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

eform option, we do not discuss privatization in detail, although we touch on
private sector service provision under the heading of competition.
The institutional challenges differ along the continuum of organizational options. For
example, smaller countries with strong informal tribal governance arrangements may
find it more difficult to implement high quality corporatization and State Owned
Enterprise models, since this requires clear separation of roles of government
appointed Boards (which should pursue commercial objectives), and the government
itself, pursuing a wide range of policy targets. Privatization and PSP contracts are
better able to achieve the required arms-length separation in these settings. On the
other hand, arrangements involving the private sector require high levels of skill for
effective regulation.
When selecting a reform option, governments will need to think carefully about the
whether the chosen approach is applicable to improving service to rural and remote
areas as well as urban areas. In assessing reform options for rural areas, governments
will need to analyze affordability and willingness to pay for services. It is likely that a
different approach or even a different mix of services from those offered in urban
centers may be more appropriate.
Public Sector Reform
Most Pacific governments have initiated public sector reforms to address poor
infrastructure sector performance. This has delivered mixed results.
Corporatization has been implemented in some Pacific countries and, where
effectively implemented, has increased efficiency and revenue for operations and
maintenance in various sectors. Corporatization has worked well with the PNG
Water Board, in electricity supply in Fiji (see Box 7.5) and in the Samoa Ports
Authority. However, in the water sector in Fiji, failure to achieve true separation
from government by appointing a strong independent Board and management team,
contributed to failed reforms.
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