. The implications of an
uncertain government policy framework are considerable. For example: the risk
premium built into pricing will be higher to cover the costs of getting things wrong;
there is likely to be more expensive litigation as providers try to get certainty through
the Courts (and this can be a problem in itself where the court system in a country is
weak); and considerable management time can be wasted on arguing with officials or
politicians about the meaning of an opaque government policy rather than
concentrating on improving the efficiency of the infrastructure business for the
benefit of consumers and taxpayers. This simply makes for low efficiency and higher
costs for consumers and the government.
The attempt to privatize Telikom PNG Ltd (Telikom) illustrates this point. The sale
has been embroiled in controversy since Telikom’s Board switched from negotiating
with Fiji Telecom, the preferred buyer, to Econet. Econet paid for 51% of the
company when the Telikom Board undertook to reassess the value of Telikom’s
assets without the knowledge of the government team, headed by the Independent
Public Business Corporation (IPBC), a body established to head the privatization
process. The Board justified this on the basis that proper due diligence had not been
carried out on Econet prior to finalizing the contract. This represents a loss of faith
in the privatization body and a breakdown in communication between it and the
Board. This has resulted in none of the bidders knowing which is preferred and all
parties uncertain whether bids and the final deal will hold.
6) Challenges for regional and national level coordination: A number of regional initiatives have
been proposed in the Pacific to help smaller countries overcome capacity and scale
issues, but some have stalled or implementation has been delayed, often due to
concerns about sovereignty or a lack of clarity on how individual country needs would
be met in practice.
For example, the Pacific Island Air Services Agreement (PIASA) is aimed at helping
to prepare Pacific countries for the gradual adoption of a region-wide ‘open skies’
regime. This has not yet eventuated due to some countries’ concerns that this will
erode the value of existing national carriers. More progress has been made on
developing the Pacific Aviation Safety Office (PASO) initiative. However, this
represents the end of a protracted process. The idea of a regional safety office was
originally proposed at a regional aviation conference in 1995.
The need for greater regional coordination is also being imposed from outside the
Pacific region in key areas. The demands of the US for countries exporting to the US
to meet minimum customs clearance standards for anti-terrorism purposes is just the
latest example where it would make considerable sense for small Pacific countries to
band together to achieve economies of scale. Hygiene standards for agricultural
exports to New Zealand and the EC are another example.
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