Sudeshna Ghosh Banerjee

Cost Recovery, Equity, and Efficiency in Water Tariffs: Evidence from African Utilities

Water and sanitation utilities in Africa operate in a high-cost environment. They also have a mandate to at least partially recover their costs of operations and maintenance (O&M). As a result, water tariffs are higher than in other regions of the world. The increasing block tariff (IBT) is the most common tariff structure in Africa. Most African utilities are able to achieve O&M cost recovery at the highest block tariffs, but not at the first-block tariffs, which are designed to provide affordable water to low-volume consumers, who are often poor. At the same time, few utilities can recover even a small part of their capital costs, even in the highest tariff blocks. Unfortunately, the equity objectives of the IBT structure are not met in many countries. The subsidy to the lowest tariff-block does not benefit the poor exclusively, and the minimum consumption charge is often burdensome for the poorest customers. Many poor households cannot even afford a connection to the piped water network. This can be a significant barrier to expansion for utilities. Therefore, many countries have begun to subsidize household connections. For many households, standposts managed by utilities, donors, or private operators have emerged as an alternative to piped water. Those managed by utilities or that supply utility water are expected to use the formal utility tariffs, which are kept low to make water affordable for low-income households. The price for water that is resold through informal channels, however, is much more expensive than piped water.

Private Provision of Infrastructure in Emerging Markets: Do Institutions Matter?

Governments in developing countries have encouraged private sector investment to meet the growing demand for infrastructure. According to institutional theory, the role of institutions is paramount in private sector development. A longitudinal dataset of 40 developing economies between 1990 and 2000 is used to test empirically how different institutional structures affect private investment in infrastructure, in particular its volume and frequency. The results indicate that property rights and bureaucratic quality play a significant role in promoting private infrastructure investment. Interestingly, they also suggest that countries with higher levels of corruption attract greater private participation in infrastructure.

Africa's Water and Sanitation Infrastructure: Access, Affordability, and Alternatives

The Africa Infrastructure Country Diagnostic (AICD) has produced continent-wide analysis of many aspects of Africas infrastructure challenge. The main findings were synthesized in a flagship report titled Africas Infrastructure: a time for transformation, published in November 2009. Meant for policy makers, that report necessarily focused on the high-level conclusions. It attracted widespread media coverage feeding directly into discussions at the 2009 African Union Commission Heads of State Summit on Infrastructure. Although the flagship report served a valuable role in highlighting the main findings of the project, it could not do full justice to the richness of the data collected and technical analysis undertaken. There was clearly a need to make this more detailed material available to a wider audience of infrastructure practitioners. Hence the idea of producing four technical monographs, such as this one, to provide detailed results on each of the major infrastructure sectors, information and communication technologies (ICT), power, transport, and water, as companions to the flagship report. These technical volumes are intended as reference books on each of the infrastructure sectors. They cover all aspects of the AICD project relevant to each sector, including sector performance, gaps in financing and efficiency, and estimates of the need for additional spending on investment, operations, and maintenance. Each volume also comes with a detailed data appendix, providing easy access to all the relevant infrastructure indicators at the country level, which is a resource in and of itself.

Provision of Water to the Poor in Africa: Experience with Water Standposts and the Informal Water Sector

Standpipes that dispense water from utilities are the most common alternatives to piped water connections for poor customers in the cities of Sub-Saharan Africa. Fifty-five percent of the unconnected urban population relies on standpipes as their first water source. Other informal water providers include household resellers and a variety of water tankers and vendors, which are the first water source of 1 percent and 3 percent of the urban population, respectively. In the cities studied, the percentage of unconnected households ranges from 12 percent to 86 percent of the population. The percentage of unconnected people covered by standpipes is substantially higher for countries with higher rates of household connection, while the percentage of unconnected people covered by water tankers or water vendors is higher for countries with lower rates of household connection. Water prices in the informal market are much higher than for households with private connections or yard taps. Although standpipes are heavily subsidized by utilities, the prices charged by standpipe operators are closely related to the informal water reseller price. Standpipe management models also affect the informal price of water. For example, the shift from utilities management to delegated management models without complementary regulation or consumer information has often led to declines in service levels and increased prices. Standpipes are not the only or even the most efficient solution in peri-urban areas. Programs that promote private household connections and arrangements that improve pricing and services in the household resale market should also be considered by policy makers.

Unleashing the potential of renewable energy in India

India has 150 GW of renewable energy potential, about half in the form of small hydropower, biomass, and wind and half in solar, cogeneration, and waste-to-energy. Developing renewable energy can help India increase its energy security, reduce the adverse impacts on the local environment, lower its carbon intensity, contribute to more balanced regional development, and realize its aspirations for leadership in high-technology industries. This diagnostic note draws on a detailed analysis conducted by a PricewaterhouseCoopers India consulting team in 2008-09 for the World Bank. The data are based on information on about 180 wind, biomass, and small hydropower projects in 20 states, as well as information from and norms of the Ministry of New and Renewable Energy (MNRE) and the Central Electricity Regulatory Commission (CERC). The study is intended to provoke discussions of the feasibility of renewable energy development in India. Why is renewable energy development relevant? How much development is economically feasible? What needs to be done to realize the potential? Each of these topics is addressed in a separate chapter, all of which suggest a few implementable measures that India can consider to tap its economically feasible unharnessed potential.

People and Power: Electricity Sector Reforms and the Poor in Europe and Central Asia

Empirical insights on household behavior and electricity consumption patterns in this book reveal that, in Europe and Central Asia, the erosion of tariff based subsidies has disproportionately affected the poor, while direct transfers through social benefit systems have often been inadequately targeted. The book suggests alternative strategies for achieving cost-recovery in the electricity sector in a socially and politically acceptable manner, providing lessons that are equally relevant for other utilities and regions.

Does Foreign Aid Promote Privatization? Empirical Evidence from Developing Countries

Abstract International assistance organizations use foreign aid to encourage governments in developing countries to enact market reform and privatization policies aimed at accelerating economic growth. Recent research findings, however, question the assumption that foreign aid has a positive impact on governments’ decisions to adopt economic reforms or that it accelerates economic growth. What is foreign aid’s impact, then, on the decisions of governments in developing countries to privatize state-owned enterprises? In an analysis of factors influencing the decision to privatize with respect to pace, timing and intensity of the process in 35 developing countries, we find that foreign aid has no systematic impact on the privatization process. Aid, especially technical assistance, can positively affect the pace and intensity of privatization and the findings point toward increasing the technical assistance component in aid. We find strong evidence of foreign aid being a facilitating factor in privatization in the presence of complementary institutional capacity. Ultimately, privatization is driven by domestic political and economic factors, and foreign aid can facilitate implementation only when developing countries have, or are able to create, market-supporting institutions.

Power and People : The Benefits of Renewable Energy in Nepal

A large section of the Nepalese population is deprived of electricity coverage despite huge hydropower potential, particularly in rural areas. About 63 percent of Nepalese households lack access to electricity and depend on oil-based or renewable energy alternatives. The disparity in access is stark, with almost 90 percent of the urban population connected, but less than 30 percent of the rural population. Nepal has about 83,000 MW of economically exploitable resources, but only 650 MW have been developed so far. This study has been designated to organize an evaluation system that measures the impact of micro-hydro installations on rural livelihoods and to establish a monitoring system for Alternative Energy Promotion Center (APEC) to continually measure the results of the results of the renewable energy programs against the targets.

The power of the mine : a transformative opportunity for Sub-Saharan Africa

Africa is blessed with energy resources yet they go largely untapped. As a result, only one in three Africans has access to energy, which stymies economic growth on the continent and seriously limits human potential and well-being. If nothing changes, Sub-Saharan Africa as a region will actually see the number of people without electricity increase from 590 million in 2013 to 655 million by 2030. The report shows that the mining industry in Sub-Saharan Africa has been sourcing power in innovative ways- some involving national utilities and some not. The self-supply arrangement imposes a loss for everyone- people, utilities, mines, and national economies. Since 2000, mines in Africa have spent around

More power to India : the challenge of electricity distribution

15.3 billion to cover their own electricity investment and operating costs and have installed 1,590 megawatts of generating capacity. None of this power made it onto a national grid. Irrespective of the country- ranging from areas where a grid barely exists, forcing mines to secure their own generation, to those with large, integrated grid systems- there is great potential for the mining industry to be used as an anchor customer to unlock energy resources for the sustainable development of the power sector. While the economic and business case for power-mining integration is strong, the report shows that this opportunity has largely been undeveloped. In some countries, integration could help connect many customers to mini-grids or national grids. In others, it has a facilitating role to support the power sector through greater mobilization of revenues from energy sales. The report also points to the challenges that must be overcome in this new and- in a developing country context- relatively unchartered area. But these are not insurmountable, and many countries that have integrated mining demand successfully in their power sectors offer proof that this untapped potential can be harnessed for national development.