EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf
EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf
EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf
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7.2.2 Choose an Appropriate Reform Option<br />
<strong>The</strong> organizational structure through which infrastructure services are provided can<br />
have a critical effect on the efficiency of provision. Table 7.1 highlights the key<br />
features of the entities responsible for providing infrastructure services. <strong>The</strong>y are<br />
presented in order of government involvement, ranging from complete government<br />
control and involvement on the far left, to private control and ownership, in the far<br />
right column.<br />
Table 7.1: Distinguishing Between <strong>Infrastructure</strong> Providers<br />
Feature<br />
Government<br />
Department<br />
Public<br />
Corporation<br />
Corporatized<br />
Company<br />
Private Sector<br />
Participation<br />
Private<br />
Company<br />
Legal Basis<br />
Public finance<br />
and/or state<br />
sector<br />
legislation<br />
Special Statute<br />
Incorporated<br />
under company<br />
law<br />
PSP Contract<br />
Incorporated<br />
under company<br />
law<br />
Entity<br />
Ownership<br />
Government Government Government Government Private<br />
Assets &<br />
Operations<br />
Ownership<br />
Government Corporation Corporation Government<br />
or Private<br />
Private<br />
Governance<br />
Government<br />
Ministry<br />
Government<br />
appointed<br />
Board with<br />
objectives<br />
defined by<br />
Statute<br />
Government<br />
appointed<br />
Board with<br />
profit making<br />
objectives<br />
Board<br />
Privately<br />
appointed<br />
Board<br />
Senior Mgt<br />
Appointments<br />
Government<br />
Ministry<br />
Board<br />
Ministry may<br />
be involved<br />
Board<br />
Ministry may<br />
not be involved<br />
Board<br />
Board<br />
Revenue<br />
Source<br />
Government<br />
Budget<br />
allocation or<br />
user charges<br />
Charge<br />
customers for<br />
service<br />
Charge<br />
customers for<br />
service<br />
Charge<br />
customers for<br />
service<br />
Charge<br />
customers for<br />
service<br />
Source of<br />
Finance<br />
Budget<br />
Borrow from<br />
financial sector<br />
Borrow from<br />
financial sector<br />
Equity and<br />
debt<br />
Equity and<br />
debt<br />
Budget<br />
Management<br />
Manage<br />
budget<br />
allocation<br />
Responsible for<br />
managing own<br />
budget<br />
Responsible for<br />
managing own<br />
budget<br />
Responsible for<br />
managing own<br />
budget<br />
Responsible<br />
for managing<br />
own budget<br />
Financial<br />
Targets<br />
Source: Castalia<br />
None Cover costs Cover costs &<br />
make a return<br />
comparable to<br />
private<br />
businesses in<br />
the same sector<br />
Cover costs &<br />
make a return<br />
comparable to<br />
private<br />
businesses in<br />
the same sector<br />
Cover costs &<br />
make a return<br />
Each entity provides different incentives for performance. <strong>Infrastructure</strong> services in<br />
the <strong>Pacific</strong> have traditionally been provided by government departments. This has<br />
not always resulted in good performance. Many governments have already<br />
recognized this problem, and have embarked on sector reforms.<br />
Public corporations and corporatization are both examples of public sector reform.<br />
<strong>The</strong>y are discussed together under the heading ‘Public Sector Reform’ below. Private<br />
sector involvement lies between public sector reform and full privatization, and is<br />
discussed in a separate section. Competition is also discussed separately. While it is a<br />
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