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

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Figure 7.1: Accountability in Infrastructure Services Provision Monopoly Environment Competitive Environment Government • Ownership • Contract • Regulation Political accountability Infrastructure Competition Service Provider • Payment for Services • Regulation Consumers Competition Competing Infrastructure Service Providers Source: Castalia Poor accountability has contributed towards poor infrastructure provision in Pacific countries. Pacific countries have few institutional arrangements or governance processes that encourage accountability in a transparent manner. In general there is very little competition for services, in part because of size and geography, but also because the underlying infrastructure policy design is poor. Papua New Guinea and Samoa have competition in Internet Service Provision, and Tonga has a duopoly in mobile telecommunications. Samoa and Lae and Port Moresby ports in Papua New Guinea have competing port service providers and airport terminal services at Port Vila in Vanuatu and Koror in Palau are procured competitively. The absence of competing service providers means that effective oversight mechanisms are essential to ensure monopoly providers operate efficiently, to price effectively and in a sustainable way, and to extend services. However, most infrastructure services are provided and sanctioned by the same entity, the government. Government departments are often financially constrained, inefficient and have limited specialist or technical human resources capacity. They also have little control over investment decisions and staffing. This is a weak model for accountability and has failed to provide incentives for good performance. For example in Fiji, the Ministry of Public Works Department is responsible for providing water and sewerage services. The utility has no control over its budget, and the existing allocations from Government do not allow for system improvements and general maintenance. The utility’s performance has been poor on most indicators, and worse than that of countries with fewer natural, financial and human resources. Where there is lack of accountability and transparency in ownership structures, the problem is sometimes compounded by weak Court systems that provide little protection for infrastructure investors and operators. An important feature of any framework to allow infrastructure assets to be managed for the benefit of consumers and investors/operators, is access to truly independent courts which can protect contractual arrangements or interpret the law affecting infrastructure transparently and independent of any political or bureaucratic influence. Some progress has been made in some Pacific nations where judges operating at Superior Court level are appointed from outside of the country. These judges bring 40
the independence and knowledge levels from other jurisdictions, and are not susceptible to the predations of political or other interference. This is a very useful example of regional coordination which is a crucial element of establishing the right framework for infrastructure investment. Donors should also conform to an accountability framework. The lack of focus on creating sustainable investment in infrastructure discussed in the preceding section is driven in part by donor policies that have not encouraged accountability. Many donor agencies concentrate their programs on providing capital for new infrastructure, with an understanding that governments will make adequate provision in the annual budgets, or set up regulatory conditions which require full cost recovery (with or without subsidy) including adequate provision for depreciation and maintenance. All too often, this has not happened, with the result that infrastructure projects are not funded on a sustainable basis. While the original investment may be properly funded (which it usually is via donors), too often financial provision is not made for long term replacement of the assets through proper pricing and maintenance of the underlying assets. Thus often donor-driven funding to the Pacific has sometimes created unintentional distortions by fostering the perception that capital is a ‘free good’ for the purchase of infrastructure investment. This runs the risk of creating the reaction from governments that the infrastructure can simply be run down over time to be replaced again in the future by further donor assistance. This sort of policy regime creates the wrong incentives for Pacific governments to invest wisely. Neither does it promote the most efficient use of infrastructure investment assets, where consumers should have to face realistic long term infrastructure prices. Alternatively, if prices are held below this level, then subsidies should be made explicit for the donors, the operators of the infrastructure assets, the government, the consumers and taxpayers to see. While these unintentional distortions by donor infrastructure policies are features of poor outcomes, in the end failure occurs because of the poor policy framework within which infrastructure investment works. The responsibility for good design is not the donors’ prime responsibility: It is the responsibility of respective governments which avail themselves of the capital for investment provided by donors. 41
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 26 and 27: Water tariffs are often too low In
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 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
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
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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
Page 112 and 113:
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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Page 178 and 179:
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“A-Z World Airports Online” www
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