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

Box 9.4: How extensive are the opportunities for competition in the Pacific region
There appear to be opportunities for competition in mobile and international
telephony and in internet service provision for example. Competition can help to
lower costs and improve service in countries that are large enough to support two
or more competing operators.
Countries like Fiji, Samoa, Vanuatu, Solomon Islands, Tonga or Papua New
Guinea can and do have competitive operators. However it has to be said that the
rules for the players are sometimes skewed in favor of the incumbent – often
government owned – operator. In the end, a PSP will not commit the investment in
new services or maintain existing services of the playing field is not level.
Competition in air services may help to encourage more choice and lower airfares,
but the potential is sensitive to the environment within the country seeking the air
services. For example, are landing fees and airport facilities adequate and fairly
priced
Where governments are concerned about continuity of service (particularly in
smaller, more remote countries), competitively bid contracts under which airlines
promise to service specified routes at specified frequencies in return for an agreed
subsidy, may be more effective and efficient than financing a loss making national
carrier.
Competitive environments can be simulated in natural monopoly sectors, such as
water and electricity distribution, by inviting private operators to bid for contracts
to provide service for a fixed term.
Box 9.5: How good are the oversight mechanisms in Pacific countries
In essence, most countries in the region have a lot to do to install open,
transparent and independent oversight mechanisms to ensure accountability.
Sector reforms will help to achieve separation between the service provider and the
governing authority, but this needs to be accompanied by open reporting to and
oversight processes by independent regulatory bodies or to Parliament where the
government is the service provider and implicit regulator.
Independent Boards with the responsibility to report openly, can oversee
management activities in public corporations or corporatized entities.
Where the private sector faces competition and consumers of infrastructure
services have real choice, it should not be necessary to have a specific sector
regulator beyond an anti-competitive agency to monitor and prosecute predatory
behavior. In small countries with human capacity and skills issues in being able to
provide these overview functions, there is a strong case for establishing region
wide overview capability. This is an issue which the Pacific Forum could explore
in depth across the sensitive infrastructure sectors like water, electricity
communications and international transport services.
Publicized performance benchmarking will help to encourage some accountability,
as will strong community involvement. Donors and multilateral lending agencies
can also help to encourage increased accountability.
73