Jordan Schwartz

Small-Scale Private Service Providers of Water Supply and Electricity: A Review of Incidence, Structure, Pricing, and Operating Characteristics

This paper summarizes the key findings and conclusions of a literature review of small-scale private service providers (SPSPs) of water supply and electricity conducted over a six-month period in 2003. It draws on more than 400 documents-including journals, articles, reports, case studies and project reports-which have been disaggregated and referenced in a publicly available database. SPSPs appear most prevalent in countries with low coverage levels, ineffective public utilities that provide inadequate or partial services, and remote, difficult-to-access regions. SPSPs are especially prevalent in post-conflict countries and others with weak or failed states. Of the countries for which evidence of SPSPs was available, at least half fall into this category. SPSP provision of networked services appears to be significantly higher for electricity than for water supply. Most SPSPs identified through the literature are single-purpose entities established for the express purpose of delivering water supply or electricity. SPSPs take a variety of organizational forms, both for-profit and non-profit. As such, they are established for a variety of reasons, including: to meet consumer demand, respond to crises, or as part of larger business ventures. The technology used may extend upstream from distribution services to the means for producing or generating water supply or electricity, so capital needs vary accordingly. The majority of SPSPs have fewer than 50 employees and usually fewer than 10. A lack of affordable financing is a constraint for most SPSPs, which fund investments mainly through their own earnings and savings, loans from friends and family, and money borrowed from formal and informal lenders.

Corporate Governance of State-Owned Enterprises

vi ABSTRACT Following a plethora of scandals in both the public and private sectors, corporate governance has become the subject of contentious debates in the public domain over the past decade As a result, codes of good practice in the form of Cadbury, Greenbury, Turnbul, Hempel, Higgs, Sarbanes-Oxley Act (SOX) and Bosch Commission were ushered in different parts of Europe, Australia and the United States of America (USA). In South Africa, the King Commission on Corporate Governance was developed and subsequently modified for State Owned Enterprises (SOEs). Despite the progress noted, the SOEs environment remains in distress as boards and management struggle to maintain a balance between legislative compliance and performance. It is in the latter context that the study was inspired by the boards of the South African Broadcasting Corporation (SABC) and the Electricity Supply Commission (Eskom) respectively struggle to actualise sound corporate governance practices in order to deliver shareholder value. As part of the qualitative research approach, primary data collection was conducted by means of comprehensive face-to-face interviews with board members and senior management at the two above-mentioned organisations. In total, 30 (thirty) board members and senior managers were interviewed. In addition, secondary data was collected in the form of records, strategy reports, business plans, and memos written to participants. In analysing qualitative interview data, the study utilised content analysis and cross-case analysis methods, on whose basis five themes were derived, namely: legislation and regulations; the interface between board and management; the role of the board in strategy development; performance monitoring of the board; as well as the organisational funding model. The findings of the study include: fragmented and convoluted legislation; blurring of lines between management and governance; a weak board performance monitoring culture; unclear prioritization of social policy agenda, and inadequate funding to support social policy programmes, such as infrastructure. The policy reviews create leadership instability and accentuate distrust between boards and senior managers. This study further emphasizes limitations of the theoretical frameworks underpinning corporate governance in SOEs, and also advances detailed understanding of the corporate governance issues facing SOEs.

Crisis in Latin America: infrastructure investment, employment and the expectations of stimulus

Infrastructure investment is a central part of the stimulus plans of the Latin American and the Caribbean (LAC) region as it confronts the growing financial crisis. This article estimates the potential effects on direct, indirect and induced employment for different types of infrastructure projects with LAC-specific variables. The analysis finds that the direct and indirect short-term employment generation potential of infrastructure capital investment projects may be considerable—averaging around 40,000 annual jobs per US

Uncovering the Drivers of Utility Performance : Lessons from Latin America and the Caribbean on the Role of the Private Sector, Regulation, and Governance in the Power, Water, and Telecommunication Sectors

1billion in LAC, depending upon such variables as the mix of sub-sectors in the investment programme; the technologies deployed; local wages for skilled and unskilled labour; and the degrees of leakages to imported inputs. While these numbers do not account for a substitution effect, they are built around an assumed ‘basket’ of investments that crosses infrastructure sectors most of which are not employment-maximising. Albeit limited in scope, rural road maintenance projects may employ 200,000 to 500,000 annualised direct jobs for every US

Understanding the benefits of regional integration to trade : the application of a gravity model to the case of Central America

1billion spent. The article also describes the potential risks to effective infrastructure investment in an environment of crisis including sorting and planning contradictions, delayed implementation and impact, affordability and corruption.

Institutional and Political Determinants of Private Participation in Infrastructure

This book conducts a micro-level analysis of various determinants of infrastructure sector performance that affect development. This book focuses on the distribution segment of three basic infrastructure services: electricity, water and sanitation, and fixed telecommunications. This books aims to answer four main sets of questions: what are the main performance trends in the region, and how heterogeneous are they?; how does the performance of state-owned and private utilities differ?; how does the institutional design of regulatory agencies affect sector performance?; and what management mechanisms create incentives for improved performance?. This book begins by describing the main elements that characterize sector performance, defined as the delivery of reliable, affordable service that complies with certain quality standards. It focuses on the relationship between sector performance and the following determinants: private sector participation, regulatory agencies, and corporate governance. It also examines related aspects, such as contract design, market structure, and, for telecommunications, market competition. This book first explains the dynamics of utility performance and the interactions between key internal variables and utility performance in each sector. The book is organized as follows: chapter one is introduction. Chapter two outlines changes in the electricity distribution, water and sanitation, and fixed telecommunications sectors in the Latin America and the Caribbean (LAC) region over the past 15 years. This chapter tells multiple stories of the substantial improvement in these sectors and fills in knowledge gaps by benchmarking utility performance at the regional, country, and utility levels. Chapter three synthesizes the impact private sector participation has had on electricity distribution, water and sewerage, and fixed-line telecommunications. This chapter also identifies whether private sector participation characteristics such as the sale method; investor nationality; and award criterion affect performance. Chapter four explores the institutional design of regulatory agencies and the link between regulatory governance and sector performance. Chapter five assesses the governance of state-owned enterprises (SOEs) in infrastructure, based on survey results from 45 SOEs in the water and electricity distribution sector of LAC. Chapters six examines other potential determinants for sector performance, including corruption, cost recovery, contract arrangements, and competition. Chapter seven summarizes the book s main results and describes the array of possibilities for moving forward.

Benchmarking Container Port Technical Efficiency in Latin America and the Caribbean: A Stochastic Frontier Analysis

The paper identifies the impact of physical barriers to trade within Central America through the use of an augmented and partially constrained Gravity Model of Trade. Adjusting the Euclidian distance factor for Central America by real average transport times, the model quantifies the impact of poor connectivity and border frictions on the regions internal trade as well as its trade with external partners, such as the United States and Europe. In addition, the authors benchmark Central Americas trade coefficients against those of a physically integrated region by running a parallel Gravity Model for the 15 core countries of the European Union. This allows for the estimation of potential intra-regional and external trade levels if Central America were to reduce border frictions and time of travel between countries and thus benefit from both the adjacency of each countrys neighbors and the gravitational pull of the regions economies. The analysis is conducted for all of Central Americas trade and is also disaggregated for three groups of products -- processed fruits and vegetables; steel and steel products; and grains -- by both volume and value. This differentiation tests the consistency of the results while providing insight into the differentiation in trading patterns and potential for these containerized, break-bulk, and bulk products. The results of the model include a potential doubling in intraregional exports if Central America could achieve the adjacency and time-distance factors of a truly integrated region. In addition, the regions combined exports to the European Union and the United States are projected to increase by more than a third compared with the current level, assuming European Union-level adjacency performance. Even more external trade benefits would accrue by reducing the economic penalty imposed by overland transport and border crossing inefficiencies.

The Effects of Country Risk and Conflict on Infrastructure Ppps

We assembled a large panel of project-level technical and financial data and country-level economic, institutional, political, and governance variables to assess the determinants of private financing of infrastructure in emerging markets and developing economies. Controlling for economic characteristics, we find that overall private participation of infrastructure financing increases with freedom from corruption, rule of law, quality of regulations, and decreases with court disputes. We provide plausible explanations of deviations from this pattern when data is disaggregated at the sectoral level. We also found that legal systems—types of democracy or dictatorship—do not play a role in whether the private sector invests in infrastructure. Our results do not vary when controlling for income inequality and across quartiles of experience, country wealth, and wealth per capita. The study shows that upstream “enabling” institutions, policies, and regulations and sector economics need to be addressed simultaneously to facilitate private infrastructure investment financing.

What Drives Private Participation in Infrastructure Developing Countries

We developed a technical efficiency analysis of container ports in Latin America and the Caribbean using an input-oriented stochastic frontier model. We employed a 10-year panel with data on container throughput, port terminal area, berth length, and number of available cranes in 63 ports. The model has three innovations with respect to the available literature: (i) we treated ship-to-shore gantry cranes and mobile cranes separately, in order to account for the higher productivity of the former; (ii) we introduced a binary variable for ports using ships? cranes, treated as an additional source of port productivity; and (iii) we introduced a binary variable for ports operating as transshipment hubs. Their associated parameters are highly significant in the production function. The results show an improvement in the average technical efficiency of ports in the Latin American and Caribbean region from 36% to 50% between 1999 and 2009; the best performing port in 2009 achieved a technical efficiency of 94%with respect to the frontier. The paper also studies possible determinants of port technical efficiency, such as ownership, corruption, transshipment, income per capita, and location. The results revealed positive and significant associations between technical efficiency and both transshipment activities and lower corruption levels.

Exploring the drivers of port efficiency in Latin America and the Caribbean

Through an empirical analysis of the relationship between private participation in infrastructure and country risk, the paper shows that country risk ratings are a reliable predictor of infrastructure investment levels in developing countries. The results suggest that a difference of one standard deviation in a countrys sovereign risk score is associated with a 27 percent increase in the probability of having a private participation in infrastructure commitment, and a 41 percent higher level of investment in dollar terms. The predictive ability of country risk ratings exists for all sectors of infrastructure and for both greenfield and concessions. On average, energy investments exhibit a higher sensitivity to country risk than transport, telecommunications, and water investments. Concessions are more sensitive than greenfield investments to country risk, although country risk is a good predictor of investment levels for both contractual forms. Although foreign direct investment is found to be sensitive to country risk, the causal relationship is not nearly as sensitive as it is with private participation in infrastructure. Finally, an analysis of private participation in infrastructure patterns for those countries emerging from conflict reveals that conflict-affected countries typically require six to seven years to attract significant levels or forms of private investments in infrastructure from the day that the conflict is officially resolved. Private investments in sectors where assets are more difficult to secure--such as water, power distribution, or roads--are slower to appear or simply never materialize.