Download Making Part F work Transpower Discussion 14 February 2003

Water and Sanitation Review
NORTH
T (33) 1 45 27 24 55
F (33) 1 45 20 17 69
Prepared for Bali Workshop
7 Rue Claude Chahu
PARIS 75116
France
Infrastructure in East Asia and Pacific – the Way
Forward
------------- www.castalia.fr
David Ehrhardt
SOUTH
T: +64 (4) 913 2800
F: +64 (4) 913 2808
28 June 2004
Level 2, 88 The Terrace
WELLINGTON
New Zealand
Copyright Castalia. All rights reserved. Castalia is not liable for any loss caused by reliance on this document. Castalia refers to members of the
worldwide Castalia Advisory Group and its staff
Outline
Service vs. GDP
Performance Review - is there a
problem?
Improvement vs. other sectors
Improvement vs. goals
Investment Needs
Past investment levels
Service standards, Tariffs, Subsidies,
Efficiency
Biggest problem : cost recovery
Institutional change to lock-in good
incentives
Financial Intermediation
Arrangements
1
Access to Improved Water vs. GDP per capita
Tonga
Samoa
Access to improved water source - % of population
100
90
Vanuatu
Philippines
70
60
Thailand
Indonesia
China
Solomon Islands
80 Vietnam
Mongolia
50
Kiribati
Fiji
40
Papua New Guinea
Lao PDR
30
Cambodia
20
10
-
500
1,000
1,500
2,000
2,500
3,000
GDP per capita
2
3,500
4,000
4,500
5,000
Annual average percentage changes in income, teledensity and access to improved water
GDP per Capita
9.00%
Annual average % change 1999-2000
8.00%
7.00%
6.00%
5.00%
4.00%
Total Fixed and Mobile
Phones-lines per capita
3.00%
2.00%
Improved water access
1.00%
0.00%
Philippines
Thailand
Vietnam
-1.00%
3
China
Investment needs (to 2015) vs. Historic actuals (1990-2000) (US$/person/year)
5.00
4.50
Investment (US$/capita/year)
4.00
Estimated Investment Need to
Meed MDGs
3.50
3.00
2.50
2.00
Estimated Private Direct
investment
1.50
1.00
Estimated Public & ODA
investment
0.50
Cambodia
China
Indonesia Philippines
4
Vietnam
an
d
al
es
5
M
in
h
ne
pu
r
an
ila
hi
M
Lu
m
C
Ku
al
a
Ho
Vi
en
tia
Ul
aa
nb
aa
ta
r
Sh
an
gh
ai
Ja
ka
rta
0.60
Ch
en
gd
u
Pe
nh
W
Ph
no
m
En
gl
an
d
Working ratio (Operating Revenue / Operating Expenses)
Ratio of operating expenses to revenue
1.60
1.40
1.20
1.00
0.80
y=1.00
0.40
0.20
-
Cost recovery through getting service standards, tariffs and subsidies right
Efficiency
Cost of Service
Service
Standards
Subsidies
Is the bundle
of services,
tariffs,
subsidies
right?
Customer
Tariffs
Lock In
6
Social and
Environmental
Priorities
Locking in Good Incentives through Good Institutions
Public
Services
Politicians
(Minister / Mayor)
Utility
Inform, Involve,
Consult
Explain the trade-offs
Link good service to
good politics
Commercialize,
corporatize
Contract with private
operator to lock in
autonomy, subsidy,
tariff rules
7
Conclusions
 Section is under-preforming against other sectors and MDGs
 Meeting MDGs requires US$6.3 billion investment per year – twice current levels
(but only US$3.50 per person per year)
 Biggest barrier to good service and investment is lack of cost recovery
 Achieving cost recovery requires:
-
Consistent, appropriate package of service standards / tariffs / subsidies
Institutional reforms to create informed consumers, accountable politicians,
efficient utilities and reliable tariff and subsidy rules
8
Financial intermediation for the water and sanitation sector
Public
Utilities
Public –
Private
Partnerships
Municipal
Government
Private
utilities
Customers
Banks
Central
Government
Financeable Projects
(US$ 8 trillion)
Private Sector Savings
Bond
Markets
Specialized
intermediaries
Taxpayers
9